US equities hit a 15-month high on Wednesday after CPI data came in lower than expected, which boosted investor sentiment. The annual inflation rate in the US slowed to 3% in June, the lowest level since March 2021, down from 4% in May and also below the consensus expectation of 3.1% in a sign the Federal Reserve’s hawkish stance on hiking rates is having a significant impact on cooling inflation. The Dow Jones rose 0.25% on Wednesday, the S&P500 added 0.74%, and the tech-heavy Nasdaq did most of the heavy lifting with the index rising 1.15% at the closing bell.

Despite inflation falling, the market is still expecting the Fed to announce another 25-basis point rate hike at the next FOMC meeting as wages inflation, services inflation and housing inflation, despite moderating, are still stubbornly high.

Over in Europe, markets in the region also had a strong rally on Wednesday as investor sentiment was boosted by inflation cooling in the US. The STOXX600 rose 1.5%, Germany’s DAX added 1.47%, the French CAC rose 1.57%, and in the UK, the FTSE100 surged 1.83%.

What to watch today:

• Ahead of the local trading session the SPI futures are anticipating the ASX to open Thursday’s session up 0.87% following the inflation-data driven rally in the US overnight.
• Locally yesterday, the ASX lifted 0.38% buoyed by a near 2% rise for the energy sector as oil is trading 1.36% higher and up 5.65% over the last week following speculation that China may move to introduce further policy to stimulate its economy through the sluggish post-pandemic recovery.
• Gold miners also extended their recent rally into the midweek session on strength in the price of the commodity while the worst performing sectors yesterday were information technology and health care.
• On the commodities front this morning, oil is trading 1.34% higher at US$75.83/barrel, gold is up 1.32% at US$1957.57/ounce and iron ore is up 1.39% at US$109.50/tonne.
• AU$1.00 is buying US$0.68 cents, 93.96 Japanese Yen, 51.97 British Pence and NZ1.08.

Trading Ideas:

• Bell Potter has initiated coverage of Smartpay Holdings (ASX:SMP) with a buy rating and a 12-month price target of $2.16/share amid terminal growth outlook from Bell Potter’s analyst. Smartpay is a full-service provider of end-to-end payment solutions and the Bell Potter analyst sees SMP has considerable uplift to gross profit and margins from implies revenue per unit as the company expands its Australian customer base.
• And Trading Central has identified a bearish signal on NIB Holdings (ASX:NHF) following the formation of a pattern over a period of 11-days which is roughly the same amount of time the share price may fall from the close of $8.43 to $7.80 to $7.90 according to standard principles of technical analysis.