Australia

Australian shares are set to open higher, after US investors ended the week on a high after the cooler inflation outlook.

ASX futures were up 0.4% or 28 point as of 8:30am on Monday, suggesting a higher open.

The S&P 500 rose 0.1% Friday, capping off a 2.2% gain for the week. The broad-based index, which booked a third straight weekly advance, has closed higher in 13 of the last 15 sessions.

The Dow Jones Industrial Average was little changed Friday, while the Nasdaq Composite was up 0.1%.

Tuesday's cooler-than-expected inflation report was the latest reason for investors to cheer, helping extend a furious November rally in which the S&P 500 has jumped 7.6%. Traders are betting the Federal Reserve's rate-hike campaign is done for now and that inflation will head toward target levels without a steep recession—the elusive "soft landing."

Interest-rate derivatives now indicate that traders see a greater-than-50% chance of an interest-rate cut by the Fed's May meeting.

In commodity markets, Brent crude oil rose 4.1% to US$80.61 a barrel while gold was flat at US$1,980.82.

In local bond markets, the yield on Australian 2 Year government bonds was lower at 4.15% while the 10 Year yield was down at 4.46%. US Treasury notes mostly flat, with the 2 Year yield at 4.89% and the 10 Year yield at 4.44%.

The Australian dollar was unchanged at 65.13. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 98.58.

Asia

Chinese shares closed higher, lifted by auto shares after authorities said it would allow road trials for some intelligent vehicles in designated city areas. Great Wall Motor gained 0.6% and SAIC Motor Corp. increased 1.1%. Pharmaceutical and retail stocks were also broadly higher. Jiangsu Hengrui was up 0.7% and Chongqing Zhifei Biological Products put on 3.4%. Telecommunications stocks weighed on the market, with China Mobile declining 1.3% and China Unicom down 1.4%. The benchmark Shanghai Composite Index rose 0.1% to 3054.37, ending the week 0.5% higher. The Shenzhen Composite Index was 0.4% higher and the tech-heavy ChiNext Price Index also advanced 0.4%.

Hong Kong stocks closed lower, weighed by disappointment over Alibaba's scrapped cloud-unit spinoff and concerns about what the decision says about other companies affected by tightened U.S. controls on chip exports. Alibaba ended 10% lower, its biggest single-day percentage loss in more than a year, even as many analysts reiterated buy ratings on what they described as solid earnings and valuation levels. Prada shed 6.6%, Baidu dropped 4.9% and Meituan lost 3.9%. Among gainers, Li Auto rose 3.15% and Netease added 2.1%, while Biotech company WuXi XDC Cayman jumped 36% on its first day of trading. The Hang Seng Index closed 2.1% lower at 17454.19, trimming the week's gains to 1.5%, while the local tech index lost 1.7% to 39080.15.

Japan's Nikkei Stock Average rose 0.5% to close at 33585.20, erasing earlier losses as a moderate fall in JGB yields boosted the domestic equity market, analysts say. Gains on the benchmark index were broad-based, with Panasonic Holdings climbing 5.5%, Japan Post Bank adding 4.2%, and Kajima Corp. up 3.6%. USD/JPY was at 150.63, compared with 151.30 as of Thursday's Tokyo stock-market close. The 10-year JGB yield was down 3.5bps at 0.750% after earlier dropping to as low as 0.715%.

India's benchmark Sensex edged 0.3% lower to close at 65794.73, tracking losses in some regional equity markets. Financial institutions led declines after the Reserve Bank of India on Thursday issued regulatory measures that raised the risk weights on consumer credit exposure of commercial banks and non-banking financial companies to 125% from 100% previously. State Bank of India slipped 3.6%, Axis Bank dropped 3.0%, and Bajaj Finance was down 2.0%. Meanwhile, Larsen & Toubro rose 2.0% and Hindustan Unilever added 1.6%.

Europe

European stocks rose with the Stoxx Europe 600 up 1.0% at 455.87 on improved investor sentiment after better-than-expected eurozone current account data. "European equity indices have seen further strong gains as the Eurozone posts the largest current account surplus in over two years," IG analysts said in a note. Germany's DAX index climbed 0.8% and France's CAC 40 advanced 0.9%.

The FTSE 100 rose 1.1% to 7489.00 as Friday's weak U.K. retail sales data, Thursday's rise in U.S. jobless claims and the recent oil-price fall all added to expectations that interest rates have peaked. Expectations are growing that the Bank of England will cut rates next year, with U.K. money markets fully pricing in a rate cut in June and a total of 75 basis points of rate cuts by year-end, Refinitiv data show. Gambling company Flutter Entertainment was the biggest riser, up 3.3%, while miners, financial and real estate stocks were all among the top gainers. Retail stocks rose but underperformed after data showed U.K. retail sales unexpectedly fell 0.3% during October.

North America

U.S. investors' appetite for risk has returned.

The S&P 500 rose 0.1% Friday, capping off a 2.2% gain for the week. The broad-based index, which booked a third straight weekly advance, has closed higher in 13 of the last 15 sessions. The Dow Jones Industrial Average was little changed Friday, while the Nasdaq Composite was up 0.1%.

Tuesday's cooler-than-expected inflation report was the latest reason for investors to cheer, helping extend a furious November rally in which the S&P 500 has jumped 7.6%. Traders are betting the Federal Reserve's rate-hike campaign is done for now and that inflation will head toward target levels without a steep recession—the elusive "soft landing." Interest-rate derivatives now indicate that traders see a greater-than-50% chance of an interest-rate cut by the Fed's May meeting.

Higher interest rates have cast a chill over many riskier assets for the better part of two years, but investors have poured into some of them lately.

The Russell 2000, which tracks small-cap stocks—seen as particularly sensitive to the state of the economy—added more than 5% for the week. Cathie Wood's ARK Innovation exchange-traded fund, which invests largely in unprofitable but fast-growing technology companies, added 9.9%.

Investors plowed $7.6 billion into Invesco's QQQ ETF, which tracks the tech-focused Nasdaq-100 Index, from Monday to Thursday, more than the fund has taken in any week since its 1999 launch, according to Bloomberg. The last two weeks have seen the largest-ever weekly inflows to junk-bond ETFs, according to LSEG.

"Both bonds and stocks had become deeply oversold in recent weeks, so they reacted very positively to signs that inflation is ebbing," said Steve Sosnick, chief strategist at Interactive Brokers.

Bond yields were little-changed Friday, with the 10-year Treasury yield closing at 4.441%, from 4.444% Thursday. The benchmark yield is down more than four tenths of a percentage point in November after touching 5% late last month.

Stocks have been boosted by a strong earnings season. With most S&P 500 companies now having reported third-quarter results, more than 80% have beaten analyst expectations, according to LSEG, the highest rate since the second quarter of 2021.

Gap shares soared more than 30% Friday after the clothing retailer posted stronger-than-expected results. Discount retailer Ross Stores was up 7.2%. Target shares gained 20% on the week, their best performance since 2019.

Home builder stocks have also been getting a boost, with investors expecting that a pause in the Fed's interest rate hikes will help ease mortgage rates and fuel housing demand. Shares of PulteGroup, Toll Brothers, and KB Home have each jumped more than 5% this week. On Friday, data showed housing starts rose 1.9% in October from the previous month, above economists' estimates for a slight decrease.

Some are chalking the sharp November rally up to large flows to index funds and continued focus on a handful of large tech stocks.

"It doesn't take that much fresh demand to move stocks up a fair bit when everyone is rushing into the same index funds and big tech names," said Alexander Morris, chief investment officer of F/m Investments.

Oil prices recovered a day after falling sharply, with Brent crude, the international benchmark, closing up 4.1% at $80.61 a barrel.