A look at the day ahead in U.S. and global markets from Mike

Dolan

Partly due to the absence of top-tier economic news this week,

world markets have found a relatively calm plateau with stocks

near their latest records - and even fizzing metals prices

cooling a touch.

Wednesday's release of both Nvidia's ( NVDA ) quarterly

earnings and the Federal Reserve's latest meeting minutes loom

largest as potential game changers - but the broad constellation

of influences remains bullish.

After recording its lowest close since just before the

pandemic on Friday, Wall St's VIX volatility gauge is

comfortably subdued and even Treasury market volatility

has subsided to seven-week lows.

U.S. financial conditions, as measured by the Chicago Fed's

index, are at their easiest since January 2022 - just before the

Fed kicked off its credit tightening campaign. And even though

futures markets retain expectations of about 41 basis points of

Fed easing over the remainder of this year, Fed officials

themselves seem in no rush.

U.S. economic surprises are indeed at their most negative

since January 2023, but that's reflecting a welcome cooling of

growth that the Atlanta Fed still estimates to be running close

to 3.5% this quarter. Excluding the energy sector, annual U.S.

earnings growth is running north of 10% and rising.

And even some of the more doggedly bearish Wall St

strategists are throwing in the towel on year-end targets.

Morgan Stanley's Mike Wilson on Monday lifted his base-case

12-month forecast for the S&P500 to 5400 points - only 2%

from Friday's close but 20% higher than his previous forecast of

4500.

Moving into Tuesday's session, a packed diary of Fed

speakers dominates. S&P 500 futures are flat, with the Nasdaq

having eked out another record on Monday. Treasury

yields edged down a touch and the dollar has

stalled broadly.

Canada's April inflation release might feed the voracious

appetite for price clues - with headline annual consumer price

gains there expected to ease to 2.7% from 2.9%.

But much of the speculation now spins on the artificial

intelligence theme and Nvidia's ( NVDA ) latest update tomorrow.

Traders are pricing in a big move for Nvidia's ( NVDA ) shares after

the chipmaker reports, though expectations for volatility are

more muted than in the past.

Nvidia's ( NVDA ) options are primed for an 8.7% swing in either

direction by Friday, according to data from options analytics

firm Trade Alert. That would translate to a market cap swing of

$200 billion - larger than the market capitalization for about

90% of S&P 500 companies.

While massive by most measures, that implied move would fall

far short of the 16.4% jump Nvidia's ( NVDA ) shares notched after the

company's most recent quarterly earnings report.

Commodities too have been pumped up of late, mostly in

metals where a mix of China's latest property market rescue

plans and considerable speculative activity sent copper

and gold to new records on Monday.

But even these have calmed down a bit today, with both

stepping back from new milestones overnight.

Oil prices too fell back from Monday's three-week

highs - helping take some of the heat out of Treasury yields.

Asian and European bourses slipped back earlier. Hong Kong's

Hang Seng was the big underperformer with losses of more

than 2% as doubts linger about the effectiveness of China's

latest attempts to backstop its housing bust and geopolitical

rhetoric around Taiwan appearing to have risen several notches

in recent days.

G7 finance ministers, meantime, head to Italy this week for

a meeting in Stresa on Thursday.

U.S. Treasury Secretary Janet Yellen is pushing for them to

agree on a plan to use the income stream from some $300 billion

worth of frozen Russian sovereign assets to back a larger loan

to Ukraine.

Proponents of the plan say this could provide up to $50

billion up front for Ukraine, without confiscating the assets,

as opposed to just using about $3.5 billion a year in interest

earnings.

Speaking in Frankfurt on Tuesday, Yellen also said the

United States and Europe need to respond to China's industrial

policies in a "strategic and united way" to keep manufacturers

viable on both sides of the Atlantic.

Key diary items that may provide direction to U.S. markets later

on Tuesday:

* Canada April consumer price inflation

* US corporate earnings: Autozone, Lowe's, American Resources,

Trip.com, Urban Outfitters, XP, Viasat, Alvotech etc

* Federal Reserve Board Governor Christopher Waller, New York

Fed President John Williams, Fed Vice Chair for Supervision

Michael Barr, Atlanta Fed President Raphael Bostic, Cleveland

Fed chief Loretta Mester, Boston Fed chief Susan Collins and

Richmond Fed boss Thomas Barkin all speak. Bank of England

Governor Andrew Bailey speaks

(By Mike Dolan, editing by Christina Fincher,

[email protected])