Global stocks inch higher on US data, with Fed in focus

• Global market surge stalls as Fed decision looms
• European stocks open lower
• Fed dot plot in focus, statement due at 1900 GMT

Global stocks eked out small gains on Wednesday and the dollar slipped after data showed US consumer prices barely rose in November, stoking hopes that central banks will stop raising interest rates in early 2023.

The subdued price moves followed a rally in stocks and a sharp drop in the dollar on Tuesday after the data was released. Yet nervousness about policymakers' next moves kept the mood in check ahead of a Federal Reserve meeting later on Wednesday and central bank decisions in Europe and Britain on Thursday.

The US consumer price index (CPI) increased 0.1% last month, 0.2 percentage points slower than economists expected. In the 12 months through November, headline CPI climbed 7.1% - its slowest pace in about a year. Data on Wednesday showed British inflation also moderated more than anticipated in November.

The MSCI All World stock index edged 0.1% higher as Asian equities rose but European markets slipped. It jumped more than 1% the previous day.

In currency markets, the dollar fell again after tumbling against a range of major currencies on Tuesday. It was last down 0.25% against Japan's yen JPY= to 135.21. The euro EUR=EBS was up 0.21% against the greenback at $1.065.

The MSCI All World is on track for its strongest quarter since the end of 2020, in a sign of investors' confidence that the pain from central bank rate hikes might soon be over.

Meanwhile, the dollar has dropped around 9% from a two-decade high in September. The dollar index =USD was 0.22% lower at 103.84 after hitting a six-month low of 103.57 the previous day.

Yet investors had shrugged off Tuesday's inflation data and were in a "wait and see mood" on Wednesday ahead of the Fed decision, said Susannah Streeter, senior markets analyst at Hargreaves Lansdown.

"There was that pop we saw in markets, but then there's a realisation perhaps dawning that it's not necessarily going to be an easy path ahead," she said. "Given the vertiginous climb we've gone up, it means that actually it's a long way down."

European stocks opened lower, with the continent-wide Stoxx 600 falling 0.5% after rising 1.3% in the previous session.

Futures for the US S&P 500 stock index ESc1, meanwhile, were flat. That followed a 0.7% rise in the index on Tuesday.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.01% as easing Chinese Covid-19 curbs boosted sentiment.

The yield on benchmark 10-year US Treasuries US10YT=RR was down 2 basis points (bps) to 3.485%, after tumbling 11 bps on Tuesday. Yields move inversely to prices.

FED AHEAD

Futures pricing shows markets expect the Fed will slow the pace of hikes when it announces its decision at 1900 GMT, but still raise its Funds rate target range by 50 bps to between 4.25% and 4.5%. FEDWATCH

Much of the focus then falls on the "dot plot" chart of committee members' projections about future rate movements, and the tone chairman Jerome Powell strikes in his press conference.

"The market wants to know if the Fed will change their stance on the dot plot," said Tareck Horchani, head of dealing, Prime Brokerage, at Maybank Securities in Singapore. The median projection in September was for a peak in the Fed funds rate of around 4.6% next year, but many analysts think the Fed could go higher.

Oil prices rallied more than 3% on Tuesday but were last trading roughly flat, with Brent futures LCOc1 at $80.52 a barrel and US crude CLc1 at $75.34 a barrel.

Bitcoin BTC=BTSP got a bounce on Tuesday despite the arrest of FTX exchange founder Sam Bankman-Fried, who was accused by US prosecutors of fraud. It was last up 0.21% to $17,810.