Scoreboard: Blue chip bonus

US equities managed to finish in the black overnight, but it was whippy and I wouldn’t say there was a lot of conviction buying last night. Positive earnings reports from large blue chips like Johnson & Johnson and Coca-Cola obviously helped give stocks a boost, but the offer came on hard following reports that Ukrainian forces were acting to secure key facilities in eastern Ukraine. That there were also rumours of Russian soldiers filtering though the border obviously didn’t help, although none of this news has been substantiated. The rumours of rising tensions hurt though and some European stocks closed deep in the red, while US stocks hit a decent trough in intraday trade.

Equities saw decent gains in the US overall, notwithstanding tensions in Ukraine, with the S&P500 up 0.7 per cent (1842), although at the low the index was down 0.8 per cent. The Dow rose 89 points (16,262) and even the Nasdaq managed a 0.3 per cent gain (4034), although that comes after losses of around 2 per cent due to Ukraine and also ongoing concerns over tech valuations. European stocks in contrast were hit hard. The Dax in particular fell 1.8 per cent, with the CaC down 0.9 per cent and the FTSE100 off 0.6 per cent.

Commodities were all weaker overnight on a combination of factors -- namely, weaker Chinese money growth and a pick-up in US inflation. Even a modest lift in inflation could see the Fed’s taper accelerate – well, that’s the fear, anyway. Interestingly, the Ukrainian crisis didn’t see crude or gold push higher. Gold was off $27 to $1300, silver dropped 2.1 per cent and copper fell 1.8 per cent. In the crude space, WTI was 0.3 per cent lower at $103.7, while Brent was also off 0.3 per cent to $108.7.

Forex markets saw the euro and British pound little changed at 1.3813 and 1.6723 respectively. The yen didn’t do much either (at 101.9). The Australian dollar dropped a little, about 30 pips to 0.9357, largely on the back of those Chinese money statistics.

Rates ended little changed in the US, but there was a bit of activity around that. For instance the US 10-year yield traded on a 6 bps range, ending at 2.63 per cent. The 5-year yield ended a touch higher at 1.62 per cent, again on a 5 bps range, while the 2-year is at 0.37 per cent. Aussie futures were up 1 tick on the 3s (97.010) and 2 ticks on the 10s (96.025).

Elsewhere, the key data flow overnight was about inflation. In the US, consumer prices rose by 0.2 per cent in March to be 1.5 per cent higher annually. Core inflation was also 0.2 per cent higher and is 1.7 per cent higher year-on-year, up from 1.6 per cent. Inflation was also up 0.2 per cent in Britain (March data), or 1.6 per cent higher annually. We also saw some house price data out of Britain -- up 9.1 per cent in February from a 6.8 per cent lift. Outside of inflation, we saw the German ZEW survey, which showed expectations falling to 43.2 from 46.6. Finally, for the US, the NAHB housing market index rose to 47 in April, from 46.

In markets today, the SPI suggests Aussie stocks will be up a few points, but ultimately the performance of our equities will depend on the data flow today. The data everyone will be watching comes from China: specifically the GDP numbers, industrial production, fixed investment and retail sales -- all at 1200 AEST. Tonight we see data such as UK employment numbers and the eurozone CPI, while US figures include housing starts, industrial production, the Beige Book and a speech from Fed Chair Janet Yellen.

Have a great day…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.