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Despite US inflation data reaching a 40-year high, Australian shares gained for the second consecutive week. However, on Friday the ASX200 dropped 1%, with all but the materials sectors in the red. US consumer inflation for January rose 7.5%, far above the expected figure. The S&P US 2-year and 10-year treasury bond indices fell 0.5% and 1% in response. Goldman Sachs economists have increased their forecast for the Fed to hike interest rates 7 times this year, up from 5. On Friday, the RBA Governor Phillip Lowe said that if US inflation forced the Fed to raise rates faster than expected, markets are at risk of an “abrupt adjustment”.

On Friday’s ASX200 leaderboard, Unibail-Rodamco-Westfield (ASX:URW) made the most gains, closing 6.5% higher, after announcing a sale and joint centre to a French shopping centre, agreeing to sell 45% of Westfield in Paris. URW also reported its full-year 2021 results, which saw “tenant sales approaching pre-COVID levels” and its portfolio was valued at €54.5 billion as of the 31^st December. Meanwhile the worst performer was language testing and student placement company IDP Education (ASX:IEL), after reporting its earnings. However, Goldman Sachs were pleased with the company’s half year results and have retained their BUY rating.

The most traded stocks by Bell Direct clients on Friday included CSL (ASX:CSL), AVZ Minerals (ASX:AVZ), Macquarie Group (ASX:MQG) and Westpac (ASX:WBC).

US equities closed lower, as worries of an imminent Russian invasion of Ukraine add onto the list of concerns about interest rates and inflation. The S&P500 closed 1.9% lower after the White House asked all US citizens to leave Ukraine. The Dow lost 1.4% and the Nasdaq dropped 2.8%.

What to watch today:

• Following Wall Street, the SPI futures are suggesting the ASX200 will fall 0.46% at the open this morning.
• In commodities, Russia is one of the world’s largest energy producers and the warning for US citizens to leave Ukraine has seen the price of oil rise 3.6%, trading at US$93 a barrel. However, oil prices have been rising before the warnings, most likely due to a statement from the International Energy Agency that oil market supplies are already tight. Gold is trading almost 2% higher at US$1,862.60 an ounce, while the seaborne iron ore price is lower at US$150.87 a tonne.
• Reporting season is in full swing this week, with many companies set to report their earnings results. A few reporting today include Boral (ASX:BLD) and JB Hi-Fi (ASX:JBH). Bell Potter expect Boral to report NPAT of $137.6 million and JB Hi-Fi to report NPAT of $287.9 million.
• Suncorp (ASX:SUN) is set to go ex-dividend today.

Trading Ideas:

• Bell Potter have maintained their BUY rating on DGL Group (ASX:DGL) and have increased their price target from $3 to $3.50, after the company delivered half-year results well ahead of expectations. They reported first-half normalised EBITDA of $23.0 million up 139% on the prior corresponding period, significantly exceeding Bell Potter’s $17.9 million.
• Trading Central have identified a bullish signal in Focus Minerals (ASX:FML) indicating that the stock price may rise from the close of $0.28 to the range of $0.34 to $0.36 over 25 days, according to the standard principles of technical analysis.