Stocks climb before US inflation data

Expectations for a pick-up in demand in China is providing upward pressure on oil prices. ©AFP

London (AFP) - Stock markets mostly climbed Tuesday before the release of key US inflation data later in the session.

The November consumer price index (CPI) figures follow Friday's forecast-beating print on US wholesale inflation, which dented hopes the Federal Reserve would scale back the size of its next interest rate hikes.

The central bank is widely expected to lift interest rates 50 basis points Wednesday -- a slowdown from the previous four 75-point hikes -- but its post-meeting statement and comments from boss Jerome Powell will be closely followed.

While the general view is that policymakers will stop increasing borrowing costs next year, there is debate about how high they will peak and when they will start to come down.

"I think CPI will be important but not necessarily for this meeting, for which a 50 basis-point hike is well flagged, but rather it will help determine the extent of further tightening," said Mitul Kotecha, of TD Securities.

"Don't expect clearcut signals from the Fed...on what they expect to be doing at early 2023 meetings," said National Australia Bank's Ray Attrill.

Elsewhere, China's shift away from its economically damaging zero-Covid policy continued to support sentiment as the world's number two economy opens up.

Top Chinese officials are meeting this week to draw up their economic blueprint for re-emerging from Covid, with observers predicting more stimulus measures and pledges of support for the troubled property sector.

But there is also a worry among investors that the quick relaxation of containment measures such as mass testing and lockdowns might lead to a massive surge in infections that could overwhelm the healthcare system and weigh on the economy.

Still, the expected pick-up in demand in China boosted oil prices further, with both main contracts extending Monday's strong gains.

"China's reopening is coming, it won't happen overnight, but it will provide a major boost to demand in the outlook next quarter," said OANDA's Edward Moya.

Ahead of the Wall Street open, United Airlines unveiled an order of 100 new Boeing 787 Dreamliners with options for an additional 100 jets.

And the US Securities and Exchange Commission charged disgraced cryptocurrency tycoon Sam Bankman-Fried with defrauding customers of billions of dollars.