-Growing optimism from Fed Chairman Bernanke early in the US session and a strong draw from the US TALF program have been once again overshadowed in Asian hours by ominous uncertainty about the impending stress-test results for US financials. Whereas in the prior session it was the press speculation that as many as 10 banks may require additional capital, this time the scrutiny is being limited to Bank of America alone. However, the sheer size of the forecasted $34B capital raise request is translating into a more magnified bout of risk aversion across equity, currency, and bond markets than one seen yesterday. The prevalence of the Bank of America speculation calling for a raise of 50% of its market cap is also weighing heavier on sentiment, with the story appearing in NY Times and WSJ after the initial rumor surfaced on the wires around 9:30pmET. Asian bourses and US index futures reversed initial gains, trading around the session's worst level going into the final hour of the day. S&P/ASX was up 0.4% pre-BAC report but last seen off by 0.7% while Korea's Kospi was lower by 0.9% after a near 1% initial rally. Nikkei225 remains close for the final day of golden week. Taiwan's Taiex remained relatively immune to US financials worries, remaining at the forefront of regional gainers in recent sessions with another 2.7% rise to gain 16% in the last 4 sessions. In US equities, front-month S&P futures point to a lower open with a 1.2% session decline.

- Although market sentiment was simultaneously clouded by the Bank of America rumors, there were some notable rays of sunshine from two rounds of Aussie economic data. March retail sales saw their biggest rise in three months and their second-best increase in years with a 2.2% gain v 0.5% expected and -2.0% prior. Likewise, Australia March trade surplus was also second only to October in at least 3 years, coming in at A$2.45B V A$1.7BE. Surplus remained driven by contracting imports, but exports leveled off to unchanged. Most striking was Australia's export levels to its largest trading partner China rising by the highest margin of 23% in years to $4.35B, also the highest multi-month level. Australia's Finance Ministry and Treasury officials subsequently reflected on better than expected retail sales and trade data as evidence that the govt stimulus is working.

- In other notable Asian hours session speakers, Fed's Yellen remarked on the recovery being more gradual and less V-shaped, with slow US growth reemerging in the 2nd half and unemployment rising up to 9.5% by the end of the year as the current jobless level understates the present conditions of labor decline. PBOC Advisor reiterated his view that China's economy would grow somewhere between 7-8% in 2009 and also extended that growth range to 2010. Earlier, the IMF urged Asian central banks to cut rates further and maintain a "forceful" fiscal and monetary policy through 2010.

- With Nikkei remaining on holiday, share-specific news were centered around Australia, where declining hard commodity prices sparked about 2% of losses for BHP and Rio Tinto. In Aussie retailers, David Jones' Q3 Revenue was down 9% at A$412M while Harvey Norman was cut at JP Morgan. Top-tier financial Westpac traded up 5.5% at session's best levels despite cutting its interim dividend for the first time in 17 years. The company reported H1 net profit of A$2.18B v A$2.25Be, but Rev well above estimates at A$8.31B v A$7.41Be. In other Aussie financials, NAB was unchanged while MacQuarie fell about 2%.

- In currencies, resurfacing risk aversion has once again pushed USD and JPY higher following the BAC rumor. EUR/USD traded below 1.3260, GBP briefly retested 1.50, and USD/CHF rallied as high as 1.1380. Japanese Yen retested 98.00 against USD and also briefly fell below the psychological 130 figure against EUR. In commodity FX, AUD retraced its post RBA hold gains all the way to 0.7330s, while USD/CAD briefly rose back above 1.18 handle.

- Crude oil prices are little changed at the time of writing, after declining by more than 1% during the NY session. In terms of oil supplies related news, API disclosed that last week crude inventories unexpectedly declined (API PETROLEUM INVENTORIES: CRUDE: -1M V +2.5ME;). Later today, the US Department of Energy will release its crude inventories report for the prior week. According to 1 survey, US crude inventories are expected to have risen by 2.5M barrels. With respect to OPEC, a Saudi Arabia Aramco executive was quoted as saying that Saudi Arabia's oil output was 8M bpd, after the Saudi oil minister Naimi was quoted in late April as saying that the country was producing less than 8M bpd. Spot Gold is higher and trading above $900/oz as markets await the results of the US bank stress tests, upcoming European central bank interest rate decisions and the US non-farms employment report. During the US session, gold prices rose by more than $2.00, inline with the decline in US equities. In terms of the outlook for gold prices, one factor that traders are paying close attention to is how Indian buyers will react with prices around $900/oz, as India is the world's largest buyer of gold.