Australia

Australian shares are set to open lower, after Wall Street was spooked by CPI print.

ASX futures were down 1.2% or 90 points as of 8:30am on Wednesday, suggesting a lower open.

A higher-than-expected CPI reading had investors pushing out rate cut expectations and sending stocks sharply lower.

The DJIA dropped 524 points, or 1.4%, to 38272, the S&P 500 lost 1.4% to 4953 and the Nasdaq slid 1.8% to 15655.

In commodity markets, Brent crude oil rose 0.7% to US$82.58 a barrel while gold was down 1.3% to US$1,993.30.

In local bond markets, the yield on Australian 2 Year government bonds was up at 3.85% while the 10 Year yield was also up at 4.17%. US Treasury notes were higher, with the 2 Year yield at 4.67% and the 10 Year yield at 4.32%.

The Australian dollar hit 64.43 US cents down from its previous close of 65.28. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 99.15.

Asia

China and Hong Kong markets were closed for the lunar new year holidays.

The Nikkei Stock Average closed 2.9% higher at 37963.97, its highest level since January 1990, driven in part by strong earnings. Tokyo Electron surged 13% after it raised fiscal-year earnings forecasts. Investors are focusing on U.S. consumer inflation data due later in the day, as well as corporate earnings. The 10-year Japanese government bond yield stays flat at 0.720%.

India's Sensex rose 0.7% to close at 71555.19 ahead of U.S. CPI data due out later today. A softer-than-expected set of data will probably boost the probability of a Fed rate cut in May and support equities, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in an email. Among financial institutions, ICICI Bank rose 2.5% and Axis Bank was up 2.3%. Among technology stocks, Wipro added 2.1% and Tech Mahindra rose 1.1%. Coal India climbed 4.5% after 3Q net profit jumped 17% on year. Meanwhile, Steel Authority of India slipped 4.1% after 3Q net profit dropped 22% on year.

Europe

European shares dropped after U.S. CPI topped expectations. The Stoxx Europe 600 fell 1% and the CAC 40 and DAX backtracked 0.9%. Oil stocks traded mixed as Brent crude rose 0.7% to $82.58 a barrel. "A higher-than-expected US CPI print provoked a sell-off in global equities as rate-cut expectations are pushed back," IG analyst Axel Rudolph writes. "Hopes for a Fed March rate cut have all but disappeared, with the market now pricing in a 53% probability of a first cut in June. The Brent crude oil price is on track for its seventh straight day of gains, albeit at a slower pace, as investors mull over the Middle East situation and supply concerns."

London's blue-chip index ended the session 0.81% lower at 7,512.28 points on Tuesday after U.S. inflation data sent global markets lower, dragging the FTSE 100 to its lowest point since Jan. 25. "A higher-than-expected U.S. CPI print provoked a sell-off in global equities as rate cut expectations are pushed back," IG analyst Axel Rudolph writes in a market comment, adding that the market now prices in a 53% probability of a first cut in June, instead of March and then May. "So, once again, it's volatility time for equities as risk appetite decreases and investors take a step back and wonder if they should lock in some profits from the recent rally on the U.S. market," AJ Bell analyst Dan Coatsworth says.

North America

A higher-than-expected CPI reading had investors pushing out rate cut expectations and sending stocks sharply lower.

The DJIA dropped 524 points, or 1.4%, to 38272, the S&P 500 lost 1.4% to 4953 and the Nasdaq slid 1.8% to 15655.

Major stock indexes had risen to all-time highs in anticipation of looser Fed policy early this year.

All 11 S&P 500 sectors fell, with real estate shares losing nearly 2% on worries that higher mortgage rates will slow housing deals.

The dollar surged against the euro and yen following the report, while the 10-year Treasury yield rose 0.145 percentage points to 4.315%.