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

Dolan

A sharp retreat in oil prices and a rare joint warning from

major economies against excessive dollar strength have helped

calm restive markets just as Big Tech earnings start to hit.

A volatile start to April looked like getting out of hand

this week as a combination of stern Federal Reserve warnings

about stubborn inflation and geopolitical stress sent the dollar

rocketing and seeded four straight daily losses for Wall St

stocks.

But there's been some respite into Thursday's session.

Despite the Middle East tensions and punchy U.S. economic

readouts, U.S. crude prices turned tail and have now

recoiled some 6.5% from Friday's 2024 highs to levels last seen

before Israel's attack on Iran's Syrian consulate on April 1.

Surging U.S. crude inventories, poor economic numbers from

China for March and a U.S. warning about releasing more of its

Strategic Petroleum Reserve if necessary have all reined in oil.

And it's retreat eases at least some of the inflation

anxiety irking bond markets and the Fed and U.S. Treasury yields

have fallen back in tandem. Having briefly topped 5% this week,

two-year Treasury yields have dropped 10 basis

points since.

The dollar, similarly, has come off the boil - partly

after a warning shot from Japan, South Korea and the United

States about potentially destabilising currency moves in Asia.

With markets keeping an eye on G7 and G20 finance chiefs in

Washington at the International Monetary Fund meetings, the rare

three-way statement agreed to "consult closely" on FX markets,

acknowledging concerns from Tokyo and Seoul over their

currencies' recent sharp declines.

The dollar/yen pair fell back slightly from 34-year

highs, although it remains stuck above 154, and South Korea's

won backed away from its weakest in almost 18 months.

Easing market concerns that China may allow its yuan

to weaken into a competitive regional exporting scramble too,

China's deputy central bank governor Zhu Hexin separately on

Thursday restated Beijing's "determination in keeping the yuan

exchange rate basically stable."

The steadier bond and currency complex helped soothe edgy

stock markets around the world as first quarter corporate

earnings stream in and attention switches to major tech sector

updates.

After Dutch chip equipment firm ASML skidded more

than 7% on its earnings miss on Wednesday, there was better news

today from Taiwan's chipmaking giant TSMC as it

reported a beat that rides the wave of demand related to the

artificial intelligence boom.

Streaming firm Netflix ( NFLX ) kicks off the U.S. Big Tech

reporting season later on Thursday.

The upshot is U.S. stock futures are slightly firmer ahead

of the bell today, but the VIX volatility gauge remains

elevated above 18 after the four daily losses for the S&P500 in

a row and cumulative losses of almost 5% from the record high

set late last month.

Financial stocks have had a rough week, with heavy

earnings-related share price swoons for Travelers and

U.S. Bancorp ( USB ) on Wednesday.

In the central banking world, the Fed warnings this week

about keeping interest rates restrictive for longer were not

matched by its European peers.

European Central Bank Vice President Luis de Guindos said

the ECB has made it "crystal clear" that interest rates could be

cut in June - even if policy decisions beyond that remain up in

the air.

Elsewhere, Bitcoin steadied after a one-month slide

of almost 20% took it to 6-week lows below $60,000 on Wednesday

- with this weeks 'halving' event seen as largely priced in

already.

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

on Thursday:

* US corporate earnings: Netflix ( NFLX ), Blackstone, Comerica, PPG,

Intuitive Surgical, DR Horton, March & McLennan, Snap-On,

KeyCorp, Elevance Health, Genuine Parts

* Philadelphia Federal Reserve's April business survey, US March

existing home sales, weekly jobless claims

* G20 finance ministers and central bankers gather at

International Monetary Fund's Spring meeting in Washington

* New York Federal Reserve President John Williams, Fed Board

Governor Michelle Bowman and Atlanta Fed chief Raphael Bostic

speak; European Central Bank vice-president Luis de Guindos

presents ECB annual report to European Parliament, ECB

policymakers Isabel Schnabel Mario Centeno, Gediminas Šimkus and

Boris Vujcic all speak; Bank of England policymaker Megan Greene

speaks

* US Treasury sells 5-year inflation-protected notes, 4-week

bills

(By Mike Dolan, editing by Kirsten Donovan;

[email protected])