Australia

Australian shares are facing upwards this morning following Tuesday’s modest gains on Wall Street. Investors cautiously awaited earnings reports from major technology firms, as well as the Federal Reserve’s next interest rate decision. Markets are broadly anticipating a 0.25% increase in the federal funds rate following last month’s pause.

ASX futures were 20 points or 0.3% higher as of 6:00am on Wednesday, suggesting gains at the open.

US stocks climbed Tuesday, with a rally in 3M shares helping lift the Dow Jones Industrial Average to its 12th consecutive day of gains.

On a busy day of earnings, the Dow rose roughly 27 points, or 0.1%, to 35438.07, its highest close since February 2022. The S&P 500 gained 0.3%, while the tech-heavy Nasdaq Composite climbed 0.6%. Meanwhile, Canadian stocks declined slightly, with the S&P/TSX Composite down 0.1%.

Upcoming earnings reports from big technology companies and the start of a two-day Federal Reserve meeting loomed over trading Tuesday. But investors still had plenty to digest as earnings rolled in.

In the case of 3M, the maker of Scotch tape and Post-it Notes reported a quarterly loss due to a litigation settlement. But its shares climbed 5.3% to lead the Dow industrials, as the company posted improved margins and raised its earnings expectations for the year.

In commodity markets, Brent crude oil added 1.0% to US$83.58 a barrel while gold moved up 0.5% to US$1,964.88.

Australian government bonds were higher, with the 2 Year yield rising to 4.02% and the 10 Year yield climbing to 4.03%. US Treasury notes also moved higher, with the 2 Year yield increasing to 4.86% and the 10 Year yield reaching 3.88%.

The Australian dollar rose to 67.86 US cents from its previous close of 67.39. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 95.80.

Asia

Chinese shares closed higher, as the country's top decision-making body signaled it would step up economic stimulus, including possible measures to aid the property sector. The memo released Monday by China's Politburo "essentially acknowledged the current property woes and opened the door further for a policy shift from stabilizing to at least modestly stimulating," Citi economists said in a research note. Tuesday's gains were broad-based, with financials and property stocks leading the market. China Vanke rose 8.1% and Poly Developments jumped 8.7%. In the financial sector, Citic added 5.8% and CICC gained 5.3%. The benchmark Shanghai Composite Index closed 2.1% higher at 3231.52. The Shenzhen Composite Index rose 2.2% and the tech-heavy ChiNext Price Index gained 2.1%.

Hong Kong's benchmark Hang Seng Index ended the day sharply higher, after Beijing pledged to offer more policy support for China's economy. The index surged 4.1%, its largest one-day percentage gain since early March, to settle at 19434.40. Property developers and real estate management services providers led the rally. Country Garden Services soared 26%, Longfor jumped 26% and Country Garden Holdings climbed 18%. Internet stocks also supported the market. Baidu rose 8.5% and Meituan was up 7.8%.

The Nikkei Stock Average of Japan ended 0.1% lower at 32682.51 as losses in tech and pharmaceutical stocks offset gains in auto and bank shares. Nippon Telegraph & Telephone dropped 2.6% and Chugai Pharmaceutical fell 1.9%, while Nissan Motor gained 6.6% and Mitsubishi UFJ Financial Group added 1.7%. The broader market index Topix rose 0.2% to 2285.38. Investors were focusing on earnings and economic data ahead of the Bank of Japan's policy decision due Friday.

India's Sensex index closed flat at 66355.71, underpinned by gains in regional equity markets as investors digested China's Politburo meeting readout. The meeting reflected a cautious approach to economic stimulus with limited commitments, the APAC strategy team at Saxo Markets said in a commentary. The best performers on the benchmark index included JSW Steel, which rose 3.3%, and Tata Steel, which added 3.25%. Among the top decliners were Asian Paints, which fell 4.0%, and ITC Ltd., which lost 1.85%.

Europe

European stocks mostly rose Tuesday as investors eyed central bank policy decisions later in the week. The pan-European Stoxx Europe 600 advanced 0.5% and the German DAX edged 0.1% higher, though the French CAC 40 dropped 0.2%.

The US Federal Reserve and the European Central Bank are both likely to increase rates by 0.25 percentage points at their meetings on Wednesday and Thursday respectively, financial services firm Ebury says. "However, while the Fed may communicate a pause, the ECB still has work to do," Ebury's head of market strategy Matthew Ryan noted.

The United Kingdom’s FTSE 100 closed Tuesday up 0.2% to 7691 points, supported mainly by mining stocks. Antofagasta rose 6.6%, followed by Anglo American, up 4.8%, amid signs that the Chinese government might provide more support for the economy, IG analysts said in a note. However, consumer goods company Unilever was the index's main riser, with shares closing up 4.3% after reporting better-than-expected sales growth in 2Q.

North America

US stocks climbed Tuesday, with a rally in 3M shares helping lift the Dow Jones Industrial Average to its 12th consecutive day of gains.

On a busy day of earnings, the Dow rose roughly 27 points, or 0.1%, to 35438.07, its highest close since February 2022. The S&P 500 gained 0.3%, while the tech-heavy Nasdaq Composite climbed 0.6%. Meanwhile, Canadian stocks declined slightly, with the S&P/TSX Composite down 0.1%.

Upcoming earnings reports from big technology companies and the start of a two-day Federal Reserve meeting loomed over trading Tuesday. But investors still had plenty to digest as earnings rolled in.

In the case of 3M, the maker of Scotch tape and Post-it Notes reported a quarterly loss due to a litigation settlement. But its shares climbed 5.3% to lead the Dow industrials, as the company posted improved margins and raised its earnings expectations for the year.

Elsewhere around the market: Dow Inc. shares rose 1.8% after the chemical maker reported better-than-expected earnings. General Electric jumped 6.3% after it raised cash flow and sales targets, while its rival RTX slumped 10% after it disclosed a potential production flaw with its Pratt & Whitney jet engines.

Overall, stocks continued to be buoyed by a growing economic optimism among investors. Recent economic data has generally topped expectations, suggesting that the economy is at little risk of a recession in the near term. Meanwhile, signs of cooling inflation have lifted hopes that the Fed might be able to contain pricing pressures without forcing a downturn.

Especially for certain types of stocks, "the absence of a worst-case scenario is all you need to have a positive surprise," said Barry Bannister, chief equity strategist at Stifel.

Highlighting the market's stability in recent weeks, the Dow’s 12-day winning streak marked its longest in six years, tying a run in early 2017. Another gain on Wednesday would mark the longest streak since 1987.

Wednesday is set to be an eventful trading session. The Fed, at the end of its two-day meeting, is widely expected to raise interest rates for the 11th time since early last year, bringing its benchmark federal-funds rate to a range between 5.25% and 5.5%.

If market expectations are correct, this could be the last rate increase of the Fed's campaign. Though most Fed officials forecast in June that they expected to raise rates to a range of at least 5.5% to 5.75% by the end of the year, interest rate futures indicated on Tuesday that investors think there is about a 20% chance of that happening at the central bank's September meeting and a 40% chance that rates could be that high by the end of its November meeting.

Because the Fed will not release new economic and interest rate projections on Wednesday, investors will be mostly focused on Fed Chair Jerome Powell's press conference.

"I think what you're going to hear is that Powell is going to continue to reiterate this narrative that they still have a long way to go in the fight, that rates are going to stay higher," said Tim Urbanowicz, head of research and investment strategy at Innovator ETFs.

Investors have largely shrugged off that message in recent months. But, Urbanowicz added, "just because no one's paying attention to it doesn't mean it's not really important."