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

Dolan

Tesla's 20%-plus stock surge whets investor appetites for

next week's earnings from most of the rest of the "Magnificent

7" of U.S. megacaps - with overseas markets keeping close tabs

on weekend elections in Japan and next week's UK budget.

A relatively quiet end to a busy week sees market attention

drift to numerous big events coming down the pike, not least the

U.S. election in 11 days time. But the related edginess in the

Treasury market earlier this week seems to have settled for now

and the White House race remains far too close to call.

Relatively upbeat economic numbers on business activity,

jobless claims and housing did little to disturb the slightly

calmer bond waters - especially as business price pressures

appear to have eased further and oil prices retreated again.

Ten-year yields hovered on 4.2% early on Friday,

with the Federal Reserve's cyclical rate trough now seen as high

3.5% - close to Fed policymakers' highest estimates of the

so-called 'neutral' long-term policy rate.

The dollar index also held the line with Treasuries.

For stocks, all the action was in earnings - with Tesla

shares clocking their biggest single-day gain in over a

decade as CEO Elon Musk's forecast of surging sales reassured

investors he was still focussed on a core electric car business.

The stock spike puts Tesla shares back in the black for the

year to date and now tilts the market to updates from the other

six megacaps next week - starting with Alphabet's quarterlies on

Tuesday, Microsoft and Meta on Wednesday and Amazon and Apple on

Thursday.

Overall, the S&P500 ended three days of losses and

closed marginally higher on Thursday, with futures up

further ahead of Friday open.

Japan's yen nudged lower through 152 per dollar as

Sunday's election results and Wednesday's Bank of Japan policy

decision were awaited, with data showing Tokyo inflation ebbing

this month against a backdrop of fresh government warnings about

excessive currency moves.

For some investors, the risk of Japan ending up with a

minority coalition government after the weekend poll raises some

concerns that the BOJ could face complications in its quest to

gradually normalise its super-easy interest rates.

Several recent polls have increased speculation the ruling

coalition could lose its majority in parliament, which could

cost new premier Shigeru Ishiba his job or force his Liberal

Democratic Party to look for another coalition partner to stay

in power.

And such a prospect may deprive the BOJ of the consensus

support needed to push ahead with raising rates, some reckon.

Britain provided the other big focus of the weekahead, with

reports of significantly higher borrowing to fund a public

investment push unnerving UK government bonds on Thursday.

Finance minister Rachel Reeves said that next Wednesday she

will announce a change to the measure of public debt that the

government targets over a five year period in order to allow

billions of pounds of more borrowing for investment.

Economists estimate that had this measure been in place in

March, it would have created scope for more than 50 billion

pounds ($65 billion) of extra borrowing, equivalent to about

1.5% of Britain's annual economic output.

In stark contrast to the retreat in U.S. yields on Thursday,

the British bond market juddered at the prospect of higher

borrowing tallies - with 10-year gilt yields hitting

their highest in almost four months and the five-year yield

premium over Germany reaching its highest this year.

The pound has held steady to firmer,

however, showing no wider disturbance to investor confidence.

Elsewhere, most stock markets in Europe and Asia were higher

on Friday - with Japan's Nikkei the underperformer.

Above-forecast German business confidence readings from Ifo

eased some of the gloom about Europe's biggest economy - but

there are persistent concerns about the country's mammoth auto

sector as trade tensions with China build.

German automaker Mercedes-Benz fell 3.7% after

third-quarter earnings in its core car division massively missed

estimates, while France's Valeo shed 7.5% as the

automotive supplier cut its annual sales guidance for the second

time this year.

Key developments that should provide more direction to U.S.

markets later on Friday:

* US September durable goods orders, University of Michigan

October consumer survey; Canada Sept house prices, August retail

sales and government budget balance

* US corporate earnings: Aon, Colgate-Palmolive, Centene, HCA

Healthcare

* International Monetary Fund and World Bank Annual Meetings in

Washington, speakers include German Finance Minister Christian

Lindner, Budesbank President Joachim Nagel and Bank of Canada

Governor Tiff Macklem

* Boston Federal Reserve Bank of President Susan Collins speaks

(By Mike Dolan,

[email protected])