Microsoft is set to report its Q1 fiscal year 2026 earnings on Wednesday after the market closes. Wall Street analysts are forecasting adjusted earnings of $3.68 per share, representing an 11% increase from the previous year. Revenue is expected to show strong growth, particularly within Microsoft’s cloud business. Azure cloud platform revenue is projected to reach $23 billion, marking a 38% year-over-year increase. Overall, the company’s total revenue is forecasted at $75.5 billion, up 15% compared to the same period last year.
Analyst feedback ahead of the earnings release has been largely positive. Deutsche Bank noted overwhelmingly favorable responses from Microsoft customers regarding the company’s competitive positioning. Citi analysts highlighted strong demand for Azure services from both corporate and public sector clients, indicating infrastructure spending remains a key focus for investors.
In line with this, Microsoft revealed it invested $30 billion in data centers and cloud infrastructure in its most recent quarter. Bank of America analysts project full-year capital expenditures could reach $125 billion, exceeding Wall Street’s consensus estimate by $10 billion. This significant spending signals robust demand for AI infrastructure suppliers, including Nvidia. Earnings reports this week from Microsoft, Alphabet, Amazon, and Meta will provide valuable insights into the demand outlook for AI chips and data center equipment.
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**Federal Reserve Rate Decision Takes Center Stage**
The Federal Reserve is expected to cut interest rates by 25 basis points to 4% on Wednesday. Markets are pricing in near certainty of this move, with futures markets also indicating another rate cut is likely in December. If these expectations materialize, it would bring total easing to 150 basis points since September 2024.
Fed Chair Jerome Powell’s post-decision press conference is anticipated to omit economic forecasts or explicit rate projections. Instead, investors will focus on his comments regarding labor market conditions and inflation expectations. Powell is expected to continue expressing caution about potential employment risks while characterizing tariff-related inflation as a temporary issue.
Additionally, the Fed’s quantitative tightening program may see changes soon. Powell recently suggested conditions are nearing a point where the central bank could end its balance sheet runoff. Banking system reserves have fallen below $3 trillion—a level still considered ample for liquidity—which could influence the Fed’s policy moves going forward.
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**Crypto Markets Show Resilience Ahead of Key Economic Events**
Cryptocurrency markets have demonstrated strength ahead of this week’s major economic announcements. Bitcoin rose 1.7% over 24 hours, reaching $113,600 and extending a three-day winning streak. This upside momentum follows signs of seller exhaustion near the 200-day simple moving average at $108,800. The next resistance level for Bitcoin is the 50-day moving average at $114,250.
Other major cryptocurrencies also gained ground. XRP surged 3% and climbed above its 200-day moving average at $2.60. Ether and Solana posted similar 3% gains over the same period. These movements occurred as traders positioned themselves ahead of the Federal Reserve and Bank of Japan’s upcoming policy decisions.
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**Upcoming Central Bank and Geopolitical Events to Influence Markets**
The Bank of Japan is scheduled to hold its policy meeting on Thursday, with expectations that interest rates will remain unchanged. Markets currently price in a potential quarter-point rate cut by early 2026. Updates to the BOJ’s economic forecasts could introduce volatility to global markets.
Meanwhile, U.S. President Donald Trump and Chinese President Xi Jinping are set to meet Thursday in South Korea during the APEC Summit. Both leaders have released statements indicating progress toward a trade agreement. The outcomes of this high-profile meeting may sway risk asset sentiment in the short term.
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**Big Tech Earnings and AI Spending in Focus**
This week’s earnings calendar is packed with reports from major technology companies including Apple, Meta Platforms, Alphabet, and Microsoft. Investors will be closely monitoring these earnings for indications of AI-related spending trends, which have been a key driver of market gains since 2023.
The collective performance of these tech giants will provide critical insights into the demand dynamics for next-generation technologies and infrastructure, shaping market expectations for the coming quarters.
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Stay tuned for full coverage and analysis as these events unfold.
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