Global Markets Overview

The S&P pulled back from its record close, with investors exercising some caution and on mild profit taking. There was nothing on the US economic calendar to really drive sentiment and as result investors looked ahead to the GDP reading, which is due out later today. US GDP is expected to be revised to a negative print, with most analysts feeling this is consistent with a handover into Q2, which is then expected to show a bounce-back. Some Fed members anticipate growth of nearly 3% for Q2. Should the Q1 figure surprise to the upside, then perhaps we might finally see a bounce in the greenback which has remained subdued.

USD/JPY was once again capped at 102, dropping to 101.64 before starting to recover heading into retail sales data today. April retail sales are expected to show a sharp 11.7% drop after having shown a solid rise in March, mainly due to front loading ahead of the consumption tax hike. We also have the weekly fund flows data to look out for, which is always interesting particularly after we saw a sharp rise in Japan buying of foreign bonds last week to the highest level since November 2013.

The Nikkei has enjoyed good gains this week and will be firmly in focus as the data and commentary ramps up heading into the end of the week. Should today's data be consistent with a deteriorating retail picture following the consumption tax hike, then we could see renewed yen weakness. We are currently calling the Nikkei a touch weaker at 14,645.

AUD bounces off the lows

The AUD will be back in focus today with the private capital expenditure reading due out at 11.30 AEST along with new home sales at 11.00 AEST. This reading should give some insight into what to expect on the GDP front. Q1 private capital expenditure is expected to show a 1.6% fall which is an improvement from the previous reading of -5.2%. The biggest drag was plant and equipment spending which is mainly mining related. This trend is expected to continue as China concerns remain, but perhaps an encouraging sign will come from building and structures after yesterday's construction work done data impressed. In fact, building and structures actually contributes around 70% of total spending. As a result, if we see a good reading in building and structures and some stability in plant and equipment then we could be in for a good reading today. AUD/USD dipped to 0.921 overnight, but has since recovered to around 0.924. The pair might be eyeing a move back to 0.926 in the near term where it was stuck for a while.

Gold and iron ore miners in focus

Ahead of the local market open, we are calling the ASX 200 down 0.2% at 5516. Iron ore dropped another 1.3% to 96.8 and gold extended its losses to 1259. As a result it could be a tough day ahead for the mining names. BoAML feels the mining sector is prime for some mergers and acquisition activity at the moment, particularly given the recent share price weakness. Westfield has an AGM today and Suncorp has an investor day and after the announcement earlier in the week, the stock will be one to watch. Wesfarmers is eyeing some international acquisitions as it has a bit of cash to spare.

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