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The first trading session on the ASX for the shortened week ended in a positive note, with the key index closing up 0.23%, and 8 of the 11 sectors ending the day higher.

Pizza giant Domino’s tumbled over 7% on Tuesday after the company said it expects sales to fall below expectations for FY23 as cost-of-living pressures continue to bite. The market may also have been led by NAB business confidence data out yesterday showing Aussie business sentiment slid 4 points in May from a flat reading in April in signs of tougher times faced in the local economy from a business perspective. Westpac Consumer Confidence data also out yesterday had a similarly lacklustre reading, with consumer optimism only rising 0.2% for June from a 7.9% fall in May, which was below expectations of a 3.2% rise.

Local tech stocks rallied yesterday, taking lead from a strong session on the Nasdaq in New York on Monday. The tech rally in recent weeks has largely been driven by the hype around Artificial Intelligence, with the outlook for AI including hyper operational efficiency, massive cost reduction and overall significant performance enhancement.

Over in the US, it is a crucial week for Wall St as the Federal Reserve’s next policy meeting to decide the latest rate decision began yesterday and the rate announcement will be released this afternoon, with economists expecting a halt in rate hikes which will maintain the US cash rate at 5% to 5.25% for the month ahead. The market is also responding to US core inflation figures which were released late last night AU time, showing US core inflation fell to 5.3% from 5.5% in April and the annual inflation rate fell to 4%, the lowest level since March 2021 and below the forecast of 4.1% and down from 4.5% in April. The decline in inflation is less than half of the 9.1% peak in June 2022, driven by a decline in energy prices and slowing food inflation. The latest inflation data released in the US sparked a rally on Tuesday, pushing the S&P500 further into bull market territory, and cements bets for a rate hike pause out of the Fed. The Dow Jones rose 0.43% on Tuesday, the S&P500 added 0.69% higher and the tech-heavy Nasdaq is added 0.83%. Tech shares continue to lead the way in the US today as easing inflation and the prospect of a rate hike pause boosts optimism for the high growth sector.

Over in Europe overnight, markets ended higher as investors digested strong UK employment figures and US inflation data ahead of the US Fed’s rate hike decision. UK labour figures showed employment in the region rose 0.2 percentage points from February to April and average wage growth accelerated from 6.7% to 7.2% over the period, which were ahead of expectations. Some economists believe this data will add heat to the Bank of England to raise rates further at the policy meeting next Thursday. Germany’s DAX added 0.83%, the French CAC rose 0.56% and, in the UK, the FTSE100 rose 0.32% on Tuesday.

What to watch today:

• The SPI futures are anticipating the local index to open 0.62% higher this Wednesday on the back of the global inflation data-led rally overnight.
• On the commodities front this morning, energy stocks have come under pressure this week amid the declining price of oil, with the commodity down 6% over the last week to US$67.32/barrel amid the Fed’s latest meeting, concerns over fuel demand growth in China and increasing supply out of Russia pressuring the price of the commodity. This morning though, oil is up almost 3% at US$69.08/barrel, gold is down 0.77% at US$1941.71/ounce and iron ore is down 3.46% at US$111.50/tonne.
• AU$1.00 is buying US$0.68, 94.78 Japanese Yen, 53.97 British Pence and NZ$1.10 cents.

Trading Ideas:

• Bell Potter has downgraded the price target on Cedar Woods (ASX:CWP) from $5.40 to $5.20 but maintain a buy rating on the property and land development company following the release of a trading update whereby the company announced lower guidance for FY23 NPAT to approximately $30m compared to the previous guidance of $37.4m. Cedar Woods attributed the downgrade in guidance to weather conditions and supply chain constraints having delayed settlements from Q4 FY23 to FY24.
• And Bell Potter has increased the price target on Doctor Care Anywhere (ASX:DOC) from 6cps to 8cps and maintain a speculative buy rating on the tele-health company after the company reported a 21% rise in patient consultations in Q1FY23 from the PCP, in addition to record consultations in May of 65,200 patients.