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

Dolan

After a frenetic first three days of the new Donald Trump

presidency, buoyant Wall Street stocks hovered near new record

highs - gradually turning attention back to a punchy corporate

earnings season and economic updates.

Wednesday's tech-led jump in U.S. equity indexes, infused by

Trump's plan to boost investment in artificial intelligence and

impressive Netflix results, saw the S&P500 clock a new

intraday record and volatility gauges subside to the

lowest of the year so far.

Stock index futures stepped back a touch overnight

and Treasury yields ticked higher in the renewed

"risk on" environment, despite brisk demand for the latest sale

of 20-year bonds on Wednesday.

One of the background features of the week so far has been

how heavy sovereign debt sales across developed markets have

been met with robust orders from investors - easing some

early-year fears about government funding. Aside from the

20-year bond sale, bond auctions in Britain, France and

elsewhere have been gobbled up by fixed income funds.

Benign inflation readings from the United States, Canada and

Europe have helped and, at 46 basis points, the estimated "term

premium" embedded in 10-year Treasuries has slipped back to its

smallest of the year.

Also helping has been the retreat in U.S. crude oil prices

to two-week lows, in part due to Trump's pro-drilling

push. On Monday the new president declared a national energy

emergency, aimed at giving him the authority to reduce

environmental restrictions on energy infrastructure and projects

and ease permitting for new transmission and pipeline builds.

TRUMP TALKS TO DAVOS

There was not much new on Trump's new tariff push overnight.

Despite statements on possible new tariffs on China, the

European Union, Canada and Mexico prior pledges on "Day One"

hikes have not materialised - leaving the issue lingering over

the weeks ahead.

Instead on Wednesday, Trump turned his attention to Russia,

saying he would add new tariffs to his sanctions threat against

Moscow if the country does not make a deal to end its war in

Ukraine.

All eyes will be on Trump's virtual appearance at the World

Economic Forum in Davos at 11:00 a.m. ET.

On Wall Street, Thursday brings a return of economic updates

after a data-starved week so far, and weekly jobless claims

numbers will be watched closely again later, with the first

sweep of January business surveys also about to unfold.

The day's earnings diary is topped by Texas Instruments and

General Electric, with markets now bracing for next week's

updates from Big Tech megacaps of the so-called Magnificent

Seven.

Overseas, Chinese stocks perked up a bit after

Beijing announced further measures on Wednesday to bolster the

market there - although tariff threats limited any gains.

Under the plan jointly released by six financial regulators

including the securities regulator, big state-owned insurance

companies will be directed to raise the size and proportion of

their investments in Chinese A-shares traded on the mainland and

equity funds.

But overseas appetite for China risk looks tentative at

best. More than half the American businesses in China, the most

in five years, say they are concerned about a further

deterioration in the bilateral relationship between the world's

two largest economies, a survey published on Thursday showed.

In Europe, stocks also retained much of their gains

to new records - with another European Central Bank interest

rate cut next week now widely expected and ECB officials

seemingly comfortable with market pricing for more cuts.

A more hawkish Norwegian central bank held its key policy

rates unchanged on Thursday, as expected.

The dollar traded in narrow ranges against major

peers.

Japan's yen was flat at 156.49 per dollar with

markets pricing 96% odds of a quarter-point Bank of Japan hike

on Friday and seemingly now comfortable with the latest

tightening after months of trepidation about the move.

With another month of sub-target inflation recorded last

month, the Bank of Canada is also seen as likely to reduce rates

by a quarter point next Wednesday

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

markets later on Thursday:

* U.S. weekly jobless claims, Kansas City Federal Reserve's

January business survey; euro zone January consumer confidence;

Canada November retail sales

* U.S. corporate earnings: Texas Instruments, General Electric,

CSX, Northern Trust, Union Pacific, Intuitive Surgical,

McCormick, Elevance

* World Economic Forum in Davos - including Bank of Spain

governor Jose Luis Escriva, German Finance Minister Joerg Kukies

and Argentina President Javier Milei

(By Mike Dolan, editing by XXXX

[email protected])