Global Markets Overview

US equities advanced yet again as earnings continued to underpin confidence in the recovery and US data encouraged. With no fresh negative tape out of the Ukraine sentiment remained positive.

The standout in the equity space was Yahoo! which put on over 6% on the back of some impressive earnings. On the data front US industrial production was up 0.7%, better than an expected 0.5% rise. The Beige Book showed a good rebound in activity after a few months of weather disruptions. Fed chair Janet Yellen was also on the wires saying the Fed will continue to support the recovery, and this helped to support the risk recovery. There was no better indication of the improvement in risk appetite than the bounce in copper prices. Copper is generally considered a growth measure and when optimism improves, then copper gains.

Sentiment was already positive from Asian trade after China's Q1 GDP didn't slow by as much as expected. While GDP was mildly better than expected, industrial production fell short and continued to highlight the challenges the economy is facing. In fact, was it not for a rebound in March growth, January and February were benign and would have weighed significantly on the quarter. Analysts still feel China will have to roll out some measures in the coming months to prevent further slowing and meet growth targets. As a result, yesterday's data hit the sweet spot in that it was better than estimates, but still not strong enough to deter hopes of further stimulus. The bounce-back in March perhaps shows the government has already started to implement some stimulus measures.

Limited moves in the FX space

AUD/USD didn't manage to break back above 0.94 despite a good recovery in yesterday's Asian trade. There is just no real conviction amongst traders to push the pair much higher than it already is given the RBA remains quite dovish to neutral.

In today's trade we have NAB quarterly business confidence and new motor vehicle sales data to look out for at 11.30 AEST. USD/JPY will be an interesting one to watch with Japan's weekly fund flows and more commentary from BoJ Governor Kuroda expected. The pair is now trading back above 102 and this has really helped the Nikkei outperform over the past couple of days. With the sales tax hike kicking in, there have been plenty of concerns about Japan's recovery stalling. However, Kuroda has reinforced he will be ready to step in should the economy deviate from its path to the 2% inflation target.

Yesterday Finance minister Aso hinted the government pension fund will make a move on the equity market in June. This could be a strong indication that Japanese equities are the place to be and the Nikkei is pointing to another 0.3% gain at the open to 14,458.

Energy names in focus locally

Ahead of the open we are calling the ASX 200 up 0.3% at 5,435. Given it's the last trading day before the long weekend, activity is likely to be subdued. Reporting today will be Santos and Woodside which are both set to release 1Q output reports. As a result there will be plenty of focus on the energy names. The rest of the resource space might also continue to ride the positive momentum from yesterday's China GDP release. BHP's ADR is pointing to a relatively flat start despite the drop in iron ore prices.

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