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US equities surged to session highs in the final hour of trading overnight, after October’s reading of consumer prices raised investor hopes that inflation has peaked. US CPI rose just 0.4% for the month and 7.7% from a year ago, its lowest annual increase since January. And core CPI, where volatile food and energy costs are excluded, increased 6.3% on an annual basis, which was also less than expected.

The Dow Jones jumped more than 1,100 points or 3.4%. This was the Dow’s largest one-day increase since stocks came out of the pandemic bear market in 2020. The S&P500 closed 5.2% higher, which was its biggest one-day rally since April 2020. And the Nasdaq gained 6.7%. A really positive session overnight, as investors took the data as a sign the worst of high inflation may finally be behind us.

What to watch today:

• The Australian market is set to finish the week nicely, with the SPI futures suggesting the market will rise 2.31% at the open this morning.
•  In commodities, oil is slightly higher and starting to regain the week’s losses, after losing more than 7% in the past three sessions. Gold has jumped almost 3% higher, after the inflation reading pushed the dollar higher. And iron ore is trading 0.6% higher at US$91.50 per tonne.
• Accent Group (ASX:AX1) is set to hold its AGM today.

Trading Ideas:

• Bell Potter maintain a Buy rating on Pendal (ASX:PDL). They say the short-term driver of Pendal’s share price is almost certainly whether PDL will be acquired by Perpetual (ASX:PPT). And this is currently in balance. PPT management have rejected the approaches so far from Regal Partners (ASX:RPL), however PPT’s share price is just under $33, which implies the market expects a higher offer, from another company perhaps, with a good chance of success. Bell Potter say that financial logic would point to the $33 per share in cash offered by the consortium for PPT. However, this offer looks opportunistic and driven by sell off in PPT’s share price down to $23 in October. When comparing PPT’s historic enterprise value over EBITDA ratio, the $33 offered is not a massive premium in Bell Potter’s opinion. They have reduced their price target from $5.90 to $4.90 and at its current share price of $3.91, this implies 25.3% share price growth in a year.
• Trading Central have identified a bearish signal in JB Hi Fi (ASX:JBH) indicating that the stock price may fall from the close of $42.12 to the range of $35.25 to $36.75 over 28 days, according to the standard principles of technical analysis.