Google helps jittery stocks ahead of Fed

A man wearing a protective face mask, amid the coronavirus disease (COVID-19) pandemic, walks past a screen showing the Shanghai Composite Index, the Nikkei Index and the Dow Jones Industrial Average outside a brokerage house in Tokyo, Japan, on February 14, 2022 .REUTERS/Kim Kyung-Hoon

SINGAPORE, July 27 (Reuters) – Better-than-expected results at Microsoft and Google helped keep a jittery mood in stock markets on Wednesday, while bonds and the dollar were on edge ahead of a meeting of the U.S. Federal Reserve that is expected to deliver another meeting . large interest rate increase.

Nasdaq 100 futures jumped 1.5% and S&P 500 futures were up 0.9% in Asia after Microsoft ( MSFT.O ) forecast strong revenue growth and parent alphabet Google ( GOOGL.O ) posted solid search ad sales. read more

Alphabet shares rose 5% after hours and Microsoft shares rose 4% to cut through some of the gloom following a profit warning at retailer Walmart ( WMT.N ) and soft U.S. economic data.

European futures rose 0.2% and FTSE futures rose 0.3%. Japan’s Nikkei (.N225) rose 0.4%.

Things were not as bright elsewhere. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.7%.

The world’s second-largest chip maker, SK Hynix ( 000660.KS ), warned that demand was likely to slow as customers cut spending, sending shares down 1.9%. read more

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 interest rates to restrictive levels,” said Khoon Goh, head of Asia research at ANZ Bank in Singapore. “They obviously want to avoid a hard landing, but they just can’t take the chance that inflation will remain high.”

The US central bank is expected to announce a 75 basis point (bps) rate hike at 1800 GMT. Futures imply about a 15% chance of a 100 bps rise. The Treasury market already expects that so many sharp short-term gains will hurt growth in the longer term.

Benchmark 10-year Treasury yields were steady at 2.8032% on Wednesday, below two-year yields at 3.0508%.

Australian bonds staged a relief rally on Wednesday, after consumer price data surprised on the downside for a change – albeit only by a small margin – that prompted investors to pull back from bets on a 75bps interest rate hike in Australia next week. read more

The Australian dollar fell marginally to $0.6935. Three-year bond futures rose 11 ticks.

EUROPE, CHINA VANGLER

On top of concerns that interest rates are hurting economies, Europe is facing an energy crisis and China is reeling from restrictive covid-19 policies and fresh setbacks for its ailing property market.

The euro had its worst session in a fortnight on Tuesday, falling 1%, as Russia’s Gazprom said it would further cut westbound gas flows and energy prices rose – with German prices for the year ahead rising to a record.

The common currency held steady at $1.0150 in Asia. The Japanese yen held at 136.96 per dollar.

China’s yuan was under pressure and property shares fell as investors fretted that a growing boycott of mortgage repayments on unfinished apartments and crippling debt at many developers could ricochet into the banking industry.

The onshore CSI property index (.CSI000952) fell 2% and a Hong Kong mainland developer index (.HSMPI) fell more than 5%, dragged down by major developer Country Garden (2007.HK) which announced a discounted share sale. read more

“China’s housing sector is in the midst of a depression and the recent mortgage boycott is a sign of the severity of the downturn,” analysts at Societe Generale said.

– The scope of this boycott, as it is now, is not unmanageable, but there is a risk of escalation.

Oil prices were steady, with Brent crude futures at $104.58 a barrel and US crude futures up 0.3% at $95.32 a barrel.

Gold was flat at $1,717 an ounce.

Reporting by Tom Westbrook; Editing by Christopher Cushing and Kim Coghill

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