Australia

Australian shares are set to open higher, as the fed-fueled rally extended gains on Wall Street.

ASX futures were up 0.6% or 48 points as of 8:30am on Friday, suggesting a higher open.

US stocks added to gains to end at new highs for 2023 after the Fed confirmed expectations that it is leaning toward multiple rate cuts next year.

DJIA gained 158 points to 37248, the S&P 500 added 0.3% to 4719 and the Nasdaq climbed 0.2% to 14761.

In commodity markets, Brent crude oil rose 3.3% to US$76.72 a barrel while gold was up 0.4% to US$2,036.03.

In local bond markets, the yield on Australian 2 Year government bonds was down at 3.85% while the 10 Year yield was also down at 4.13%. US Treasury notes were down, with the 2 Year yield at 4.38% and the 10 Year yield at 3.91%.

The Australian dollar hit 66.94 US cents down from the previous close of 66.58. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 96.47.

Asia

Chinese shares closed lower, losing steam gained in early trading after the Fed held rates steady and signaled interest-rate cuts next year. The overall market sentiment on China remains negative after the disappointing economic work conference. Beverage stocks led losses for a second session. Shanxi Xinghuacun Fen Wine Factory was down 2.6% and Kweichow Moutai dropped 1.45%. Wuliangye Yibin lost 0.8%. Coal producers were among the gainers, with Shanxi Lanhua Sci-Tech Venture rising 0.6% and Pingdingshan Tianan Coal Mining adding 1.2%. Zijin Mining gained 0.35%. The benchmark Shanghai Composite Index fell 0.3% to 2958.99 and the Shenzhen Composite Index shed 0.55%. The ChiNext Price Index declined 0.6%.

Hong Kong shares closed higher as markets cheered the Fed's dovish stance. The benchmark Hang Seng Index rose 1.1% to 16402.19 and the Hang Seng Tech Index added 0.3%. Looking ahead, Chinese economic data due tomorrow could keep investors on the sidelines amid concerns that it may be another round of disappointing data, IG market strategist Jun Rong Yeap said. Energy and property stocks led gains. ENN Energy was up 7.65% and Power Assets Holdings gained 6.3%. Link REIT rose 4.7% and Hang Lung Properties was up 4.2%. Meanwhile, NetEase and Baidu dropped 3.15% and 2.0%, respectively.

Japan's Nikkei Stock Average fell 0.7% to close at 32686.25, with a starkly stronger yen hurting automakers and other exporters. The benchmark index started the day higher but capitulated by mid-morning as regional markets interpreted overnight FOMC messaging to mean rate cuts are highly likely in the new year, strengthening most Asian currencies against the greenback. Investors also weighed a cabinet reshuffle taking shape, with a chief cabinet secretary and an industry minister among those tendering resignations. Mitsubishi Motors, Mazda, Nissan, Subaru and Honda shed 6.8%, 5.9%, 5.5%, 5.2% and 5.0%, respectively, as decliners outranked gainers 187 to 38. Recruit Holdings extended weekly gains with a 7.2% rise. USD/JPY was at 141.43, compared with 145.55 as of Wednesday's Tokyo stock-market close.

India's benchmark Sensex closed above the 70000 level for the first time, with readings of a more dovish Fed adding to weekslong bullishness over the direction of the domestic economy. The Sensex closed 1.3% higher at a record 70514.20, lifting a December rally to 5.3%. Tech Mahindra, Infosys, Wipro, HCL Tech added 3.9%, 3.6%, 3.5% and 3.3%, respectively, while TCS and Reliance Industries notched gains of 2.0% and 1.3%, respectively. Among decliners, Hindustan Zinc shed 1.95% and HDFC Life fell 1.9%.

Europe

European stocks pared earlier gains after the European Central Bank and Bank of England kept interest rates on hold. "Christmas came early for risk assets yesterday with the Fed's dovish turn," J.P. Morgan Asset Management global market strategist Hugh Gimber wrote. "Unfortunately for the BOE, UK economic data means policymakers simply aren't able to be as generous. With wage growth still above 7% and headline inflation north of 4%, it's too early for the Bank to declare victory in its battle against inflation." Meanwhile, the ECB hinted that a first rate cut is more likely in June or beyond, rather than early 2024, Berenberg says. The Stoxx Europe 600 rose 0.9%, the FTSE 100 advanced 1.3% and the CAC 40 gained 0.6%, but the DAX traded flat.

The FTSE 100 rose 1.3% to 7,648.98 points on the back of the U.S. Federal Reserve's pivot toward rate cuts last night, and despite a push-back on following a similar rate cut outlook from the Bank of England and the European Central Bank. "The FTSE 100...has managed to dodge some of this push-back, helped in some part by the sharp falls in yields which are helping to provide a lift to the commercial real estate and housing sector," CMC Markets UK analyst Michael Hewson said in a market comment. Retailers, miners and house builders were among the main risers, with online grocer Ocado's stock increasing 12%.

North America

US stocks added to gains to end at new highs for 2023 after the Fed confirmed expectations that it is leaning toward multiple rate cuts next year.

DJIA gained 158 points to 37248, the S&P 500 added 0.3% to 4719 and the Nasdaq climbed 0.2% to 14761.

Moderna climbed 9.2% after announcing positive trial results for an experimental mRNA-based treatment for skin cancer.

Energy was the best performing sector amid a broad commodities rally that is helped both by expectations of a soft landing for the economy as well as a weakening dollar.

Consumer staples and utilities both fell over 1%.

The 10-year Treasury yield fell back under 4% for the first time since August.