Overnight Sentiment: Quiet With A Chance Of Excess Volatility After Apple Reports

It' quiet out there... Too quiet, as everyone is awaiting the most important earning number of the quarter - that of Apple. Everything else is secondary. Here is how the secondary data is driving the market so far in the trading session.

From Bank of America:

Market action

Asian equity markets finished mixed on concerns about political uncertainty in Europe. Yesterday the Dutch prime minister Mark Rutte tendered his cabinet's resignation after the collapse of budget austerity talks. One implication of the collapse of the Netherlands government is that it could create some difficulties in ratifying the fiscal compact.

Looking at the individual markets, the Japanese Nikkei fell 0.8% while the Korean Kospi lost 0.5%. On the flip side, the Indian Sensex managed to rise 0.6% and the Hang Seng was lifted 0.3%. The Shanghai Composite finished flat.

In Europe, equities are rallying sharply up 0.7% in the aggregate. The best performing major European market is the French CAC up 0.9%. At home, futures are pointing to a bounceback from yesterday's 0.8% drop in the S&P 500. Futures are pointing to a 0.4% higher open today.

In bondland, Treasury yields are backing up 1 basis point across the curve with the 10-year yield currently trading at 1.94% while the long bond is trading at 3.09%. In Europe, the UK gilt is 1bp higher as well (yielding 2.13%) and the German bund is up 3bp to 1.68%. Yields on the Periphery's debt are lower -Spain's 10-year note is 8bp lower at 5.87%.

After rallying yesterday the dollar is weakening against a basket of other major currencies. The DXY index is down 0.1%. Commodities are mixed with WTI crude oil basically flat and gold down 45 cents an ounce at $1,638.38.

Overseas data wrap-up

Australia's inflation figure for the first quarter moderated to 3.1% yoy in the first quarter from 3.5% in the fourth quarter of 2011 opening the way for the RBA, the country's central bank, to cut rates. Coupled with the deteriorating outlook for employment our Australian economist expect the RBA to cut rates again at next month's meeting.

Spain's housing market continues to deteriorate. The number of Spanish mortgages issued to buy homes fell 47.1% from a year earlier in February. High unemployment coupled with the country's economy falling further into recession and tighter credit will make it increasing difficult for households to purchase a home. Home prices should fall further. The weakness in the housing sector has implications for the country's banking sector. To read more take a look at: Spanish Banks, 19 April 2012.

Today's events

Both economic indicators we'll be sorting through today are released at 10:00 am: the Conference Board's Consumer Confidence Index for April and the New Home Sales report for March. The Conference Board's Consumer Confidence Index is expected to moderate to a three-month low of 69.0 in April from 70.2 in March. That is a historical weak level of confidence at this stage in an expansion. Meanwhile, we expect new home sales to rise 0.7% in March to 315,000 from 313,000 in the prior month.


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