US equities closed lower overnight, with all three major benchmarks in the red. The decline followed a mixed bag of corporate earnings, including disappointing results from Tesla, which showed a fall in net income, and the company’s announcement of further price cuts. CEO Elon Musk stated that he was willing to sacrifice margins in a push for market share. All three major averages are on track for a week of losses. The Dow and the S&P500 on track for their worst weekly performances since March. 

European stocks were mostly lower and investors are considering the outlook for interest rates, after UK inflation unexpectedly held above 10%, while wage rises slowed by less than expected. 

What to watch today:

• The SPI futures are suggesting the Australian market will drop 0.52% at the open this morning, following the broad selling globally overnight. 
• In commodities: 
  • Oil prices have sharply fallen to a nearly-three week low, pressures by lingering concerns that higher interest rates could dampen growth and impact demand. 
  • Meanwhile gold is trading higher, recovering from yesterday’s losses to trading at around US$2,000 an ounce, as the US dollar declined, and yields eased. 
  • Iron ore is higher, bouncing back above the US$120 per tonne mark, however remains close to the 3 ½ month low hit earlier this week. 

Trading Ideas:

• Bell Potter maintain a buy rating on Allkem (ASX:AKE), expecting cash generation to lift substantially from 2023 with ongoing strength in lithium demand, commodity prices and production growth. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth. Bell Potter have increased their price target from $18.61 to $19.89. At AKE’s current share price of $11.64, this implies 71% share price growth in a year. 
• Trading Central have identified a bullish signal in Flight Centre (ASX:FLT), indicating that the stock price may rise from the close of $18.94 to the range of $21.20 to $21.70 over 30 days, according to the standard principles of technical analysis.