European stocks rose and Wall Street stock futures rallied on Wednesday after gains by tech titans Microsoft and Alphabet reassured investors ahead of a crucial US interest rate decision later in the day.
The regional stock index Stoxx 600 was up 0.2 percent in early trade, while London’s FTSE 100 rose 0.3 percent.
Microsoft, one of the biggest companies in the technology sector that dominates US stock indexes, missed analysts’ forecasts for quarterly sales and earnings but said its cloud computing business remained resilient. Shares of the group rose 4 percent in after-hours trading in New York.
“The core DNA of the Microsoft growth story appears to be gaining momentum through 2023, despite the economic headwinds,” said Daniel Ives, analyst at Wedbush.
Alphabet’s shares were also up 5 percent in response to Google’s parent company’s aftermarket financial results. Chief Executive Sundar Pichai assured investors that the group will continue to make long-term investments despite the slowest quarterly revenue growth in two years.
The robust technical results pushed US futures higher. Contracts, which track the tech-heavy US stock index Nasdaq 100, gained 1.4 percent. Those in the broader S&P 500 rose 0.9 percent.
Later on Wednesday, the Federal Reserve will announce its latest interest rate decision, with futures markets rising 0.75 percentage points to 2.25-2.5 percent after inflation hit a new 40-year high in June .
The Federal Reserve also raised interest rates by 0.75 percentage points in June, with tighter monetary policy helping propel the S&P 500 into a bear market last month, defined as a 20 percent decline from a recent peak.
However, the blue-chip indicator for US stocks rose nearly 4 percent in July as traders viewed signs of a US economic slowdown as likely, which could prompt the Fed to ease the pace of its rate hikes later this year.
US Treasury markets traded cautiously ahead of the decision. The yield on the two-year bond, which is in line with monetary policy expectations, was constant at 3.05 percent.
The 10-year government bond yield rose 0.02 percentage point to 2.81 percent from about 3.5 percent in mid-June, with the decline reflecting rising debt prices as investors scaled back interest rate and economic growth expectations.
The dollar index, which measures the US currency along with six others, fell 0.1 percent but remained close to its highest level in two decades.
In Asia, Hong Kong’s Hang Seng stock index fell 1.5 percent, mirroring a decline on Wall Street on Tuesday after Walmart warned of gains blaming food and fuel inflation. Tokyo’s Topix closed 0.1 percent higher.
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