Optimism gave way to caution in overnight trading. Although the US dollar eased again, European shares fell and US shares recovered late in the session to finish flattish. Crude oil prices fell, despite a surprise production cut from Saudi Arabia, but gold and bonds also came under pressure. In a night of mixed market messages, commodity currencies fell as base metals rallied.

These conflicting moves could see subdued trading in the Asia Pacific region today. Investors must balance the positives of potential easing of containment measures against the growing evidence of substantial economic damage. Last night’s read on Italian industrial production added to the argument with a 28.4% fall in March. Australian business confidence and China CPI and PPI data today will likely colour the picture.

The evidence at the company level is just as disturbing. Around 90% of S&P500 companies have reported for the quarter ended 31 March, when containment measures were just starting to kick in. The overall impression is sobering. Although sales increased slightly, profits fell by around 8%. The reports pushed analysts to downgrade forecasts, and the average cut to earnings outlook is 25%. The US company-reporting season that begins in July will reflect the full impact of virus lockdown measures.

Nikkei futures finished the overnight session flat, although futures for markets in Hong Kong, Australia and Singapore futures are lower. Currency traders remain focused on the daily Yuan fixing, given that the offshore Yuan is trading near record lows.