• Uncertainty looms across equities as participants weigh risk events in the form of the Fed and BoJ rate decisions with the surge higher in crude prices.
  • GBP finds support to remain near 1.4600 following UK GDP figures, while commodity linked currencies strengthens against the USD amid the surge in crude prices.
  • Looking ahead, highlights include Fed, RBNZ and Brazilian rate decisions and US Pending Home Sales.

ASIA

Asia equity markets traded mixed following the tentative lead from Wall St. as participants remained weary ahead of the upcoming FOMC & BoJ meetings, while disappointing earnings from Apple also weighed on Asian suppliers. ASX 200 (-0.3%) initially outperformed after WTI climbed to YTD highs following an unexpected API drawdown, while weak domestic CPI data also boosted RBA rate cut hopes. However, the index was then dragged into negative territory alongside the risk-averse tone in the region. Nikkei 225 (-0.3%) fell as participants remain cautious as the BoJ kicked off its 2-day policy meeting, while Apple suppliers in the region also suffering following poor Q2 results from the tech giant which missed on earnings, revenue and forecasts, while iPhone sales declined for the 1st time Y/Y. Shanghai Comp (-0.4%) had been initially supported by strong Industrial Profits which rose 11.1% Y/Y, although declines in Chinese commodity prices and default concerns saw the index reserve its earlier gains. 10yr JGBs weakened with participants side-lined ahead of the upcoming policy decision, while the absence of the BoJ in the market also contributed to the lack of demand.

Chinese Industrial Profits (Mar) Y/Y 11.1% (Prev. -4.7%). (RTRS)

Australian CPI (Q1) Q/Q -0.2% vs. Exp. 0.2% (Prev. 0.4%)
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CPI (Q1) Y/Y 1.3% vs. Exp. 1.7% (Prev. 1.7%). (RTRS)

EQUITIES/ FIXED INCOME

Stocks have traded in modest negative territory through much of the morning before seeing a pickup in recent trade to pare earlier losses. Sentiment in equity markets has been somewhat uncertain after the downbeat CPI data overnight from Australia and ahead of the key risk events of the week in the form of the Fed and BoJ rate decisions. Equities however reversed course amid the positive impact from the upside seen in the energy complex. This comes as WTI and Brent both continue to trade at YTD highs in the wake of the surprise API drawdown last night (-1100k vs. Exp. 2400k) and the continued upside seen in oil seen over the past few weeks. In terms of equity specific news, earnings season is in full flow with the likes of Adidas (+6.6%) and Barclays (+2.6%) among the best performers after premarket releases.

Fixed income markets remain modestly higher on the day, in fitting with the general risk off sentiment. As such, Bunds remain at elevated levels, subsequently tracking USTs higher with the curve notably flatter amid outperformance in the long end.

UK GDP Growth Rate (Q1 P) Q/Q 0 cialis preiswert.40% vs. Exp. 0.40% (Prev. 0.60%)

GDP Growth Rate (Q1 P) Y/Y 2.10% vs. Exp. 2.00% (Prev. 2.1%)

FX

A busier morning in FX than we would have expected ahead of the key FOMC meeting tonight, with yet more USD sales to note against selected majors, but enough to pull the USD index lower again.  Stand out has been GBP earlier in the week, but EUR/USD gains have seen us back into the low-mid 1.1300’s again, while a WTI surge to $45.0 has sent USD/CAD through 1.2600 and below the lows from Friday.  The move has also stemmed the sell-off in AUD/USD, which slumped from the mid .7700’s in the wake of the surprise Australian CPI read which was much lower than expected – Q1 yoy 1.3% vs 1.8% previously.  We tested .7600, but unsuccessfully as yet.  Big data release in the UK in Q1 GDP, but coming in largely as expected, pre data positioning saw early selling above 1.4600 reversed, but 1.4545-50 levels have held up so far.  Tuesday’s 1.4638 high is intact as yet.  USD/JPY has every reason to stand pat with the BoJ decision hot on the heels from that of the Fed.  Support holding up, but stock market weakness creeping in (Apple miss) to cap the topside for now.

COMMODITIES

Heading into the North American crossover, WTI and Brent crude futures have extended on gains following yesterday’s surprising drawdown in the latest API crude oil inventory report. Subsequently, crude prices now trade at YTD highs with WTI breaking above USD 45.00/bbl which is the first time since Nov’15.Gold (+0.1%) prices remained near yesterday’s highs as a cautious tone and USD weakness underpinned. Elsewhere, copper and Dalian iron ore futures extended on losses in Asian trade with the latter declining 6% to hit limit down on Chinese concerns and a continuation of the selling since China increased transaction costs.
China April crude steel daily production could reach a record level. (21st Century Business Herald)

China's Dongbei Steel stated it was unsure whether it could pay capital and interest on 1-year CNY 700mln note due on May 5th. (RTRS)

World nickel market seen in deficit this year after 4 years of a supply glut. (RTRS)

Antofagasta (ANTO LN) – Co. reports full year production and cash cost guidance is unchanged, gold production in Q1 2016 increased 1.8% was 56,700 ounces, Q1 2016 copper production increased 7.3% Y/Y to 157,100 tonnes. They also stated that cash costs before by product were better than expected. (RTRS)