Google gives jittery stocks a lift ahead of Fed

Better-than-expected results at Microsoft and Google helped soothe a nervous mood in stock markets on Wednesday, while a cut in Russian gas flow dragged on the euro and a Federal Reserve meeting due later in the day kept bonds and the dollar on edge.

Nasdaq 100 futures bounced 1.4 per cent and S&P 500 futures were up 0.8 per cent in Asia after Microsoft forecast steep revenue growth and Google parent Alphabet posted strong search engine ad sales.

Alphabet shares rose 5 per cent after hours and Microsoft shares rose 4 per cent to cut through some of the gloom cast over Tuesday by a profit warning at retailer Walmart and some soft US economic data.

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MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 per cent and Japan's Nikkei fell 0.3 per cent.

The Federal Reserve is expected to announce a 75 basis point rate hike at 18:00 GMT but investors are wary of a surprise in either direction and have preferred safe assets such as dollars.

"The market is trying to convince itself that peak inflation has happened," which would be a basis for more clarity and confidence about future rates and growth, said ING economist Rob Carnell, but that means a Fed that is staying the course.

"(The Fed) does need to give the sense that fighting inflation is their number one priority, otherwise the sense is that inflation will stay higher for longer," he said.

Australian data sounded something of a warning on Wednesday, with headline consumer prices rising at their fastest pace in two decades.

In the United States a 75 bp hike is fully priced on Wednesday, but futures imply about a 15 per cent chance of a 100 bp hike. The Treasury market is already anticipating that near-term hikes will hurt longer-run growth.

Benchmark 10-year Treasury yields were steady at 2.8068 per cent on Wednesday, below two-year yields at 3.0528 per cent.

Europe, China wobbly

On top of worries about interest rates damaging economies, Europe faces an energy crisis and China is beset by restrictive Covid-19 policies and fresh fears of a property market collapse.

The euro had its worst session in a fortnight on Tuesday, sliding 1 per cent, as Russia's Gazprom said it would further cut westbound gas flow and energy prices zoomed higher.

It steadied at $1.0145 in Asia. The Australian dollar was marginally lower at $0.6923. The Japanese yen steadied at 136.96 per dollar.

China's yuan was under pressure and property stocks fell as investors have been spooked that a widening boycott of mortgage repayments on unfinished apartments can ricochet around the development and banking industries.

The onshore CSI real estate index fell 2 per cent and a Hong Kong index of mainland developers fell more than 5 per cent, dragged down by large developer Country Garden announcing a discounted share sale.

"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," said analysts at Societe Generale.

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

Europe's soaring gas prices kept oil firm. Brent crude futures were steady at $104.30 a barrel. U.S. crude futures rose 0.1 per cent to $95.14 a barrel.

Gold was steady at $1,717 an ounce.