(Reuters) – Earnings for the first quarter are flooding in from HSBC in Europe and Volvo in Europe, to Apple (NASDAQ) and McDonalds Wall Street. They could give the lame stock markets an injection.

France’s Sunday election saw Emmanuel Macron win the presidency over Marine Le Pen. The wait for another unlikely event — the default of Russian sovereign debt — is now on.

This is Kevin Buckland’s Tokyo market report, Saqib Allah in New York, Danilo Marioni in Milan, Dhara Ranasinghe, Karin Strohecker, all looking at markets for the week ahead.

1 VIVE LA FRANCIA

Emmanuel Macron, the French president, defeated Marine Le Pen by a large margin on Sunday. He secured a second term in office and halted what could have been a political tsunami.

Markets are relieved by the news, which has boosted stocks, bonds, and euro. These gains may be fleeting as investors return to tighter ECB policy, and what the French parliamentary election results in June will mean for the economy.

It was evident that Macron has many problems, as demonstrated by the teargas sprayed on protestors after Sunday’s election in central Paris.

GRAPHIC: French bond spreads tighter compared to 2017 election (https://fingfx.thomsonreuters.com/gfx/mkt/xmpjoykeovr/FRANCE2104.PNG)

2 TRUE DOVE

Before Thursday’s policy conference, the Bank of Japan stated that it is committed to supercharged stimulation. It jumped in to markets to defend its target of 0% bond yield, even though the price was a plummeting currency.

At the core of the plunge in the yen, which has fallen to 130/dollar after two decades, is the contrast between BOJ and Federal Reserve.

Shunichi Suzuki the finance minister has issued warnings about rapid depreciation. This has put markets on alert and forced them to issue a 11% yen fall over the month. However, BOJ Governor Haruhiko Kuroda believes that overall yen weakness is good for Japan.

IMF appears to be in agreement. Senior officials stated that yen movements were due to fundamentals, and it was not necessary to alter policy (including the BOJ’s ultra-low rates stance).

GRAPHIC: Dollar-yen chases U.S. yields higher (https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnygjxvq/Pasted%20image%201650521218750.png)

    3/ TECH TROUBLE

This year has been difficult for U.S. stocks as well as tech firms. The ongoing results season may make things worse.

Netflix (NASDAQ) shares tumble after it reported falling subscriber figures. This has led to concern over upcoming earnings reports from Google-parent Alphabet (NASDAQ), and Facebook-parent Meta (NASDAQ). Apple and Amazon (NASDAQ)

These so-called FAANG groups benefited greatly from the work-from home environment and low interest rates. However, with rising interest rates their shares have lost approximately $2.5 trillion annually in market value.

The overall earnings growth is expected to be 6.3%. The quarterly adjusted earnings per share for Apple are only expected to increase by 2%, compared with the same period last year. Alphabet will see a 0.7% decline. The Refinitiv Data shows that Amazon and Meta may see EPS drops of up to 49% and 24%, respectively.

GRAPHIC: All FAANG, no bite (https://graphics.reuters.com/USA-STOCKS/gdvzyayaepw/chart.png)

4/ EUROPE INC: INFLATION AND EARNINGS

While the Ukraine conflict rages on, full-year earnings revisions for European companies — the total number of upgrades and downgrades — are now negative for the first year since October 2020.

Refinitiv estimates that the Q1 earnings increase will be 25 percent. This could help to improve a market in bearish conditions. There are still questions about cost pressures, and whether they can be passed on to consumers, as more than 140 companies announced earnings in the week of April 25-29.

Nestle and Danone, giants in the food industry, managed to increase Q1 earnings while also raising prices. However smaller competitors may not be able to achieve this.

Leading banks, including UBS, Deutsche, HSBC and Barclays LON: also reports; the possibility of higher rates after disappointing Q1 shares performance is lifting the sector.

GRAPHIC: European earnings (https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnynyqpq/European%20earnings.PNG)

5/ OLD JOB, NEW PROBLEMS

Elvira Nabiullina, Russian central bank governor, starts her fifth year in charge of monetary policies with an enormous to-do-list: Dealing with the full-scale crises caused by Western sanctions that are unprecedented and growing.

Expect the economy to contract at its fastest rate since 1991, when the Soviet Union collapsed. Russia’s debt default is imminent and the annual inflation rate has exceeded 20%.

Nabiullina might cut interest rates Friday by up to 200 basis points from current 17%. This will partially reverse the emergency rate increase that the central bank had to make after the Kremlin invasion of Ukraine on February 24, 2019.

The rate-setters will also discuss raising capital controls and recapitalising some banks.

GRAPHIC: Russia inflation (https://fingfx.thomsonreuters.com/gfx/mkt/zgvomlbqnvd/Pasted%20image%201650568920953.png)