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US and European markets declined overnight, following the Federal Reserve’s Chairman’s latest comments on inflation, that weighed on the investor sentiment. Jerome Powell said that more rate hikes are likely ahead to combat inflation. US equities were flat in overnight trading, after the market suffered three consecutive days of declines, as the tech-power rally has started to fade. All three major benchmarks fell for three days in a row, with the S&P500 marking its worst daily performance this month.

What to watch today:

• The SPI futures are suggesting our local market will drop 0.14% at the open this morning, after markets closed in the red overnight.
• In economic data, the Manufacturing and Services Flash PMI will be out this morning. That’s the producer’s managers index, that looks at economic trends in the manufacturing and services sectors. The flash PMI is a forward-looking estimate of the final PMI out next Wednesday. And remember a PMI above 50, illustrates an expansion from the month prior.
• Looking at commodities,
  • The price of oil is trading 2% higher at US$72.60 a barrel, the highest in two weeks, on optimism about strong demand in the United States.
  • The gold price is lower, extending losses from this week, to their lowest in three months, following the comments made by the Fed.
  • And iron ore is now slightly lower, however is hovering near its seven-week high of US$115.50 per tonne, amid bets of incoming stimulus rollouts from Beijing.

Trading Ideas:

• Bell Potter maintains a Buy rating on Lynas Rare Earths (ASX:LYC) and have decreased their price target by 4% to $8.55 from $8.90. Bell Potter says that LYC is a high-quality business, and a key supplier of separated rare earths to Western economies. The price target of $8.55 and the current share price of $7.43, implies 15% share price growth in a year.
• Trading Central have identified a bearish signal on Flight Centre (ASX:FLT), indicating that the stock price may fall from the close of $19.90 to the range of $18.30 to $18.70 over 35 days, according to the standard principles of technical analysis.