By Aya Wagatsuma

(Bloomberg) — Asian stocks and European equity futures advanced to follow Wall Street’s tech-led rebound from a selloff that shook global markets, as focus turns to the Federal Reserve’s rate decision and US mega-cap earnings.

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Europe’s Stoxx 50 index futures rose, extending gains after ASML Holding NV’s order bookings beat estimates. US contracts gained Wednesday after the S&P 500 rose 0.9% and Nasdaq 100 advanced 1.6% on Tuesday, as Nvidia Corp. rallied 8.9% following the largest one-day value loss in history. Japanese, Australian and Indian shares advanced, while most other major markets in the region were closed for Lunar New Year holidays.

Shares rebounded after a rough start to the week, sparked by concerns over a cheap artificial intelligence-model from Chinese startup DeepSeek. However, investors like Steve Cohen see the development as a boon for the industry. Focus shifts to the Fed decision and Big Tech earnings, starting Wednesday.

“The dust has settled on DeepSeek and investors seem much more circumspect,” said Kyle Rodda, a senior market analyst at Capital.Com Inc. “We look to earnings and the Fed now — the former being more important because the latter will probably be a nothing-burger!”

Fed officials are widely expected to hold borrowing costs steady on Wednesday against a backdrop of healthy demand and stubborn inflation. Bond traders are ratcheting up bullish bets on US Treasuries in hopes that Fed Chair Jerome Powell signals a cut in March is firmly on the table. A survey conducted by 22V Research shows 67% of respondents expect the reaction to the Fed Wednesday to be “mixed/negligible,” 21% said “risk-off” and 12% “risk-on.”

The yield on 10-year Treasuries inched lower. West Texas Intermediate oil steadied on Wednesday after gaining 0.8% on Tuesday.

“Simply put, the strong US fundamental story of strong growth, elevated inflation, and a more hawkish Fed continues to favor higher US yields and a stronger dollar,” Win Thin, a strategist at Brown Brothers Harriman, wrote in a note.

In Japan, the benchmark repurchase-agreement rate surged the most in 16 months, indicating that bond crunch has eased. It fell more than 30 basis points in the past two days amid signs that investors rushed to borrow bonds to close out bearish positions on these securities.

As for earnings in the US, while profits from the so-called Magnificent Seven behemoths are still rising — and far outpacing the rest of the market — growth is projected to come in at the slowest pace in almost two years.

“While we still believe in the AI-driven productivity story, investing in this sector going forward may not be as easy as it was over the past two years,” said Emily Bowersock Hill at Bowersock Capital Partners. “We expect investors to be more discerning and selective when it comes to AI investing.”

ASML reported order bookings of €7.09 billion ($7.4 billion) in the fourth quarter, beating estimates as the artificial intelligence boom drove demand for its chipmaking machines — further potentially easing concerns sparked by DeepSeek.

In Australia, core inflation eased by more than expected in the final three months of 2024. The Australian dollar dropped and the policy-sensitive three-year yield fell on bets that the Reserve Bank may embark on a monetary easing cycle soon.

In other corporate news, Sony Group named President Hiroki Totoki as CEO, effective April 1. The company hit a record high and was the largest contributor to the gains in the Topix index on Wednesday, as software and gaming stocks rose.

Apple Inc. has been secretly working with SpaceX and T-Mobile US Inc. to add support for the Starlink network in its latest iPhone software, according to people with knowledge of the matter.

Key events this week:

• US Fed rate decision, Wednesday

• Tesla, Microsoft, Meta, ASML earnings, Wednesday

• Canada rate decision, Wednesday

• Eurozone ECB rate decision, consumer confidence, unemployment, GDP, Thursday

• US GDP, jobless claims, Thursday

• Apple, Deutsche Bank earnings, Thursday

• US personal income & spending, PCE inflation, employment cost index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 6:47 a.m. London time

• Nasdaq 100 futures rose 0.4%

• The MSCI Asia Pacific Index rose 0.4%

• The MSCI Emerging Markets Index was little changed

• S&P 500 futures rose 0.2%

• S&P/ASX 200 futures rose 0.1%

• Euro Stoxx 50 futures rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.1% to $1.0442

• The Japanese yen rose 0.2% to 155.30 per dollar

• The offshore yuan rose 0.2% to 7.2597 per dollar

• The British pound rose 0.1% to $1.2459

Cryptocurrencies

• Bitcoin rose 2.3% to $102,572.53

• Ether rose 2.9% to $3,140.56

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.52%

• Germany’s 10-year yield advanced three basis points to 2.56%

• Britain’s 10-year yield advanced three basis points to 4.61%

• Japan’s 10-year yield was unchanged at 1.190%

• Australia’s 10-year yield declined five basis points to 4.37%

Commodities

• Spot gold fell 0.1% to $2,760.49 an ounce

• West Texas Intermediate crude was little changed

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Rita Nazareth, Toby Alder, Rob Verdonck and Kurt Schussler.

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