• Asian stocks better bid on positive risk sentiment.
• Nikkei and ASX taking cues from Wall Street ahead of US CPI, US election results. 

Japan's benchmark Nikkei average opened up 0.04% at 27,884.55 on Wednesday but is now back to flat as investors weigh the prospects of the forthcoming US Consumer Price Index and risks to the risk-on theme that has emanated from a turn of the sentiment of late. investors will also be looking at the midterm elections in the United States with republicans on the verge of a shake-up in the House.

In Australia, shares advanced for a fourth straight session on Wednesday, led by mining stocks as iron ore prices surged on hopes of China easing its COVID curbs, while the National Australia Bank slumped on a dire lending outlook. The S&P/ASX 200 index added 0.5% to 6,996.4 by 2343 GMT. The benchmark ended 0.4% higher on Tuesday.

In the US, the three US benchmark indices moved higher Tuesday, led by the Dow Jones Industrial Average, as investors awaited the results of the midterm elections. The Dow added more than 1% to 33,160.83. The S&P 500 rose 0.6% to 3,828.11, while the Nasdaq Composite put on 0.5% to 10,616.20. Materials, technology, and industrials led the gainers among sectors, while consumer discretionary posted the only loss.

US CPI and outlook for the Fed

The US Consumer Price Index will be critical. It will be scrutinized and analysts at TD Securities suggested that Core prices likely slowed modestly in October but to a still strong 0.4% MoM pace.'' All told, our MoM forecasts imply 7.9%/6.5% YoY for total/core prices.

'A below consensus print is likely to help push the pricing for the terminal funds rate modestly lower, likely bull steepening the curve in the process,'' analysts at TD Securities argued. ''The risk of a lower reading is why we took profit on our 2s10s curve steepener last week and went long 10y Treasuries, which we viewed as attractive,'' they said. Ultimately, this would be encouraging for stocks.