Stocks welcome US inflation relief, but wary of Fed

SINGAPORE : Asian stocks rose on Wednesday, bonds were firm and the dollar nursed losses after data showed U.S. consumer prices barely rose in November, stoking hopes that inflation has peaked and interest rate increases will slow and eventually stop in 2023.

Overnight Wall Street surged, before paring gains to leave the S&P 500 up 0.7 per cent at the close. The dollar, which is falling from 20-year highs as U.S. interest rate expectations retreat, dropped broadly and sharply, while bonds rallied. The U.S. consumer price index increased 0.1 per cent last month, 0.2 per centage 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.

The U.S. dollar fell 1.5 per cent against the yen after the inflation data and was steady at 135.58 yen in Asia. The U.S. dollar index fell to a six-month low of 103.57, before steadying at 104.01. It is down more than 9 per cent from a two-decade high made in September.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.

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