Oil markets ripped higher overnight after data showed demand at stronger than forecast levels. A perception of increased activity underpinning the draw on oil inventories lifted industrial commodities, already firmer as markets assessed the potential impact of sanctions on Russia. This strength spread across asset classes and European and US shares extended recent gains as bonds fell.

US company reporting added to the risk on flavour. Although IBM disappointed the majority of reports beat forecasts. Textron leaped 6%. The reports support the consensus view of an across the board jump in sales and profits. Lighter trading volumes suggest institutional investors are on the sidelines awaiting the complete corporate picture.

Currency markets remained calm, and the US dollar index made a second straight gain. Bond yields edged higher and ten year yields are once again approaching multi-year highs.

Gains in the Asia Pacific region today may be uneven with a bias toward commodity exposed exchanges. BHP’s quarterly production report, released this morning, showed copper production doubled and iron ore production lifted a further 8%. The shares are likely to open considerably higher despite a fall in oil production taking some gloss off the quarter.