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Nikkei soars to near five-year high. In Japan, stocks came off a long weekend well-rested and promptly rallied to near five-year highs as the Nikkei surged 3.55% on the back of Friday's strong U.S. jobs data. Some say Japanese equities (NYSEARCA:EWJ) have further to run. "The P/E multiple on forward earnings is about 15x [and] for the last decade, the average multiple has been 19 times," one strategist told CNBC.

Australia's central bank cuts rates. The Reserve Bank of Australia cut rates for the seventh time in 18 months Tuesday, taking the benchmark cash-rate down 25 basis points to a record low 2.75%, surprising some forecasters who expected the rate to remain unchanged. At 2.5%, inflation in Australia is within the central bank's target range and the strong aussie has weighed on mining companies who say it undermines their export competitiveness. The Australian dollar fell by more than half a cent against the dollar following the announcement.

Top Stock News
Diageo CEO Walsh steps down. Diageo (NYSE:DEO) CEO Paul Walsh will step down in July after 13 years of stewardship at the world's largest distiller. Walsh will be replaced by COO Ivan Menezes who has led the company's North American division for the better part of a decade. Walsh, whose leadership helped DEO's stock triple over the course of his tenure, will stay with the company for a year to aid in the transition, but will retire for good in June of 2014.

Microsoft admits Windows 8 misstep. "The learning curve is definitely real," Microsoft's (NASDAQ:MSFT) head of marketing and finance told the Financial Times, in a partial explanation of why the company will reportedly change "key aspects" of how Windows 8 works when a new version is released later this year. The company's apparent about-face is being likened to Coke's infamous New Coke debacle and it appears MSFT will attempt to appease those whose difficulties adjusting to the tablet-like interface have prompted calls for the return of a more familiar PC experience.

HSBC profit tops view. HSBC (HBC) reported a Q1 pretax profit of $8.43B, ahead of analysts' expectations of $8.1B. Underlying pretax profit (which strips out one-time items) rose 34% Y/Y to $7.6B. CEO Stuart Gulliver noted that loan impairments were down in every region. The firm's capital position improved as core tier 1 capital rose to 12.7% from 12.3% in Q4.

Bank of America and MBIA reach settlement. Bank of America (NYSE:BAC) and MBIA (NYSE:MBI) settled their long-standing legal dispute Monday as BAC agreed to pay $1.7B to the bond insurer which in turn released the bank from all Countrywide-related mortgage put-back liability. In addition, BAC will receive warrants to purchase 9.94M shares of MBI — representing a 4.9% stake — at an exercise price of $9.59/share. BAC will also drop its opposition to MBI's 2009 restructuring, extend the insurer a $500M credit line, and reduce its Q1 earnings by $0.10 to account for the settlement.

Commerzbank swings to loss on restructuring. Commerzbank AG (OTCPK:CRZBY) reported a Q1 net loss of €94M Tuesday, as Germany's second largest bank took a €493M restructuring charge related to layoffs. The loss was narrower than analysts expected however and operating expenses fell 3.7% to €1.72B (better than expectations), while risky assets in the firm's bad bank also declined during the period. On the other hand, provisions for bad debt were up 26% and net interest income fell 20% to €1.36B.

French banking heavyweights report. It's a tale of two banks in France as Crédit Agricole (OTCPK:CRARY) reported a 51% increase in net profit (€469M versus €311M in Q1 2012) Tuesday while Société Générale (OTCPK:SCGLY) said its bottom line slid 50% to €364M from €732M in the year earlier period, as revenues were hit by a €1B CVA charge. Both banks are in the midst of cost-cutting initiatives and general operational enhancements aimed at streamlining operations and complying with tougher banking rules. Crédit Agricole and Société Générale's tier 1 capital ratios were 8.5% and 8.7% respectively at the end of March.

Top Economic & Other News
Senate passes Internet sales tax bill. In an effort to end tax-free shopping on the Internet, the Senate passed a bill Monday empowering states to impose sales taxes for purchases made online. The measure — which passed by a 69 - 27 margin with bipartisan support — next goes to the House of Representatives, where anti-tax sentiment among many Republicans may make it more difficult to push through. eBay (NASDAQ:EBAY) is fighting to make retailers with less than $10M in online sales or less than 50 employees exempt, while Wal-Mart (NYSE:WMT) and unlikely bedfellow Amazon (NASDAQ:AMZN) support the bill.

Portugal to sell 10-year debt. Investors' quest for yield could fuel demand for Portugal's first 10-year bond sale since receiving an international bailout in 2011. Demand for bonds maturing in 2024 could exceed $5.23B according to sources cited by Bloomberg. "Investors are rushing into anything that grants you a good yield and when you look at the Portuguese curve the 10-year is around 5.5%," one analyst said. Fragile eurozone nations who received bailouts are seeking to gingerly step back into debt markets in an effort to wean themselves off bailout money as the region desperately looks for a light at the end of the crisis tunnel.

EA, Disney ink Star Wars game deal. Electronic Arts (NASDAQ:EA) on Monday announced a multi-year deal with Disney (NYSE:DIS) to make new Star Wars games "spanning all interactive platforms and the most popular game genres." Disney maintains the rights to develop mobile, online, and social games for the franchise. The deal comes shortly after Disney decided to shutter LucasArts' game development studio, and close to 18 months after EA launched Star Wars: The Old Republic, whose performance has underwhelmed.

New car sales rise in U.K. New car sales in the U.K. were up 14.8% Y/Y to 163,357 in April, according to the Society of Motor Manufacturers and Traders. The U.K. has been a bright spot in Europe for the automobile industry and the forecast for full year sales has been revised higher. Ford (NYSE:F) claims the top two YTD sellers in the U.K. with the Fiesta and Focus.

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Today's Markets:
In Asia, Japan +3.5% to 14180. Hong Kong +0.58% to 23047. China +0.2% to 2235. India +1.09% to 19888.
In Europe, at midday, London +0.39%. Paris +0.49%. Frankfurt +0.83%.
Futures at 7:00: Dow +0.23%. S&P +0.12%. Nasdaq +0.14%. Crude -0.5% to $95.68. Gold -0.52% to $1460.

Today's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
1:00 PM Results of $32B, 3-Year Note Auction
3:00 PM Consumer Credit

Notable earnings before today's open: ACM, AFAM, AKRX, ALLT, ARCC, ARIA, BCRX, CHTR, CMLP, CNK, CQB, CRZO, CVLT, DFT, DISCA, DTV, DWRE, EMR, ENDP, FE, FOSL, HCN, HFC, HPT, HSIC, KWK, LPX, NRG, NRGY, NVAX, OAK, OMX, PQ, PRGO, RIGL, SHOO, TA, TAP, TDG, TGH, TICC, TRGT, TW, WRES, XEC

Notable earnings after today's close: ANDE, ARAY, AWK, AXLL, BIO, BIOL, BMC, BWC, CA, CDXS, CHRW, CODI, DGI, DGIT, DIS, DVA, EA, ENPH, EXEL, GTEK, GA, GPOR, IAG, JAZZ, KGC, LYV, MAKO, MCEP, MCK, MDLZ, MITK, MRO, MYGN, NVTL, OAS, OCLR, OHI, ONXX, ORA, PRI, RBCN, SD, SGEN, SYMC, SYNC, TRIP, TWO, URS, VCLK, WBMD, WFM, WMB, WPZ, WTI, Z

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Source: Wall Street Breakfast: Must-Know News