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Annual US inflation fell for a ninth consecutive month in March to 5% or the lowest level since May 2021. Economists were expecting annual inflation to fall to 5.2% so the larger drop to 5% beat expectations. Core inflation, the Fed’s preferred measure of inflation as it removes the volatile food and energy prices, on the other hand inched up for the first time in 6-months to 5.6% for March from 5.5% in February. Investors were spooked into sell-off mode on Wednesday after some fed officials said a mild recession is likely this year before the economy recovers over the next 2-years. The Dow Jones fell 0.11%, the S&P500 lost 0.41% and the tech-heavy Nasdaq fell 0.85% on Wednesday.

Over in Europe, markets closed slightly higher as investors digested key inflation data out of the US, with markets already factoring in a 75% chance that the Fed will raise interest rates by a further 25-basis points in May. Germany’s DAX rose 0.31%, the French CAC added 0.09% and, in the UK, the FTSE100 rose 0.5% on Wednesday.

The local market closed 0.47% higher buoyed by a rally for technology and materials stocks, extending the local bourse’s rally into a second straight session.

What to watch today:

• Ahead of the local trading session the SPI futures are anticipating the ASX to open 0.04% lower or flat on the second last trading session of the week as global recession fears enhance on the back of the comments made by Fed officials overnight.
• On the commodities front this morning oil is trading 2.12% higher at US$83.26/barrel, gold is up 0.53% at US$2013.70/ounce and iron ore is up 1.25% at US$121.50/tonne. Iron Ore prices have risen in recent days following the formation of a cyclone off the Kimberley coast in Western Australia, a key region for iron ore export in Australia.
• Stocks trading ex-dividend today include Best & Less (ASX:BST), Horizon Oil (ASX:HZN) and Duxton Water (ASX:D2O). If you’ve been thinking about these stocks it might be worth considering buying in today as stocks trading ex-dividend generally trade lower on the ex-dividend date.
• On the economic calendar front today, there is no local data released however over in the US tonight, Producer Price Index data for March will be released with the market expecting a rise of 0.1% following a 0.1% drop in February.

Trading Ideas:

• Bell Potter has initiated coverage of LGI Limited (ASX:LGI) with a Hold recommendation and a 12-month price target of $2.56. Bell Potter is positive on the long-term prospects for the market leader in the biogas recovery and renewable energy space, but feels the company is well valued at its current range.
• Bell Potter has cut its price target on Whitehaven Coal (ASX:WHC) from $8.15 to $7.05 and maintain a hold rating on the leading Australia coal producer, after the company cut its FY23 production guidance. Whitehaven Coal cited predicted labour shortages, operational constraints at Maules Creek, and weather interruptions during March, as the reasons for the downgrade in guidance.