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US inflation came in hotter than expected this week, with consumer prices rising 8.3% year-over-year in August. However, what was even more concerning than the headline figure was the core inflation measure excluding volatile food and energy prices, which accelerated from 5.9% in July to 6.3% in August. Now, the interest rate futures responded to the inflation readings by pricing out any probability of a 0.5% hike at next week’s Fed meeting, and pricing in a 32% likelihood of a full percentage point hike, up from 0% probability one week prior.

US equities overnight closed higher. The Dow Jones slightly higher, up just 0.1%, the S&P500 up 0.3% and the Nasdaq up 0.7%.

What to watch today:

• Locally, the Australian market is set to open flat this morning, with the SPI futures suggesting a rise of just 0.09%. Investors are hoping for a more positive outlook today, after yesterday’s heavy sell-off.
• In commodities,
  • Oil is trading just under 2% higher, as investors continue to assess the outlook for global demand. Oil stocks to watch include Santos (ASX:STO) and Woodside Energy (ASX:WDS).
  • Gold is in the red, weighed down by a sharp US dollar, as the higher-than-expected US inflation figures fuelled expectations that the Fed will continue to raise rates. So gold miners to keep your eye on are Evolution Mining (ASX:EVN) and Regis Resources (ASX:REG).
  • And iron ore is trading at its highest level in almost three weeks, amid prospects of increased Chinese demand. China, a top steel producer and iron ore consumer, has announced more stimulus measures to support its COVID-hit economy, which includes new infrastructure projects. So keep watch of miners that may benefit from rising iron ore prices, such as Rio Tinto (ASX:RIO), Fortescue Metals (ASX:FMG), BHP (ASX:BHP), and Champion Iron (ASX:CIA).
• Stocks set to go ex-dividend today, which often sees share prices fall include Best & Lee (ASX:BST), Earlypay (ASX:EPY), IGO (ASX:IGO), Regis Healthcare (ASX:REG), Ramelius Resources (ASX:RMS) and South32 (ASX:S32).

Trading Ideas:

• Bell Potter maintain a Speculative Buy rating on Avita Medical (ASX:AVH) with a valuation of $3.00. At its current share price of $1.95, this implies 53.8% share price growth in a year.
• Trading Central have identified a bearish signal in Bendigo and Adelaide Bank (ASX:BEN), indicating that the stock price may fall from the close of $8.43 to the range of $7.90 to $8.00, over 5 days, according to the standard principles of technical analysis.