• U.S. stock markets rallied late yesterday securing small gains in the main indices. The pick-up in risk sentiment was supported by a Fed economic survey showing tentative signs of improvement and equity markets have continued higher in Asia.
• Bond yields are little changed overnight. USD has corrected slightly lower, while SEK and NOK are somewhat stronger against EUR overnight.
• China's economy grew at the slowest pace in almost a decade in Q1, as exports collapsed, but the details do raise hope that the large Chinese stimulus plans are beginning to work

Markets Overnight

Equity markets managed to end the day higher in the US yesterday, as stock prices surged in the last hour before the close following a day of choppy trading. The S&P500 index gained 1.25%, as the Beige Book (the Federal Reserve's regional business survey) sparked some optimism. Most Asian equity indices are also higher this morning, and the Nikkei was up by more than 3% at one point, but has since edged lower.

The Fed's Beige Book covering from March through April 6 reported a further decline in activity, but also some signs of stabilisation. Five out of 12 Fed district banks ‘noted a moderation in the pace of decline' and several saw signs of stabilisation in some sectors.

The Chinese economy grew at the slowest pace in almost 10 years in the first quarter a GDP report showed this morning. Real GDP grew 6.1% y/y, slightly less than expected, as exports collapsed. Growth in industrial production and investment did accelerate, though, suggesting that the large Chinese stimulus plans are beginning to work.

US bond yields rose marginally on the back of the improved risk sentiment and the yield curve flattened slightly.

In FX markets the dollar continued to appreciate against the euro in yesterday's trade, taking EUR/USD below 1.32, but the pair has corrected higher overnight. The Scandies came under renewed pressure yesterday, but both EUR/SEK and EUR/NOK are lower this morning

Global Daily

Focus today: Earnings from JPMorgan Chase and US Philly Fed survey will be main events today. After positive surprises from Wells Fargo and Goldman Sachs expectations are set for JPMorgan results (scheduled for 12.30). Philadelphia Fed business survey at 16.00 is expected to rise and we see upside risks to the number – as also hinted at by the strong Empire index yesterday (see chart on right). US housing starts and permits will also be potential market movers. Housing data has also surprised positively lately as witnessed as late as yesterday with the stronger-than-expected NAHB housing index. Finally US jobless claims and Euroland inflation are on the agenda. Jobless claims have stabilised recently but at a very high level, which still signals strong job losses. Euro inflation is not likely to move the markets as neither inflation risks nor deflation risks are seen in current numbers.

Fixed income markets: Risk appetite continues to be the main driver for bond markets and hence the JPMorgan earnings report will likely be the most important event today for the bond markets. Philly Fed survey could also be a driver, though, if it mirrors the rise in Empire yesterday and this could put a bit of upward pressure on yields later in the day. Overall we continue to believe that bond yields are in a bottoming phase and hence declines in yields - as we have seen in recent days - should rather be used to position for higher yields in the medium term.

FX markets: We have seen some pick-up in risk sentiment being priced in the FX market this morning, which if it continues should see EUR/USD higher, AUD and NZD stronger, and JPY and CHF weaker. Sterling continues to see tailwind and GBP/USD has broken above 1.50 for the first time in three months. We continue to see potential for the oversold GBP and expect EUR/GBP to drift lower in the coming months on the back of improved UK activity data and a general improvement in risk sentiment. AUD/NZD has broken out of its 1.20 – 1.25 range and we see further upside potential, which could secure a break of 1.30, as the market increasingly prices the divergence in both the macroeconomic and monetary policy situation. Tomorrow's New Zealand CPI numbers could add to the upwards pressure on the cross

Scandi Daily

Both NOK and SEK suffered yesterday as sentiment turned sour in global equity markets. However, the strong closing of the US market bodes well for the European market today, which should support both NOK and SEK. With regards to SEK keep an eye on house prices for March released at 9.30 CET. We see value in both NOK and SEK, but we are a bit cautious with SEK ahead of the Riksbank meeting next week and prefer long NOK-positions currently.

Danske Bank
http://www.danskebank.com/danskeresearch

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