GLOBAL MARKETS-Stocks advance, yen strengthens against dollar as intervention eyed

By Chuck Mikolajczak

NEW YORK, Jan 26 (Reuters) - Global stocks climbed for a fourth straight session on Monday as investors awaited earnings from a host of U.S. megacaps while the yen strengthened against the dollar as investors remained on guard for any signs of intervention in the Japanese currency.

In addition, gold advanced to top $5,100 an ounce for the first time, as a swath of geopolitical tensions continues to weigh on the U.S. dollar.

On Wall Street, U.S. stocks were higher, buoyed in part by gains in the S&P 500 communication services .SPLRCL and tech .SPLRCT sectors. Markets are also expecting earnings this week from heavyweight names such as Microsoft MSFT.O, Apple AAPL.O, Tesla TSLA.O and Meta Platforms META.O while the Federal Reserve is scheduled to release its policy statement on Wednesday.

"You're seeing communications and technology are trading well today in advance of the earnings from a lot of the large companies," said Chris Zaccarelli, chief investment officer, Northlight Asset Management, Charlotte, North Carolina.

"It seems like we're having an expansion in corporate profits and an expansion in the economy so generally speaking, investors are cautiously optimistic and most likely looking forward to earnings season."

The S&P 500 materials sector .SPLRCM was also among the better performing on the day, as the rise in gold helped lift stocks such as Freeport-McMoRan FCX.N and Newmont Mining NEM.N. The materials sector has the second-highest earnings growth rate of any sector in the first quarter at 24.4%, according to LSEG data.

The Dow Jones Industrial Average .DJI rose 286.86 points, or 0.58%, to 49,385.57, the S&P 500 .SPX rose 44.47 points, or 0.64%, to 6,960.08 and the Nasdaq Composite .IXIC rose 162.21 points, or 0.69%, to 23,663.46.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 7.29 points, or 0.7%, to 1,044.84 and was on track for a fourth straight session of gains, while the pan-European STOXX 600 .STOXX index closed up 0.2%, supported by gains in financial stocks ahead of bank earnings later in the week.

GOLD HITS RECORD HIGH

Spot gold XAU= rose 1.96% to $5,080.04 an ounce after hitting a high of $5,110.50. It is up more than 17% for the month. "We now see gold reaching $6,000/oz by year-end, with the caveat that this is probably a conservative estimate and it could well go higher," said analysts at Societe Generale.

The Fed is widely expected to keep rates unchanged, according to CME's FedWatch Tool, while investors will monitor comments from Chair Jerome Powell for clues on the path of monetary policy.

The dollar index =USD, which measures the greenback against a basket of currencies, shed 0.22% to 97.01, with the euro EUR= up 0.47% at $1.1881. Sterling GBP= strengthened 0.34% to $1.3688.

Against the Japanese yen JPY=, the dollar weakened 1.01% to 154.13 after hitting its lowest since mid-November at 153.30 yen, after sharp spikes in the Japanese currency on Friday sparked speculation over potential intervention. The New York Federal Reserve conducted rate checks on Friday, sources told Reuters.

Top Japanese authorities said on Monday they have been in close coordination with the United States on foreign exchange, which would mark the first coordinated intervention between the two countries in 15 years.

"While a cautiously hawkish stance from the (Fed) this week, along with resilient data could offer some support to the USD, any potential intervention in the yen market may worsen the already weak flow picture for the dollar," analysts at Barclays said in a note.

While markets will eye comments from Powell in the wake of the Fed policy statement, the meeting will likely be overshadowed by a Trump administration criminal investigation into the central bank chief, an evolving effort to fire Fed Governor Lisa Cook, and the coming nomination of a successor to take over for Powell in May.

The yield on the benchmark U.S. 10-year note US10YT=RR dipped 2.8 basis points to 4.211%. A $69 billion auction of two-year notes US2YT=RR was seen as strong by analysts.

JAPAN'S FISCAL CHALLENGE

The yen has been under pressure since Sanae Takaichi took over as Japan's prime minister in October, in part due to concerns over Japan's government debt that stands at more than double its economic output. A historic rise in market interest rates has raised fears for Japan’s ability to service its debt, but Takaichi has said she will cut taxes as she campaigns for a snap election to be held on February 8.

BOJ money market data released on Monday suggested there had been no intervention on Friday.

U.S. President Donald Trump provided a brief respite to markets last week when he appeared to back down from threats to slap tariffs on European allies unless they let him take over Greenland.

However, with the prospect of more sanctions targeting Iran in the offing, geopolitics continues to have an impact on markets.

U.S. crude CLc1 fell 0.64% to $60.68 a barrel and Brent LCOc1 fell to $65.62 per barrel, down 0.39% on the day after climbing more than 2% in the previous session on output disruptions in U.S. crude-producing regions and tensions between the U.S. and Iran.