The biggest catalyst for overnight markets, first reported on this site, was the announcement by Kuwait that its oil workers had ended their strike which disrupted oil production in the 4th largest OPEC producer for 3 days cutting it by as much as 1.7 mmb/d, and had served to offset the negative news from the Doha debacle. Kuwait Petroleum also added that it would boost output to 3m b/d within 3 days, which in turn has pressured the price of oil overnight, and the May WTI contract was back to just over $40 at last check, sliding 2%. Not helping things was a very dejected Venezuela oil minister Eulogio Del Pino who said at a conference in Moscow that he sees oil prices returning to lows in 3-4 weeks if oil producers can't make a deal. For now the algos - and central banks - disagree.

And speaking of central banks, it is probably safe to say that after yesterday's negative inventory build data and the news of the Kuwait strike ending, should oil resume its climb and somehow end green (even if DOE reports another inventory build later today) that it is indeed central banks who are now actively propping up and daytrading oil, as so many have now suspected.

It wasn't just oil: overnight Chinese stocks also snapped and dropped by the most since February, with the SHCOMP sliding 2.3% after dropping as much as 4.5% earlier, to the lowest since March 17 as analysts questioned the PBoC's willingness to conduct further monetary easing. The catalyst was the PBOC research bureau chief economist Ma Jun who said late Tuesday that future policy operations, while observing the need to continue supporting growth, will pay attention to heading off macroeconomic risks.  "We will probably see the PBOC take a wait-and-see approach and assess the macro-economic data coming through” before adding to stimulus measures, said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “The fundamentals for oil are still bearish.”

Dai Ming from Hengsheng Asset Management added that the "decline today was seen as a technical correction as market faces resistance near 3,100-point level, unlikely to see loss over consecutive sessions" adding that the "market worries central bank might turn cautious in monetary policy in 2Q due to large scale money supply in 1Q." Considering China injected $1 trillion in direct and shadow loans in Q1, one can see why this may be a concern. As a result, the Shanghai Composite closed at its lower level this month and Hong Kong’s Hang Seng Index was down 1.2%.

On any other day, rolling over Crude and Chine would have been enough to pressure global stocks even more...

... but not today - at least not yet - because while futures and European stocks were looking uglier overnight, it was once again BOJ-driven levitation by the USDJPY which was magically activated just as Europe opened, that pushed US equity futures back to the unchanged, on speculation that the BOJ will now announce even more QE in its April meeting, this time in the form of expanded ETF purchases, which according to Goldman may be almost double the existing size.

Still, if only for now, the Stoxx Europe 600 Index slipped from a three-month high, down 0.3% with health care and media companies posting the biggest losses. BHP Billiton and Rio Tinto added more than 3 percent. Despite recent gains, the European gauge has still tumbled 16% since reaching a record a year ago, and optimism over European Central Bank stimulus has given way to skepticism about its ability to boost growth. 

But that may change: "It’s difficult to find a major positive trigger from here,” said Otto Waser, chief investment officer at R&A Research & Asset Management. "Central banks are done so we don’t expect anything positive from them anymore. Earnings trends are not positive enough in Europe to support a major positive market."

Investors are also awaiting the ECB’s next meeting on Thursday for clues about the path of monetary policy. While economists are virtually certain ECB President Mario Draghi won’t touch interest rates, recent history shows that increased stock volatility is still likely. Intraday swings for the Euro Stoxx 50 Index averaged 4.1 percent during the ECB President’s past four policy updates, or about double that for all meetings since 2010.

Futures on the Standard & Poor’s 500 Index declined 0.2 percent, after the gauge closed above 2,100 for the first time since since Dec. 1. Of the benchmark’s 60 members to have reported first-quarter earnings so far, 77 percent have beaten profit estimates, according to data compiled by Bloomberg.

What is, however, most ironic is that global equities have climbed more than 15 percent from this year’s low, spurred by now rejected rumors of an oil production cut (at first), then freeze (also rejected), and signs of stabilization in China’s economy, which in turn has been nothing more than another massive credit injection and once the credit impulse fizzles, will leave the Chinese economy in an even worse shape than it was. 

It’s a quiet day for data again in the US with just more housing market data due out in the form of existing home sales in March. There’s also some central bank speak for us to keep an eye on. ECB President Draghi is scheduled to make opening remarks in Frankfurt this morning while the BoE’s Hauser and McCafferty are due to speak. Earnings wise we’ve got 25 S&P 500 companies set to report including Coca-Cola and American Express.

Where markets are now:

• S&P 500 futures down 0.2% to 2088
• Stoxx 600 down 0.4% to 348
• FTSE 100 down 0.4% to 6377
• DAX down 0.4% to 10310
• German 10Yr yield down 2bps to 0.15%
• Italian 10Yr yield down less than 1bp to 1.4%
• Spanish 10Yr yieldunchanged at 1.54%
• S&P GSCI Index down 1% to 340.2
• MSCI Asia Pacific up less than 0.1% to 133
• Nikkei 225 up 0.2% to 16907
• Hang Seng down 0.9% to 21236
• Shanghai Composite down 2.3% to 2973
• S&P/ASX 200 up 0.5% to 5216
• US 10-yr yield down 3bps to 1.76%
• Dollar Index up 0.09% to 94.06
• WTI Crude futures down 2.4% to $40.10
• Brent Futures down 2% to $43.16
• Gold spot down less than 0.1% to $1,250
• Silver spot up 0.3% to $16.99

Top Global News:

• Kuwait Oil Workers Ending Strike After Three-Day Disruption: decision came after minister pledged no talks during strike
• Lexmark to Be Bought by Apex, PAG Asia in $3.6b Deal: agreement for whole company follows interest in parts
• Intel to Cut 12,000 Jobs, Forecast Misses Amid PC Blight: Krzanich to increase focus on data center, Internet of things
• Google’s Curbs on Phone Makers Choke App Competition, EU Says
• Yahoo CEO Says Acting Decisively on Sale as Interest Sharpens: Mayer touts process as 1Q revenue tops estimates
• China’s Stocks Tumble Most in Seven Weeks to Break Trading Calm: Shanghai Composite Index falls below key 3,000 level
• Mitsubishi Motors Admits Manipulating Fuel Economy Test Data: President Tetsuro Aikawa to brief reporters on the matter
• BHP Joins Rio in Cutting Ore Output Forecast as Prices Gain: Australian iron ore output forecast cut by 4% on bad weather
• Daily Mail Said to Be Among Yahoo Bidders, WSJ Says: Verizon, Daily Mail, TPG all submitted separate bids, WSJ says
• UnitedHealth to Exit Obamacare in 16 States to Stem Losses: Texas, North Carolina, Connecticut, Pennsylvania affected
• Trump, Clinton Win New York Primaries to Control Their Races: Presidential front-runners sought to rebound after defeats
• Global Payments to Replace Gamestop in S&P 500: GameStop demoted to S&P MidCap 400; changes effective post-mkt April 22
• Companies reporting earnings today include Coca- Cola, Qualcomm, Abbott, US Bancorp

Looking at regional markets we start in Asia, where stocks traded mixed and off their best levels as sentiment was largely dictated by oil prices. ASX 200 (+0.5%) and Nikkei 225 (+0.2%) were supported by yesterday's gains in the commodity complex after oil futures advanced following a 3rd day of strikes by Kuwait oil and gas workers. This saw Nikkei 225 rise briefly above 17000, while Australian mining names were supported by strength in metals prices which overshadowed BHP Billiton's miss on production and saw the Co. trade in firm positive territory. However, stocks have pared some gains amid a pull-back in crude during Asia hours after a larger than expected API build and reports that Kuwait strikes have now ended , while subdued Chinese markets also dampened the tone with the Shanghai Comp. lower by 2.3% as analysts questions the PBoC's willingness to conduct further monetary easing. 10yr JGBs traded flat as heightened risk-sentiment in Japan was counterbalanced by the BoJ's presence in the market for over JPY 1.2trl of government debt, while there was also a decline in yields led by the super long-end with the 40yr yield falling to record lows.

Top Asian News

• China Default Chain Reaction Looms Amid 192 Day Cash Turnaround: Wait increases risks firms can’t repay debts, Natixis says
• All Japan Sovereigns Yield Below 0.4% as 40-Year Hits Record Low: 40-year yield drops to 0.31%, 30-year falls to record 0.3%
• Kuroda Rejects Idea of Helicopter Money, Citing Legal Hurdles: BOJ governor says notion of helicopter money contradicts the law
• China Said to Mull Shenzhen-Hong Kong Link Approval Before July: Final approval by Chinese regulators may include start date
• HSBC Sees India Yield Dropping to 7% as Rajan Gets Cash Flowing: 3-mo. treasury bill yield slides to lowest since 2010

In a relatively subdued session so far in terms of newsflow, European equities have seen modest downside, following on from choppiness seen in US and Asian hours. In terms of stock specific news, the likes of Heineken, ABB and Accor have all seen strength this morning in the wake of pre market earnings, while Renault underperform, weighed on by their stake in Nissan after Mitsubishi Motors announced they used fuel economy testing methods that were not in line with Japanese regulations, including 468k vehicles made for Nissan.

Fixed income has benefitted this morning from the uncertain mood in equities, with Bunds trading higher, and above the 163.50 level. Analysts at Informa suggest that core paper has also benefitted this morning from Japanese accounts switching out of JGBs. In terms of today's European auctions Germany hosted another respectable Bund auction which drew a b/c in-line with the previous at 1.4 while the UK hosted a strong linker auction.

Top European News

• ASML Sees Rising Sales, Margin Pressure on New Technology: Dutch company trying to fuel demand for new EUV technology
• Commerzbank CEO Says Slow Quarter Means ‘Challenging’ 2016: Blessing says first-quarter will likely be weaker than in 2015
• U.K. Unemployment Posts First Rise Since 2015 as Market Cools: U.K. unemployment rose for the first time in seven months
• Syngenta Ups Cost Cuts as It Targets ChemChina Deal by Year- End: co. reports fifth quarterly sales decline
• ABB’s Profit Beats Estimates on Orders from Power Utilities: maker of power grids reports lower first-quarter profit
• Heineken Beer Volume Beats Estimates on Asia, Americas: 7% increase in shipments soars past analyst consensus of 2.4%
• SAP Sees 2016 Sales on Track After Sluggish Start to Year: Finance chief Mucic said no large acquisitions on horizon
• Russia-Germany Gas Link Polarizes Europe, EU Energy Chief Says: Nord Stream 2 isn’t aligned with bloc’s energy principles

In FX, the yen strengthened 0.2 percent to 109.01 per dollar after Bank of Japan Governor Haruhiko Kuroda said monetary easing is not a promise of a weaker currency or stronger equities. Japanese exports dropped 6.8 percent from a year earlier in March, while imports declined 14.9 percent, data showed Wednesday.

The main event in FX markets this morning was the UK jobs report, which disappointed on both the jobless claims — which rose 6.7k vs -12.5k expected — and a lower than expected rise in average earnings (+1.8% vs 2.3% f/c). We saw a very brief hit on GBP, and with focus in the USD rates, Cable snapped down to 1.4345-50 before edging higher again. This was largely on the tech based support at the previous highs, and we expect to see 1.4400+ heavily offered. This was very much the case last night, and there is even more reason to cap now. Elsewhere, EUR trade is limited ahead of the ECB tomorrow, but the commodity currencies continue to probe higher levels with AUD back above .7800 again while the CAD returns through 1.2700 despite a quiet session for Oil. NZD looks reluctant to retest .7050, despite the GDT auctions beating the futures indications yesterday. European stocks are pretty stable after mixed sentiment in Asia, so the JPY pairs are range-bound to slightly softer in this respect.

In commodities, oil prices were pressured due to the larger than expected increase in API stockpiles, WTI prices are currently down below the USD 42.00/bbl level with the lows of the session at USD 41.30/bbl and later today we will be looking out for DOE inventory levels which will also provide some volatility. Gold has been trading sideways after touching the USD 1245.50/oz support level. Elsewhere, copper and iron ore prices remained firm after yesterday's broad-based commodity gains with the red metal at near 3-week highs while Dalian iron ore futures hit limit-up to print its highest levels since October 2014 alongside expectations of increased steel demand.

On today's calendar we have US Existing Home Sales, DoE crude inventories, while central bankers on deck include ECB's Draghi (Dove) and BoE's McCafferty (Soft Hawk). Companies reporting earnings today include Coca- Cola, Qualcomm, Abbott, US Bancorp

Bulletin Headline Summary from Bloomberg and RanSquawk

• European equities enter the North American crossover in modest negative territory as weakness in energy prices guide price action in an otherwise uneventful session
• GBP has shrugged off disappointing jobs data after GBP/USD ran in to support at the recent previous high for the pair at 1.4347
• Treasuries rise during overnight trading amid drop in crude oil and global equities; China’s stocks tumbled most in two months, pushing a gauge of volatility up from its lowest level this year as turnover surged.
• In the debate over helicopter money, a form of stimulus that many believe is at odds with the European Union treaty, even the option with the fewest legal hurdles risks kicking off a political battle that may contribute to the euro’s demise
• Bank of Japan Governor Haruhiko Kuroda said he isn’t thinking about using so-called helicopter money and that the notion contradicts the law
• Japan’s 40-year bond yield fell to a record low, meaning all the nation’s sovereign bonds yield less than 0.3 percent as investors rush for securities with positive income
• Primary dealers are getting more picky in what they will buy so European sovereign issuers are experimenting with new maturities, smaller auctions and liquidity-boosting measures, while some are consulting more with investors before going ahead with syndicated offerings
• Commerzbank AG Chief Executive Officer Martin Blessing said a “slow” first quarter will make it more difficult to match last year’s profit, just a month after the bank projected an increase in full-year earnings
• Donald Trump and Hillary Clinton won their New York presidential primaries Tuesday, ending losing streaks for both campaigns and allowing the two front-runners to reassert control over their party nominating fights
• Sovereign 10Y bond yields lower; European, Asian equity markets lower; U.S. equity-index futures fall. WTI crude oil, metals mostly lower

US Event Calendar

• 7:00am: MBA Mortgage Applications, April 15 (prior 10%)
• 10:00am: Existing Home Sales, March, est. 5.28m (prior 5.08m); Existing Home Sales m/m, March, est. 3.9% (prior -7.1%)
• 10:30am: DOE Energy Inventories

Central Banks

• 4:15pm: Bank of Canada’s Poloz testifies before Senate panel

DB's Jim Reid concludes the overnight wrap

One of the big themes in 2016 so far has been the weakness in the US Dollar with the Greenback plummeting 5% or so since the turn of the year. Not helped by some soft US housing data, the pressure was on the Dollar again yesterday with the currency finishing down over half a percent to take it to the weakest level since June last year. As a result we saw a number of currencies make year-to-date highs yesterday (including Norway, Canada, New Zealand, Australia and South Africa) while the move in the Dollar also helped to continue the positive tone to the start of the week with the S&P 500 (+0.31%), Dow (+0.27%) and Stoxx 600 (+1.46%) firmer once again, while Oil (WTI +3.27%) broke back up past $41/bbl and above where we closed on Friday ($40.36/bbl) pre-Doha with the rally off the Monday lows a touch above 9%.

That said it’s been a different story for Oil after the US close last night with the news that workers in Kuwait are set to end the 3-day strike which had caused a decent disruption in production levels and was largely attributed to the recovery from the early post-Doha lows at the start of the week. Local press (Al Jarida) are reporting the announcement from the trade union and the news comes just after Kuwait oil’s minister had announced that negotiations with workers would not commence until the strike is halted. On the back of the news WTI is currently over 2% lower this morning at a shade above $40/bbl.

Markets in Asia are fairly mixed following the news, although are trending lower as we type. The Hang Seng (-1.11%) and Shanghai Comp (-2.55%) are currently heavily in the red after opening initially on a positive note, while the Kospi is unchanged. The Nikkei (+0.35%) and ASX (+0.46%) are the relative out-performers although have also given up bigger gains from the open. Commodity sensitive currencies have weakened a tad while metals markets have generally firmed up.
Meanwhile the early data this morning was out of Japan where the March trade numbers were released. Exports were reported as declining slightly less than expected (-6.8% yoy vs. -7.0% expected) however that’s after printing at -4.0% yoy in February. Imports declined a steep -14.9% yoy (vs. -16.6% expected) which is the 15th consecutive monthly fall, with the trade surplus expanding as a result to the highest since October 2010. A reminder that the BoJ is due to meet next Thursday.

The other story overnight is from the US presidential election campaign where both Donald Trump and Hilary Clinton have recorded victories for their parties at the NY primary which was largely as expected.

Earnings season is slowly ramping up and yesterday we had the busiest day so far with 17 companies out with their latest quarterly numbers. The highlight came from Goldman Sachs where once again the big theme was a bigger than expected cut in operating costs helping the bank to exceed EPS guidance, while revenues were a slight miss. As we noted yesterday the bar for earnings is particularly low this season, with some of the headline beats overshadowing what have been huge downward revisions to the consensus street forecast GS’s EPS yesterday of $2.68 was a decent margin above the $2.48 consensus estimate, although a snapshot of that forecast at the end of the last three months shows just how far expectations have fallen in a short space of time (March: $3.51, February: $4.30, January: $4.60). Putting in perspective this quarter’s earnings for GS, net income was 56% lower yoy, while revenue was down about 40%.

Johnson & Johnson and United Health were other corporates who exceeded profit guidance yesterday and which helped contribute to the overall more positive tone for risk assets, however it’s the tech sector which is providing some of the unexpected downside misses so far. Following on from Netflix twenty-four hours earlier, Intel became the latest name to offer a fairly bleak outlook ahead with the announcement that they are to cut up to 12,000 jobs over the next twelve months in what will be the biggest cut back in a decade. Management also downgraded revenue growth guidance which helped to weigh on the share price by a couple of percent in extended trading. Prior to this the Nasdaq (-0.40%) was one of the few markets to close in the red yesterday.

Switching to the macro, yesterday also saw the ECB release the results of its Q1 bank lending survey (BLS). It was generally supportive of an improvement in euro area lending conditions which will offer some relief given recent weakness in bank equities and concerns over the sector. Credit standards for loans to enterprises eased further (net percentage of reporting banks: -6% vs. -4% previous). There was some evidence of an impact from tighter Q1 market conditions in e.g. Italy, but improvement of other factors – increased competition between banks, improved perception of the macro outlook – offset this. Net loan demand from enterprises continued to increase, albeit at a slower rate than the quarter before (+17% vs. +27% previous). This slowdown was mostly focused in Spain, suggesting that the political uncertainty there could be weighing on firms’ borrowing decisions. Meanwhile, credit standards for loans for house purchases tightened (+4% vs. -7% previous), largely driven by the implementation of the EU mortgage credit directive which requires an in-depth creditworthiness assessment of mortgage borrowers. In general banks expect these trends to continue into the next quarter, with a Q2 outlook of continued easing of lending standards for enterprises (-4%) but a tightening of credit standards on housing loans (+7%). Recent weakness in equity prices remains a worry though so we'll continue to watch for anecdotal evidence of Euro bank lending standards before next quarter's release.

In terms of the other data yesterday, the April ZEW survey out of Germany was fairly mixed. While the current situations index declined unexpectedly to the tune of 3pts to 47.7 (vs. 50.8 expected), the expectations index was however up a robust 6.9pts to 11.2 (vs. 8.0 expected) and the highest level this year. Meanwhile, over in the US and as mentioned earlier, the latest housing market indicators were softer than expected. Housing starts were recorded as falling -8.8% mom last month (vs. -1.1% expected), while building permits (-7.7% mom vs. +2.0% expected) also fell sharply. These numbers will be worth keeping a close eye on next month with regards to which way momentum swings in the US housing market in Q2.

Looking at the day ahead, this morning in Europe the early release shortly after we go to print is out of Germany where the March PPI data is due. Later this morning the focus will be on the UK where we get the latest employment report, for which no change to the 5.1% unemployment rate is expected. It’s a quiet afternoon for data again in the US this afternoon with just more housing market data due out in the form of existing home sales in March. There’s also some central bank speak for us to keep an eye on. ECB President Draghi is scheduled to make opening remarks in Frankfurt this morning while the BoE’s Hauser and McCafferty are due to speak. Earnings wise we’ve got 25 S&P 500 companies set to report including Coca-Cola and American Express.