US stock futures opened higher on Thursday following the Federal Reserve's first interest-rate increase in three years, lifting investor sentiment despite initial post-decision weakness.
The Dow Jones Industrial Average rose 0.6 percent to 51,750.70, the S&P 500 gained 1.0 percent to 7,625.05, and the Nasdaq led with a 1.3 percent advance to 26,302.16. Broker IG's pre-market indicators showed the Dow 1.3 percent higher at 52,120 and the Nasdaq 100 up 1.7 percent, after both indexes had dipped to mid-June lows late Wednesday.
The Fed raised its policy rate by 25 basis points as expected. Markets responded with relief rather than alarm, buoyed by the perception that Fed Chair Kevin Warsh is firmly committed to combating inflation and that the central bank will remain independent of political pressure. "The Fed is defending its credibility," said Michael Heise, chief economist at HQ Trust.
Easing oil prices also provided support, fueled by hopes that an important Saudi Arabian oil pipeline could restart soon. However, Haris Khurshid, an investment strategist at hedge fund Karobaar Capital, cautioned that while some capacity would return, "there is little buffer for unforeseen outages."
Declining inflation concerns were reflected not only in rising equity prices but also in strengthening US Treasury bond prices and lower yields. UBS strategists said they did not expect the Fed to derail markets, adding that at least one more rate hike remained likely but was largely priced in. "Economic strength and robust corporate earnings make rising rates easier to digest," they said.
Artificial-intelligence stocks led pre-market gains. Nvidia, Micron, Intel, Marvell Technology and Sandisk were traded 2.2 to 4.5 percent higher. All of the "Magnificent 7" tech giants moved higher pre-market.
Amazon advanced on news of an up-to-$8 billion supply agreement with Generac for data-center generators. Generac's stock surged roughly 32 percent on the announcement, which also included an option for Amazon to take a stake in Generac. Hubbell, Brown & Brown and Iron Mountain gained 4 to 5 percent. Tech-adjacent names Vertiv, Marvell and Oracle also posted notable gains. Lennar fell 2.5 percent.
In Europe, the DAX and EuroStoxx 50 each rose about 0.5 percent midday to 25,670 and 6,304 respectively. Andreas Lipkow, chief analyst at CMC Markets, said the Fed's resolve was easing European markets, but warned: "The longer inflation remains elevated, the longer the Fed must keep monetary policy tight — and the greater the risks to the economy."
In Switzerland, the SMI climbed 0.6 percent, reaching 13,906.75 by mid-morning. The SMIM rose 0.96 percent to 3,049.40 and the SPI gained 0.37 percent to 19,630.16. ABB led SMI gainers at +1.3 percent, followed by Logitech and UBS, both up about 1.2 percent. Nestlé added 0.3 percent.
UBS shares rose as the Council of States delayed its vote on new capital rules for systemically important banks with foreign operations. Time constraints prevented completion of the debate on Thursday; it resumes next week.
At Roche, positive clinical trial data failed to sustain momentum, and the stock fell 0.7 percent after gaining the previous day. Analysts viewed the results as only marginally influential since the drug is already approved. Novartis rose up to 1.2 percent.
On the insurance side, Helvetia Baloise surged 3.9 percent after half-year results that Vontobel said significantly beat market expectations, with strong synergy execution. Sandoz gained 1.7 percent and Galderma 0.8 percent; both will join the SMI next week.
Rieter fell 16 percent after UBS initiated coverage with a sell recommendation. Ypsomed declined 2.2 percent and Medacta 1.4 percent on muted analyst commentary. MCH rose 4.2 percent and Aevis 2.9 percent.
