Australia

Australian shares are set to open higher today after Wall Street continued Tuesday’s gains. Investors are hopeful that US consumer price data, set to be released today, will show that inflation cooled down in December.

ASX futures were up 0.8% at 7196 as of 8am on Thursday, suggesting a gain at the open.

US stocks rose Wednesday as investors grew more confident that Thursday's inflation data would lead to more muted interest-rate hikes.

The S&P 500 ticked up 1.28%, the Dow Jones Industrial Average added 0.8%, while the technology-focused Nasdaq Composite Index advanced 1.76%. All three indices rose on Tuesday as well.

Investors' attention for the remainder of this week will likely focus on the December inflation report, which the Labor Department will release on Thursday. Economists surveyed by The Wall Street Journal expect consumer prices to have risen 6.5% annually, down from 7.1% a month earlier.

In commodity markets, Brent crude oil added 3.42% to $US82.84 a barrel while gold edged 0.06% lower to US$1,875.95.

In local bond markets, the yields on Australian 2 Year and 10 Year government bonds were both unchanged at 3.28% and 3.71%, respectively. Overseas, the yield on 2 Year US Treasury notes slipped to 4.23% and the yield on 10 Year US Treasury notes declined to 3.55%.

The Australian dollar rose to 69.11 US cents after its previous close of 68.93. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, dipped to 96.16.

Asia

Chinese shares finished lower and underperformed regional markets as optimism about the country's relaxed Covid policies faded amid a surge in infections. However, CICC analysts said the declines will likely be temporary, as recent government policies continue to focus on improving the macro economy and addressing market concerns, which should support the A-share market. Most sectors retreated during the session, with software and consumer companies among the biggest decliners. Finance and property stocks led the gainers, with Ping An Insurance rising 3.0%. The Shanghai Composite Index declined 0.2% to 3161.84, the Shenzhen Composite Index dropped 0.8% and the ChiNext Price Index lost 1.1%.

Hong Kong stocks ended the session higher, resuming a broad rally so far in 2023 as optimism regarding China’s reopening continued to buoy investor sentiment. The benchmark Hang Seng Index rose 0.5% to settle at 21436.05. A wide range of sectors provided support, with coal company China Shenhua rising 4.7%, auto maker BYD up 4.7% and drug developer CSPC Pharma gaining 4.4%. Insurers also advanced, as China Life rose 3.9% and Ping An added 3.5%.

Japan equities were higher at the close on Wednesday, as gains in the machinery, glass and mining sectors propelled shares higher. At the end of trade in Tokyo, the Nikkei 225 Index rose 1.03%. The biggest gainers of the session were Yaskawa Electric Corp, which rose 6.26%, Fujitsu, which added 4.82%, and Fanuc Corp, which gained 4.60% in late trade. Biggest losers included J. Front Retailing Co, which lost 3.34% in afternoon trading, Isetan Mitsukoshi Holdings, which declined 2.98%, and Nippon Paper Industries Co, which shed 2.63%.

Europe

European stocks rose in closing trade as US equities gained ahead of tomorrow's key US inflation data that are expected to show a further easing in price pressures. The pan-European Stoxx Europe 600 rose 0.4%, the German DAX advanced 1.2%, and the French CAC 40 added 0.8%.

The British FTSE 100 added 0.4% as gains for JD Sports Fashion and miners offset losses for financial stocks and Sainsbury's. Shares in JD topped the gainers, up 5% after the clothing retailer forecast annual adjusted pretax profit toward the top end of market expectations after a strong Christmas.

Miners Glencore, Anglo American, BHP and Antofagasta gained as precious and base-metal prices rose. At the other end of the spectrum, Sainsbury lost 2% despite strong third-quarter trading as some analysts pointed to a lack of volume growth and a tough outlook.

Elsewhere, Admiral dropped 11% and other insurers fell after FTSE 250-listed Direct Line Insurance scrapped dividend plans for 2022 due to higher-than-expected fourth-quarter weather-related claims.

Overseas, Federal Reserve policymakers are "sticking to the hawkish script" with recent comments about the need for continued policy tightening but a further cooling in the latest US inflation data could change that, Oanda analyst Craig Erlam wrote. A further easing in inflation could pave the way for fewer interest rate hikes and even rate cuts later this year, he said.

North America

US stocks rose Wednesday as investors grew more confident that Thursday's inflation data would lead to more muted interest-rate hikes.

The S&P 500 ticked up 1.28%, the Dow Jones Industrial Average added 0.8%, while the technology-focused Nasdaq Composite Index advanced 1.76%. All three indices rose on Tuesday as well.

Investors' attention for the remainder of this week will likely focus on the December inflation report, which the Labor Department will release on Thursday. Economists surveyed by The Wall Street Journal expect consumer prices to have risen 6.5% annually, down from 7.1% a month earlier.

"It's becoming clearer that inflation has peaked and we're closer to the end of the rate-hike cycle than people were concerned we'd be," said Jamie Cox, managing partner at Harris Financial Group. "That's why markets are breathing a sigh of relief."

Money managers said they are bracing for potentially volatile trading after the data release. Consumer-price index data in recent months have sparked big swings in stocks. A comedown in headline inflation would be an encouraging sign for investors, though many will also focus on so-called core inflation, a measure that excludes food and energy prices -- which are often volatile -- and is considered a better indicator of underlying pricing pressures.

Markets have "been relatively quiet over the last 24 hours as we await [Thursday's] all important US CPI print," said Jim Reid, a Deutsche Bank strategist, in a Wednesday note.

Thursday's inflation data will factor heavily into the Federal Reserve's next monetary policy meeting, which kicks off Jan. 31.

Central bankers have so far indicated that they aren't yet finished with interest-rate increases. Fed Chair Jerome Powell said Tuesday the central bank remains committed to lowering inflation by restraining economic growth.

Fourth-quarter results, which kick off in earnest this week, also remained top of mind for investors. Overall, analysts expect S&P 500 companies to report their first year-over-year decline in quarterly earnings since the height of the Covid-19 pandemic in 2020, according to FactSet.

With 2022 in the rearview mirror, investors will also be carefully focused on the profit outlook for the coming year, Goldman Sachs strategists led by David Kostin said in a note published last week.

Shares of Bed Bath & Beyond jumped 42% Wednesday afternoon, extending a streak of wild trading. The retailer said Tuesday it is planning more layoffs and cost cuts after sales continued to fall.

GE HealthCare Technologies climbed 8%. The company, which recently spun out of industrial giant General Electric, said it expects 2023 organic revenue to grow from 2022 levels.