SINGAPORE- Better-than-expected results at Microsoft and Google helped steady a nervous mood in stock markets on Wednesday, while bonds and the dollar were on edge ahead of a US Federal Reserve meeting that is expected to deliver another big rate hike.
Nasdaq 100 futures bounced 1.5 percent and S&P 500 futures were up 0.9 percent in Asia after Microsoft forecast strong revenue growth and Google parent Alphabet posted solid search engine ad sales.
Alphabet shares rose 5 percent after hours and Microsoft shares rose 4 percent to cut through some of the gloom cast by a profit warning at retailer Walmart and soft US economic data.
European futures rose 0.2 percent and FTSE futures rose 0.3 percent. Japan’s Nikkei rose 0.4 percent.
Things were not as bright elsewhere. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent.
The world’s second-biggest chipmaker, SK Hynix, warned demand was likely to slow as customers cut spending, and shares fell 1.9 percent.
The euro struggled to recoup an overnight drop as a further cut in Russian gas flows loomed. The International Monetary Fund has cut global growth forecasts and in a few hours traders expect the Fed to raise interest rates sharply.
“They have laid out their plan to raise rates to restrictive levels,” said Khoon Goh, head of Asia research at ANZ Bank in Singapore. “They want to avoid a hard landing, obviously, but they just can’t take the chance of inflation staying elevated.”
The US central bank is expected to announce a 75 basis point (bps) rate hike. Futures imply about a 15 percent chance of a 100 bps hike. The Treasury market is already anticipating that so many sharp near-term hikes will hurt longer-run growth.
Benchmark 10-year Treasury yields were steady at 2.8032 percent on Wednesday, below two-year yields at 3.0508 percent. US/
Australian bonds staged a relief rally on Wednesday, after consumer price data surprised on the downside for a change – even if only by a tiny margin – prompting investors to back out of bets on a 75 bps rate hike in Australia next week.
