Asian markets are likely to be subdued Wednesday as investors await the Federal Reserve’s rate decision, with equity futures for the region mixed and currencies holding to narrow ranges in early trading.

Contracts for Japanese shares were flat, those for Australia rose slightly and futures for Hong Kong showed a small decline. The yen was little changed near 140 to the dollar while the Australian currency steadied after leading gains against the greenback in the previous session. Traders will be watching Australian inflation data this morning for further cues.

Stocks on Wall Street and commodities rose Tuesday as the Conference Board’s US consumer confidence index climbed to a two-year high. Big tech led equity gains, with traders counting on the earnings season to see whether the enthusiasm around artificial intelligence will justify this year’s market advance.

The S&P 500 closed at its highest since April 2022, the Nasdaq 100 outperformed and the Dow Jones Industrial Average saw its 12th straight advance — the longest winning run in over six years. In late trading, a $210 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) climbed as Google’s parent Alphabet Inc. reported revenue that beat analysts’ expectations. Microsoft Corp. posted tepid sales growth, while Texas Instruments Inc. gave a lukewarm forecast.

While Chinese assets rallied following the Politburo meeting Monday, investors are still cautious. They are waiting for Beijing to deliver more tangible support for economy amid concern that debt and demographics constraints will weigh on growth.

In a reminder of the opaqueness of government actions, China removed its foreign minister following just seven months in the job after he disappeared from public view in June. Meanwhile, it named Pan Gongsheng as central bank governor.

In the approach to the Fed’s decision, strong consumer confidence data bolstered the soft-landing narrative for the US economy — while suggesting policymakers aren’t done with their inflation fight yet. Rates on swap contracts continued to price in a quarter percentage-point Fed hike later on Wednesday, with an additional 12.5 basis point increase factored in by year-end. That indicates a 50% likelihood of another quarter-point move.

Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped five basis points to 4.87%. The dollar halted a five-day advance Tuesday.

Oil slipped slightly Wednesday after recent gains amid tighter supplies and optimism that China’s government will boost the country’s economy.

Earnings tests

There are so many bulls in the US stock market that any disappointment on the economy or earnings poses a risk to the rally, according to Citigroup Inc. strategists. Investor exposure to the S&P 500 remains extended and one-sided, even after bullish momentum has waned in recent weeks, a team including Chris Montagu said.

Given that Wall Street had set a low bar coming into the reporting season, roughly 80% of the companies have thus far beaten profit estimates, according to data compiled by Bloomberg.

With the S&P 500 just 5% away from its all-time high, elevated bullish positioning and indicators pointing to overbought levels, many investors are counting on earnings to make a decision on where to go from here. That’s especially true when it comes to big tech, with the Nasdaq 100 continuing to push higher even after an over $5 trillion rally that has spurred concerns about overstretched valuations.

“The next couple of weeks will be when the proverbial rubber hits the road for the Nasdaq 100,” said Matthew Weller, global head of research at Forex.com and City Index. “With the index still hovering near bull-market highs and up more than 40% on the year, investor expectations are clearly elevated — leaving little room for error.”

Key events this week:

• US new home sales, Wednesday
• FOMC rate decision, Fed Chair Powell news conference, Wednesday
• China industrial profits, Thursday
• ECB rate decision, Thursday
• US GDP, durable goods orders, initial jobless claims, wholesale inventories, Thursday
• Japan Tokyo CPI, Friday
• BOJ rate decision, Friday
• Eurozone economic confidence, consumer confidence, Friday
• US consumer income, employment cost index, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 7:21 a.m. Tokyo time. The S&P 500 rose 0.3% on Tuesday
• Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 0.7%
• Nikkei 225 futures were little changed
• Australia’s S&P/ASX 200 Index futures rose 0.3%
• Hang Seng Index futures fell 0.5%

Currencies

• The euro was little changed at $1.1051
• The Japanese yen was little changed at 140.94 per dollar
• The offshore yuan was little changed at 7.1371 per dollar
• The Australian dollar was little changed at $0.6789

Cryptocurrencies

• Bitcoin was little changed at $29,223.1
• Ether was little changed at $1,861.11

Bonds

• The yield on 10-year Treasuries advanced one basis point to 3.88% Tuesday

Commodities

• West Texas Intermediate crude fell 0.4% to $79.34 a barrel

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Rita Nazareth.