By Danilo Masoni and Stella Qiu
MILAN/SYDNEY, Nov 11 (Reuters) - Stocks rose on Wednesday as investors looked past mounting expectations of further Federal Reserve interest rate rises and focused on a renewed wave of AI optimism after strong results from AI infrastructure firm CoreWeave.
European shares rose, lifting the pan-European STOXX 600 0.4% by 0924 GMT and leaving it within striking distance of its August record high, while technology stocks led gains across Asia.
Nasdaq futures jumped 1.6%
and S&P 500 futures rose 0.7% after CoreWeave said it expected to become profitablein 2028, easing concerns that demand may not be strong enough to support the company's debt-fuelled expansion.
Its shares rose 16% in US premarket trading.
"The results confirm that demand for AI is still very strong," said Alberto Conca, CIO at Swiss wealth manager LFG+ZEST. "However, CoreWeave still faces significant questions over the sustainability of its debt burden."
MSCI's broadest index of Asia-Pacific shares jumped 1.5% for a third straight day of gains, helped by a 2.6% rise in South Korea and a 3.6% increase in Taiwan. Japan's Nikkei climbed 1.3%.
Conca said the equity rally was broadening beyond the AI-linked stocks that had led markets higher in recent years, with value sectors and Europe attracting fresh interest. He added that earnings growth remained robust enough to support equities despite pressure on valuations across parts of the AI sector.
Investors were also watching Anthropic, which is pressing ahead with its listing at a $1.4 trillion valuation, setting up a key test of Wall Street's faith in the AI boom.
Nvidia shares rose in premarket trading after two days of steep losses that erased $430 billion. Its CEO Jensen Huang is being investigated over reports he may have been the target of a foreign intelligence operation linked to an alleged Chinese spy.
50-BP HIKE IN PLAY
Data on Tuesday showed core US inflation ran at a monthly rate of 0.3% in October, higher than the forecast 0.2%. Before the data landed, Fed Governor Christopher Waller said a core reading of 0.3% would prompt him to consider a 50-basis-point rate hike at the next meeting in December.
Dallas Fed President Lorie Logan said two more rate rises were needed, and Chicago Fed President Austan Goolsbee warned of a "real inflation issue" on hand, while Philadelphia Fed President Anna Paulson called for gradual rate hikes.
The chorus of hawkish rhetoric sent Fed funds futures tumbling, with a quarter-point move in December now essentially locked in and a 10% risk of a 50 bp rise. A total of three quarter-point moves are fully priced in by the middle of next year.
US Treasury markets were closed for the Veterans Day holiday after a sharp selloff on Tuesday, when 2-year yields jumped 18 basis points.
Asian bonds were under pressure, pushing Japan's 10-year government bond yield up 10 basis points to 2.793%, while euro zone debt steadied, with Germany's benchmark 10-year yield little changed at around 3.3%.
"This Fed is finally doing what every other Fed would have done in this situation, which is hike and hike quickly," said Andrew Lilley, chief rates strategist at Barrenjoey.
"I'd say you're going to have at least four or five people who want to do that (50bp hike)... you cannot rule it out."
The repricing in interest rate expectations lifted the dollar, which gained 0.5% on Tuesday and rose a further 0.2% to 102.45 against its major peers.
The risk-sensitive Australian dollar steadied after tumbling nearly 0.9% as traders bet the Reserve Bank of Australia has finished tightening after five rate increases this year and will begin cutting rates in 2027.
Gold rose 0.4% to $4,049 an ounce, recovering some ground after a 2.6% slide in the previous session as a stronger US dollar weighed on the precious metal.
Oil prices rebounded from two-month lows, as the market swung between hopes for a de-escalation in the US-Israeli war on Iran and concerns about attacks on shipping in the Strait of Hormuz. Brent crude rose 0.15% to $91.6 a barrel.
(Editing by Shri Navaratnam, Muralikumar Anantharaman and Alex Richardson)
