SINGAPORE, Dec 14 ― Asian stocks advanced today, bonds were firm and the dollar nursed losses after data showed US consumer prices barely rose in November, stoking hopes inflation has peaked and interest rate increases will slow and eventually stop in 2023.

Nervousness about policymakers' next moves, though, kept the mood in check ahead of a Federal Reserve meeting later in the day and central bank meetings in Britain and Europe on Thursday. Investors are also turning watchful on the global economy, despite China's reopening from tight Covid restrictions.

The US consumer price index increased 0.1 per cent last month, 0.2 percentage points slower than economists expected, and in the 12 months through November, headline CPI climbed 7.1 per cent ― its slowest pace in about a year.

European markets were set for a higher open with pan-region Euro Stoxx 50 futures up 0.15 per cent, German DAX futures flat and FTSE futures FFIc1 rising 0.05 per cent. US stock futures, the S&P 500 e-minis, meanwhile, advanced 0.35 per cent.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 per cent. The index is up 1.2 per cent so far this month.

Japan's Nikkei was up 0.78 per cent while Australian shares advanced 0.67 per cent.

China and Hong Kong stocks also jumped today as easing Covid-19 curbs and refocus on economic growth underpinned sentiment.

China's blue-chip CSI 300 Index rose 0.3 per cent while the Hang Seng Index climbed 0.89 per cent.

"If CPI comes off and China fully reopens, that's still not really enough to go gung-ho in Asia markets, because we're facing a scenario where the more developed markets, the major markets are facing a recessionary environment in 2023,” said Sat Duhra, Portfolio Manager on Janus Henderson Investors’ Asia ex Japan Equity Team.

"There will be some upside from China reopening, but I think it's not enough to offset the negatives.”

Overnight Wall Street surged, before paring gains to leave the S&P 500 up 0.7 per cent at the close. The index was up nearly 2.8 per cent at one stage, while the Nasdaq rose as much as 3.8 per cent before closing 1 per cent higher.

The dollar, which is falling from 20-year highs as US interest rate expectations retreat, dropped broadly and sharply, while bonds rallied.

The yield on benchmark 10-year US Treasuries fell 11 basis points overnight and was steady at 3.4956 per cent in afternoon Asia trade. Two-year yields, which track short-term interest rate expectations, touched 4.2053 per cent compared with a US close of 4.229 per cent.

The US dollar fell 1.5 per cent against the yen after the inflation data and was steady at ¥135.37 in Asia. The US dollar index, which tracks the greenback against a basket of currencies of other major trading partners, fell to a six-month low of 103.57, before steadying at 104.04. It is down more than 9 per cent from a two-decade high made in September.

Fed ahead

Futures pricing shows markets expect the Fed will slow the pace of hikes, but still raise its Funds rate target range by 50 bps to between 4.25 per cent and 4.5 per cent later on Thursday.

Much of the focus then falls on the "dot plot” chart of committee members projections about future rate movements, and the tone chairman Jerome Powell strikes in his press conference.

"There are now clear signs that inflation is softening, but it is still at elevated level,” said Tareck Horchani, head of dealing, Prime Brokerage, at Maybank Securities in Singapore.

"The market wants to know if the Fed will change their stance on the dot plot,” he said, with the median projection in September being for a peak in the Fed funds rate of around 4.6 per cent next year.

Oil was carried 1 per cent higher with the broader mood, before trimming gains a bit in Asia with Brent futures last at US$80.35 (RM354.45) a barrel and US crude at US$75.12 a barrel.

Bitcoin got a bounce overnight, but was unable to hold onto gains above US$18,000.

Cryptocurrency markets have been unmoved, but transfixed, by the arrest of FTX founder Sam Bankman-Fried, who was accused by US prosecutors yesterday of misappropriating billions of dollars in customer funds from the cryptocurrency exchange. ― Reuters