By Chris Prentice and Amanda Cooper
NEW YORK/LONDON, Oct 28 (Reuters) - Global stocks and major Wall Street indexes held gains on Wednesday after the Federal Reserve held interest rates steady, as expected, and traders awaited earnings from two titans of the AI buildout, Microsoft and Alphabet.
In a 10-2 decision, the US central bank said it would maintain its benchmark interest rate within the current 3.75%-4.00% range.
US treasury yields extended their gains after the decision.[US/]
US stocks pared
gains slightly, and spot gold prices were little-changed.[GOL/]
MSCI's gauge of stocks across the globe rose 2.46 points, or 0.22%, to 1,132.20.
The Fed's decision "reflects the continued balancing act between inflation concerns and an economy and employment situation that have remained relatively resilient," said Charlie Wise, head of global research at TransUnion in Chicago.
Earlier, market moves had been mostly modest ahead of the Fed decision, outside of Asia.
New Zealand's central bank surprised investors by leaving interest rates on hold, contrary to expectations for a hike, while the Bank of Canada raised rates for the first time in three years.
The European Central Bank and Bank of Japan are expected to issue policy decisions this week as well.
Traders' attention will also turn to Thursday's US Personal Consumption Expenditures data, which could offer further insight into the trajectory of monetary policy.
"While the September dot-plot suggests just one more hike, another increase in energy prices or further strong data prints could bring additional tightening into play next year," said Kay Haigh, head of fixed income and liquidity solutions at Goldman Sachs Asset Management in New York.
On Wall Street, the Dow Jones Industrial Average rose 91.54 points, or 0.17%, to 52,469.11 and the S&P 500 rose 5.42 points, or 0.08%, to 7,728.60. The Nasdaq Composite fell 43.31 points, or 0.16%, to 26,434.50.
The pan-European STOXX 600 index rose 0.07%.
AI RALLY FACES NEXT TEST
The AI rally faces its next test after the market close, when technology giants Alphabet and Microsoft are due to report earnings. Investors will be looking out for signs of changing trends in capital spending, the driver of the AI boom, and scouring for evidence of returns that would justify the hefty cost of the AI build-out.
"These results could determine if the tech/AI rally has legs. Any signs of 1, a failure to monetise investments, or 2, a slowdown in capex spend, could have big repercussions for the AI trade on Wednesday night and Thursday," she said.
A series of AI-related funding announcements from Meta, SpaceX and Broadcom this week has once again tested the market's willingness to pay for further building, though Anthropic's filing for an initial public offering showed results that many investors regarded as stronger than expected, providing support.
CENTRAL BANKS IN THE SPOTLIGHT
Earlier on Wednesday, the Reserve Bank of New Zealand surprised investors by keeping interest rates at 2.75% in a narrow vote, sending the kiwi
"Today's decision shows the RBNZ is willing to surprise markets, a reminder that central banks do not take orders from markets," Carol Kong, a currency strategist at Commonwealth Bank of Australia, said.
In the UK, finance minister John Healey delivered a cautious first budget, one that prioritised stability in the bond market over the kind of big spending moves that Andy Burnham talked about when he became prime minister. Britain's stocks, bonds and currency barely reacted to the statement, in which he pledged to stick to fiscal rules, while accepting a smaller fiscal cushion due to rising energy prices and borrowing costs.
The pound was down a touch at $1.3301, while UK government bond yields edged up.
Israel's shekel fell 2.3%, as election results showed Prime Minister Benjamin Netanyahu's right-wing bloc performing more strongly than expected, but still falling short of a parliamentary majority.
In commodities, oil prices rose after an attack on a refinery in Saudi Arabia, the world's biggest crude exporter, renewed concerns around the risks to supply in the Middle East. [O/R]
Brent crude futures rose 1.4% to $115.48 per barrel, as US crude rose nearly 3% to $102.86.
European natural gas futures extended gains, up 4.9% at fresh four-year highs.
(Additional reporting by Saeed Azhar in New York, Suzanne McGee, and Rae Wee in Singapore; Editing by Kate Mayberry, Toby Chopra, Keith Weir, Colin Barr and Nick Zieminski)
