Asian stocks rose broadly on Wednesday, tracking a rally from Wall Street as investors latched on to the year-end optimism driven by expectations that the Federal Reserve could begin cutting rates as early as next March. 

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As traders wind down with few critical economic data releases scheduled between now and the end of the month, the market mood continues to be dominated by the prospect that major central banks globally could begin easing rates in 2024, with the Fed taking the lead.

Those bets have spurred a bout of risk-taking and driven a rally in global equities, with MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) last up 0.6 per cent.

The index was on track for a 2.3 per cent gain this month and looked set to end the year roughly 2.5 per cent higher, having clocked a 20 per cent decline in 2022 - its worst performance since 2008.

Japan's Nikkei (.N225) rose 1.2 per cent, while Hong Kong's Hang Seng Index (.HSI) was last up 0.9 per cent in its first trading day after being closed for the Christmas and Boxing Day holidays.

Market pricing now shows a more than 80 per cent chance the Fed is likely to begin cutting rates next March, according to the CME FedWatch tool, with over a 150 basis points of easing priced in for all of 2024 .

"One of the most notable developments of 2023 came at the end of the year when the Federal Open Market Committee (FOMC) delivered a surprisingly dovish signal at its December meeting," said Tim Murray, a capital markets strategist in the multi-asset division at T. Rowe Price.

"This is a big deal. We spent 2023 fearing that the impacts of tight monetary policy would drag the economy into recession. Happily, that did not happen, and a more dovish Fed means the likelihood of recession in 2024 has fallen considerably."

In the currency market, the dollar remained on the back foot and languished near a five-month low against a basket of currencies and a four-month trough against the euro.

The common currency last bought $1.1032.

The yen slipped 0.2 per cent to 142.68 per dollar, with a summary of opinions from this month's Bank of Japan (BOJ) policy meeting showing that policymakers remain divided over if, and when, the central bank should move away from its ultra-loose monetary stance.

While the board agreed to maintain massive stimulus for the time being, the nine members were split between those who were cautious about raising interest rates, and others who saw the need to start preparing for a future exit, the summary released on Wednesday showed.

"The BOJ minutes sounded dovish with some members noting that upside inflation risks remained small, thus there was no need for 'rapid tightening'," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

Elsewhere, Brent crude futures and U.S. WTI crude futures slipped, though stood not too far from their respective one-month highs hit in the previous session as further attacks on ships in the Red Sea prompted fears of shipping disruptions.

Israel's war on Hamas will last for months, Israel's military chief said on Tuesday, while the United Nations voiced alarm over an escalation of Israeli attacks that killed more than 100 Palestinians over two days in part of the Gaza Strip.

Brent fell 27 cents to $80.80 a barrel, while U.S. crude lost 35 cents to $75.21.

Spot gold fell 0.07 per cent to $2,065.19 an ounce.