US Markets

US stocks took a sharp turnabout overnight. Having initially dipped as much as 1% earlier in the session on valuation and Russo-Ukrainian concerns, they recovered towards the end after companies posted healthy earnings. The Nasdaq, which is heavily tech laden, slid close to 2% before a technical resistance at the 200 SMA stemmed a further sell off. The index ended the session 0.3% up. Meanwhile, the S&P 500 reversed earlier losses from the tech sector to put in gains of 0.7% overnight. With earnings well under way, a report from Coca-Cola helped lift investor sentiment after earnings met consensus. Stocks at the beverage behemoth rose 3.74% as overall product volumes gained some 2% in Q1, beating Wall Street estimates. Elsewhere shares at Johnson and Johnson rose to an all-time high of $99.2 on gains of 2.1% as profits rose close to 8% in Q1. Despite the recovery in equities, we continue to see laggards in the tech sector like Facebook and Netflix as investors shift out of the prized jewels of yesterday into the undervalued stocks of today. Search giant Yahoo remains in the bright spot, however, after earnings beat forecasts. Shares at the firm leapt more than 6% in extended trading on both its earnings results and a bumper report from Alibaba, of which it owns nearly a quarter. In the fundamentals space, despite a slew of mixed reports, the dollar managed to eke out gains against the majors due to the late recovery in equities. Manufacturing activity in the New York region slowed unexpectedly, while home builder sentiment ticked up to 47, from 46 in April. Inflation rose unexpectedly in March, led by a 0.4% increase in food prices, while core consumer prices rose at their fastest pace since March 2008 at 2.8% from a year earlier. US fundamentals have played a less important role in recent days and remain likely to be such, with a blurred forward guidance from the Fed. That is why traders will pay attention to each Janet Yellen speech, with one scheduled for tonight at 12.15am.

Forex

How currencies may trade will be largely dependent on how Chinese GDP fared in Q1. Weaker industrial production figures in January and February point towards a slowdown in growth, since they make up a significant portion of GDP. The trade figures from last week further reiterate the point, with exports falling more than 6%. Softer inflation also signals at lower price pressures and the difficulty for firms to raise prices. Having all these considerations in mind, analysts expect Q1 GDP to range between 7.2- 7.4%, which is well below the 7.5% target of the Chinese government. A print at the lower end of this consensus estimate will likely trigger a sell off in recent buoyant currencies like the AUD and NZD.

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