While events in Ukraine have once again broken out into lethal fighting, and in a surprise development the Chinese Yuan crossed the 6.25 line for the first time in two years threatening to accelerate the unwind of carry trades which have a 6.25-6.30 point of max pain, futures remain completely focused solely on the strong after-hours results from Apple and Facebook which have helped push Spoos overnight to near record levels once again. The biggest push was given to NASDAQ futures which are back up 1% with optimism for US tech returning with the material earnings beats from both Apple ($11.62 EPS vs Est $10.17 EPS) and Facebook ($0.34 Adj EPS vs $0.24 forecast). Shares in both companies rose in afterhours trading with Facebook up +5% and Apple up more than +7% (supported further by the announcement that the company was expanding its share buyback plan to $90bn from $60bn). Not even the Nikkei being down 1%, the SHCOMP down 0.5% and the USDJPY once again treading water could put a dent in the tech-driven euphoria, which somehow also managed to slam gold and silver to month lows.

On today's calendar we have initial claims which consensus expects to rise to 315K from 304K, but far more important than layoffs (since hiring is well below pre-recession levels), is the Durable Goods report also at 8:30am which will show whether or not the long suffering and longer expected capex boom is finally coming.

Bulletin summary headlines from Bloomberg and RanSquawk

• Treasuries little changed before week’s auctions conclude with $29b 7Y notes, WI yield 2.315%; drew 2.258% in March.
• 5Y notes sold yesterday drew 1.732%, 0.6bp above WI yield at 1pm according to Stone & McCarthy and highest since May 2011
• ECB’s Draghi said any worsening of the medium-term outlook for inflation in the euro area could be the trigger for broad-based asset purchases
• Spain sold EU2.65b 10Y bonds at a record low 3.059%, down from 3.291% at a previous sale on April 3
• Ukraine said its forces entered the city of Slovyansk and killed five pro-Russian separatists as it stepped up an offensive in the east, a day after the government in Moscow warned it would respond if Russians were attacked
• Bank of Japan officials are increasingly concerned the nation’s bond market is failing to reflect emerging inflation, raising the risk of a sudden surge in yields, according to people familiar with the matter 
• German business confidence rose in April, with the Ifo institute’s business climate index advancing to 111.2 from 110.7 in March
• Obama warned China the U.S. would protect East China Sea islands administered by Japan and urged the two countries to peacefully resolve a dispute over the territory that has raised tensions across Asia
• Sovereign yields mostly higher. Asian stocks mostly lower, with Nikkei -0.9%, Shanghai -0.5%. European equity markets, U.S. stock futures gain. WTI crude and copper higher, gold little changed
• European equities are seen higher across the board (Eurostoxx50 +0.9%) amid European M&A activity, positive EU earnings, Apple earnings and a dovish Draghi. E-Mini S&P futures have now retraced all of the biotech/Ukraine led sell-off and are now 10 points off record highs.
• ECB's Draghi said that that bond and money markets could cause the central bank to act with potential rate cuts, asset purchases and an extension of full-allotment tools.
• Spot gold on the lowest levels of the month trading below the 100 DMA, with no real levels of support until USD 1238/oz, which was last seen at the end of Jan 2014.
• Later will see the release of US weekly jobs data, durable goods, EIA nat gas, comments from ECB's Constancio and a host of earnings.

US Event Calendar

• 8:30am: Durable Goods Orders, March, est. 2% (prior 2.2%);
  • Durables Ex Transportation, March, est. 0.6% (prior 0.2%, revised 0.1%)
  • Capital Goods Orders Non-def Ex-Aircraft, March, est. 1.5%  prior -1.3%, revised -1.4%)
  • Capital Goods Shipments Non-def Ex-Aircraft, March, est. 1% (prior 0.5%, revised 0.6%)
• 11:00am POMO: Fed to purchase $450m-$700m in 2024-2031 sector

Asian Headlines

Nikkei 225 closed down by 0.97% on fears of lower guidance given Japan's recent sales tax rise as Japanese earnings season starts. Shanghai Composite closed down 0.5% as the PBoC conducted the 20th consecutive liquidity drain.

However, the Hang Seng (+0.24%) closed higher as China Unicom, China's 2nd mobile operator, reported strong earnings. JGBs closed lower by 2 ticks despite the weakness in Japanese stocks. (RANsquawk)

EU & UK Headlines

ECB's Draghi struck a dovish tone highlighting that tensions in the bond and money markets could cause the ECB to act on policy (specifically highlighting rate cuts, asset-purchases and an extension of full-allotment as tools on the table). These comments comes as excess liquidity in the Euro-area fell below EUR 100bln for the first time since 2011. ECB sources suggest no consensus now on need for May policy action, which is in line with ECB Nowotny comments yesterday.

German IFO survey beat expectations (111.2 vs. Exp. 110.4) which provided support for EUR/USD and equities. Peripheral bonds also benefited from a well-covered Spanish auction, with all three lines sold at the lowest funding cost on record.

US Headlines

According to sources, the White House are considering a former American Bankers Association lawyer as a possible nominee to the board of the Fed. (RTRS) Currently the Fed is operating with just four of its seven board positions filled. Today sees large-cap earnings from Visa, 3M, Microsoft, Caterpillar and Amazon.com, with markets keen to see if the companies repeat the forecast-beating earnings from Apple after-market yesterday.

Equities

Apple shares trade higher by 7.5% pre-market after their impressive earnings report with the E-Mini S&P trading at 3-week highs, paring the recent biotech and momentum name inspired sell-off. E-mini's now trade back in touching distance of record highs. European equities are higher across the board (Eurostoxx50 +0.9%) further buoyed by positive M&A news from Alstom (+14%), Scania (10%) and Telekom Austria (+6.75%), which are the best performing stocks across Europe.

FX

The EUR's initial strength (led by better-than-expected IFO) was pared following Draghi's dovish speech. NZD is one of the outperforming currencies following the RBNZ's 25bps rate hike and slightly hawkish statement.

Commodities

Spot gold ( USD -6.70) trades at is lowest levels in April trading through its 100 DMA and WTI moves higher (USD 0.41) in line with stronger equities.

On the geopolitical front Ukraine's armoured vehicles enter separatist-held Slovyansk. This comes after earlier reports that there had been a shootout in the area resulting in deaths and injuries and Obama has announced that the US is ready to move on additional Russian sanctions. (BBG)

Jim Reid concludes the overnight recap:

Onto markets and still elevated tensions in the Ukraine and disappointing US data led to softness in markets yesterday in spite of stronger than expected European data. However strong after-hours results from Apple and Facebook have helped US futures overnight. Prior to these earnings reports the S&P 500 closed down -0.22% with the NASDAQ continuing its 2014 underperformance, falling a further -0.83%. The NASDAQ is now down -1.2% YTD (vs the S&P500’s +1.5%). Overnight NASDAQ futures are back up 1% with optimism for US tech returning with the material earnings beats from both Apple ($11.62 EPS vs Est $10.17 EPS) and Facebook ($0.34 Adj EPS vs $0.24 forecast). Shares in both companies rose in afterhours trading with Facebook up +5% and Apple up more than +7% (supported further by the announcement that the company was expanding its share buyback plan to $90bn from $60bn).

In spite of these better than expected earnings figures, Asian markets have struggled to make much headway overnight with the Nikkei down -0.44%, the Hang Seng up +0.19% and the Shanghai Composite unch. In other news the Reserve Bank of New Zealand raised interest rates for the second month on the back of rising inflation concerns. The NZD has strengthened around 0.5% vs the AUD. Elsewhere Bloomberg is reporting that General Electric Co. is in talks to buy France's Alstom SA in a $13bn deal (a 25% premium) which would make it GE’s biggest acquisition ever. The story suggests a deal could be announced as early as next week. It'll be interesting to see whether this boosts European equities this morning. Clearly there have been a lot of M&A stories already this week, especially in the pharma space.

Prior to all this yesterday saw equity weakness across Europe with the Core countries and Italy bearing the brunt of the moves with the DAX and CAC closing down –0.58% and –0.74% respectively whilst the FTSE MIB was down –1.18%. This weakness was felt in credit markets too with iTraxx Main and Xover +1 and +4bps wider respectively. Markets weren’t helped by the continued build up of tensions in the Ukraine yesterday as both the Ukrainian and Russian governments issued statements. The government in Kiev stated it was ready to resume operations against militants in the country’s eastern cities whilst Russia pledged to defend its citizens inside Ukraine, with the Russian foreign minister drawing parallels to the Russian invasion of Georgia in 2008, saying his country was prepared to “respond” if its “legitimate interests” were “attacked directly, like they were in South Ossetia.” This news flow appeared to override what was a relatively good day of European data with April euro-area flash PMI’s up 0.9 points to 54 (vs expectation of no change), the highest level since May 2011. This broad figure reflected a stronger than expected service reading in Germany (55 vs 53.3E) offsetting a weakening of the French Composite to 50.5 (from 51.8). According to our European economists the Euro area April flash readings are consistent with growth between +0.4% and +0.5% in Q2, slightly higher than their current forecasts. This generally positive news flow carried over to our side of the Channel where the BoE released its April 9th minutes in which it said it saw Britain’s recovery, ”building momentum,” even as, “near-term inflationary pressure appeared to have eased further.” All of this comes on the back of the IMF’s report earlier in the month that it expects the UK to be the fastest growing of any of the G7 economies this year.

Over in the US we saw weaker than expected March data on new home sales which fell -14.5% to +384k (vs consensus expectation of +450k). DB’s Joe LaVorgna puts this fall down to a continued weather-related hangover as he notes sales closed in March are largely a function of buyer activity in the prior two months.

Looking to the day ahead it’s relatively quiet on the data front with the stand out release being US initial jobless claims. DB’s Joe LaVorgna expects a reading of 325k whilst BBG consensus is expecting 315K (vs 304k previously).