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

Dolan

Ailing Tesla shares caught a rare 10% break overnight

despite the electric auto giant's quarterly revenue miss,

underscoring a better market mood as Meta steps up to

the earnings dock later and U.S. business activity cools in

April.

Deep in a global price war and hit by waning worldwide

demand for electric vehicles, Tesla said its quarterly revenue

fell for the first time since 2020 and by more than Wall St

analysts had forecast. Revenue per vehicle plunged 5% from year

ago.

But perhaps reflecting the extent of short-selling that fed

this year's 42%-plus stock drop up to Tuesday's close, shares

surged once the report was released after the bell - ostensibly

cheered by somewhat vague plans to introduce low-cost "new

models" by early 2025 and boss Elon Musk's update.

More buoyant tech stocks generally helped as the

megacaps shape up to report their quarterlies through this week

and next. The S&P500 at large clocked a second straight

day of gains on Tuesday, which saw the index recover more than a

third of the near-6% peak-to-trough slide this month.

Facebook parent Meta Platforms ( META ), one the big winners

from the artificial intelligence boom of the past 18 months and

whose stock is still up more than 40% this year, reports after

the market close on Wednesday.

In the background, the U.S. Senate voted by a wide margin

late Tuesday in favor of legislation that would ban TikTok in

the United States if its owner, the Chinese tech firm ByteDance,

fails to divest the popular short video app over the next nine

months to a year. The move ups the ante in the increasingly

tense U.S.-China tech standoff.

The four-year battle over TikTok, which is used by 170

million people in the United States, is just one front in a war

over the internet and technology between Washington and Beijing.

Last week, Apple ( AAPL ) said Beijing had ordered it to remove

Meta Platforms' ( META ) WhatsApp and Threads from its App Store in China

due to Chinese national security concerns.

U.S. Secretary of State Antony Blinken arrives in Shanghai

on Wednesday with U.S.-China ties fragile and with a daunting

array of unresolved issues between the two global rivals.

As Blinken hits Beijing, President Joe Biden will sign a

bill into law that provides billions of dollars of new aid to

Ukraine for its war with Russia, a bipartisan victory for the

president as he seeks re-election.

Also lifting investor spirits yesterday was this month's

flash U.S. business readings from S&P Global that showed a

surprising slowdown in overall activity in April and ebbing

price pressures and labor costs.

Even though the miss may seem worrying, markets read the

report as a potential relief to the increasingly hawkish Federal

Reserve - helping Fed rate futures and Treasuries rally.

Helping the $69 billion two-year note auction in the

process, the report dragged two-year Treasury yields

back from 5% - although they continue to hover about 4.94% early

on Wednesday as another $70 billion of 5-year notes is up for

grabs later in the day.

The markets didn't run away with the S&P Global business

survey for two reasons - they want to see any April slowdown

confirmed by equivalent ISM surveys due next week and they were

sideswiped by rebounding March new home sales data released

shortly after.

And that kept the dollar buoyed, not least against

Japan's yen - where it inched ever closer to 155 yen at

34-year highs just as the Bank of Japan meets this week.

The weak yen and rallying tech sector saw Japan's Nikkei

outperform generally buoyant world stocks on Wednesday,

with gains of more than 2%.

The U.S. business readings stand in contrast to the

better-than-forecast purchasing managers' surveys from the euro

zone and Britain.

Reinforcing those numbers on Wednesday, German business

morale captured by the Ifo survey improved more than expected in

April.

European bourses and Wall St futures were higher as earnings

streamed in on both sides of the Atlantic.

Shares in French luxury group Kering were a

standout mover, falling by almost 10% in early trade to their

lowest level in over 6 years as the market digested news of a

likely 40%-45% plunge in first-half operating profit.

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

on Wednesday:

* US March durable goods orders

* US corporate earnings: Meta Platforms ( META ), IBM, Ford, Boeing, Lam

Research, General Dynamics, CME, AT&T, Hasbro, Norfolk Southern,

Universal Health, Molina Healthcare, Amphenol, Chipotle, Masco,

Bunge, Otis, Hilton, Fortive, Westinghouse, Interpublic,

Teradyne, United Rentals, Tyler Technologies, Align Technology,

Avery Dennison, TE Connectivity, Rollins, O'Reilly Automotive

etc

* European Central Bank board member Isabel Schnabel speaks;

Bank of Canada releases minutes of latest policy meeting

* US Secretary of State Antony Blinken visits China. German

Chancellor Olaf Scholz meets British Prime Minister Rishi Sunak

in Berlin

* US Treasury sells $70 billion of 5-year notes

(By Mike Dolan, editing by Christina Fincher,

[email protected])