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

Dolan

World markets stalled on Tuesday as another heavy earnings week

for megacap stocks cranked up, with renewed slippage in Japan's

yen and U.S. Treasuries eyed closely in the background.

Major macro market moves are likely in check for now as the

Federal Reserve starts its latest two day policy meeting - with

Wall Street also eyeing first quarter results from two more top

ten world caps Amazon and Eli Lilly.

News of a larger U.S. Treasury borrowing slate for the

coming quarter than previously estimated unnerved the bond

market a touch overnight. Blaming lower cash receipts, the

government said late Monday it expects to borrow $243 billion in

the second quarter - some $41 billion more than it said in

January.

But currency markets remained focussed on the fate of the

yen as it fell again earlier on Tokyo's return from Monday's

public holiday - during which suspected official intervention

lifted it from a trough of 160 per dollar.

As the Nikkei stock benchmark jumped more than 1% on

its return from the long weekend, the Japanese currency

weakened almost a full yen from Monday's New York close to

within a whisker of 157 - almost 1% down from levels seen before

Friday's Bank of Japan meeting and despite yesterday's wild

swings.

Without confirming Monday's intervention, Japan's top

currency diplomat Masato Kanda said on Monday that 'speculative,

rapid and abnormal' yen moves could not be overlooked and on

Tuesday said the authorities were ready to act around the clock.

"We are ready 24 hours, so whether it's London, New York or

Wellington, it doesn't make a difference," he told reporters.

Kanda also said finance ministers of Japan, China, South

Korea and ASEAN countries will meet on the sidelines of the

upcoming Asian Development Bank's annual meeting in Tbilisi,

Georgia.

Whatever the merits or otherwise of the yen's accelerating

fall to 34-year lows for Japan's own economy, there's some

trepidation that it may upend the competitive landscape across

Asia's major exporting nations and South Korea and others are

watching closely.

To that end at least, China continues to hold the yuan

relatively stable against the dollar - although its

recently buoyant stock markets wobbled a bit again

Tuesday after a mixed set of monthly business surveys showed a

slowing of activity there in April.

China's Politburo, a top decision-making body of the ruling

Communist Party, said on Tuesday it will step up its support for

the economy, flexibly using policy tools that include banks'

reserve requirement ratios and interest rates.

It also said it would coordinate and improve policies to

reduce housing inventories and optimize policy measures for new

housing to address the ongoing property sector bust - though the

statement seemed to stop short of detailing the sort of major

initiatives that markets had speculated about on Monday.

In Europe, the heavy earnings season dominated - but there

was some relief that April consumer price inflation readings for

the euro zone came in as expected at annual 2.4%, core inflation

rates ebbed and flash readings for quarterly growth in the bloc

beat forecasts with a 0.3% expansion.

Money markets are more than 70% priced for the first

European Central Bank interest rate cut as soon as June and the

euro held steady.

That's despite the contrast with Fed expectations, where

futures now don't fully price a quarter point off rates until

after November's election.

With the Fed kicking off this week's two-day meeting on

Tuesday, it's widely expected to hold the line again - though

there is some focus on whether it will reveal anything on

slowing its balance sheet rundown of Treasury holdings.

Irked by the 'higher for longer' rates prospect, heavier

second-quarter borrowing plans and even the chance Japan may

soon be a seller of Treasuries to fund intervention to support

the yen, 10-year yields nudged higher again on

Tuesday to 4.65%.

In company news, HSBC's ( HSBC ) stock rose 2% after Chief

Executive Noel Quinn said he plans to step down, marking the

surprise departure of a hard-nosed leader who has overseen a

raft of asset sales, guided the lender to record profit and

lifted its share price.

A former head of the bank's markets business who was

appointed to the No. 2 role over a year ago, Chief Financial

Officer Georges Elhedery is likely the leading internal

candidate for the job.

Back on Wall Street, Tesla stole the show on Monday

as its beaten down shares surged 15.3% after the electric

vehicle maker made progress in securing regulatory approval to

launch its advanced driver-assistance program in China.

Apple ( AAPL ), which reports earnings on Thursday, gained

2.5% following a report the iPhone maker had renewed discussions

with OpenAI about using the startup's generative artificial

intelligence technology.

Amazon tops the heavy earnings diary later, with eyes also

on Super Micro Computers for a glimpse of what's happening in

the AI world.

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

on Tuesday:

* US April consumer confidence, Chicago April PMI business

survey, Dallas Fed April service sector survey, US Q1 labor

costs, Feb monthly home prices

* Federal Reserve's Federal Open Market Committee starts two-day

policy meeting - decision Wednesday

* US corporate earnings: Amazon, Eli Lilly, Super Micro

Computers, Advanced Micro Devices, Prudential Financial, PayPal,

3M, Marathon, Mondelez, Coca Cola, Starbucks, Molson Coors,

McDonalds, Clorox, Corning, Edison, Eaton, Amcor, Archer Daniels

Midland, Stryker, Sysco, Hubbell, Pacar, Skyworks Solutions,

Incyte, CentrePoint Energy, Diamondback Energy, Caesars

Entertainment, American Tower, Illinois Tool Works, Republic

Services, Essex Property Trust, Ecolab, Gartner etc

(By Mike Dolan, editing by Christina Fincher,

[email protected])