SYDNEY, — Australian shares rose on Thursday. Investors welcomed strong cloud computing results from Microsoft that eased concerns about an artificial intelligence bubble and weighed the U.S. Federal Reserve's decision to hold interest rates steady.

The S&P/ASX 200 index was up 35.3 points, or 0.40%, at 8,882.6 at 1:23 p.m. AEDT. The benchmark opened 0.3% higher at 8,870.9 and extended its gains through the morning.

The index closed nearly flat on Wednesday at 8,847.3, after giving up early gains following hotter-than-expected inflation data.

Fed holds, signals hikes ahead

The Federal Reserve kept its benchmark interest rate in a range of 3.75% to 4% on Wednesday in Washington, in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, preferring a rate increase.

Fed Chair Kevin Warsh gave no clear guidance on the path for rates but said the central bank had not yet achieved price stability. "We're working on it," he said.

Markets now see about an 80% chance of a Fed rate hike at its December meeting, with another possible by March.

Commonwealth Bank of Australia currency strategist Joseph Capurso said he expects the Fed to raise rates in December and again in March 2027, taking the range to 4.25% to 4.50%.

"The bottom line is inflation is........

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