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Yesterday, the market closed 0.4% lower. Shares rose higher after the US Fed announced it would wind down its asset purchases, known as tapering, at a faster pace amid a continued rise in inflation, and signalled an interest rate rise next year.

Information technology gained the most, while healthcare fell 5%. The local market was dragged into the red by heavy losses from CSL, which lost over 8% yesterday. Champion Iron (ASX:CIA) was another of the worst performers. On Wednesday, Macquarie maintained their Outperform rating on CIA, with a $7.40 price target. The broker is generally positive on stocks with iron ore exposure.

Mesoblast (ASX:MSB) jumped 11%, off the back of a clinical trial update, where they’re working on regenerative medicines for inflammatory conditions. WiseTech (ASX:WTC) jumped over 6% to $59.10 a share, after hitting a new all-time high at $59.25 in intraday trading.

The most traded stocks by Bell Direct clients yesterday, were CSL (ASX:CSL) and Fortescue Metals (ASX:FMG), which yesterday revealed its looking to repurpose its New Zealand oil refinery. Morgan Stanley retain their Underweight rating on FMG with a $14.05 target price. And Macquarie retain their Outperform rating and a $21 target. FMG is also a Bell Potter BUY at $19.75 target.

And Woolworths (ASX:WOW) has come under some selling pressure this week, after a trading update: its bottom line took an $150 million hit. Analysts were expecting its pace of growth in grocery sales to ease off once restrictions were lifted but were caught out by the extent of COVID-19 ramifications. Woolworths staff were required to be tested every three days for Delta, then had to wait a few days for results. This interrupted the efficiency and productivity of the supermarket’s labour-intensive operations. The pandemic also caused supply shortages and delays, which led to a sharp increase in wholesale grocery prices. Most brokers have updated their recommendations on Woolworths and lowered their price targets this week. UBS retain their SELL rating, while Macquarie and Citi are Neutral.

European stocks closed higher as investors took in central bank decisions. The Bank of England yesterday hiked interest rates for the first time since the beginning of the pandemic. Meanwhile the European Central Bank further cut its bond purchases, promising to continue its monetary policy support for the euro zone into next year. And the US Fed announced several rate hikes. In New York, equities were lower, as some of the large tech names struggled, which saw the Nasdaq drop 2.5%. The Dow also down 0.08% and the S&P500 down 0.9%.

Looking to the local session ahead, despite the sell-off in tech in New York, the local market is set to open higher. The SPI futures are suggesting a 0.14% rise at the open, which is supported by a broad rally in commodities.

What to watch today:

• Oil is trading 1.5% higher, above US$71 a barrel. The gold price rose for the second straight day, trading at US$1,798 an ounce, as the dollar weakened and inflation threats become more evident after central bank meetings. The seaborne iron ore price is higher at US$111 a tonne. 
• The unemployment rate was released yesterday, which fell to 4.6% in November, from 5.2% a month earlier. Unemployment fell by 69,000 people. Employment increased by 366,000 people. The large increase in employment saw the participation rate increase to 66.1% in November. That is slightly under the peak in May, and higher than the start of the pandemic.
• Incitec (ASX:IPL), National Australia Bank (ASX:NAB) and Nufarm (ASX:NUF) are set to hold their AGMs today.

Trading ideas:

• Bell Potter have a Speculative BUY rating on S2 Resources (ASX:S2R), and have increased their valuation by 33% to $0.24, to reflect the addition of the Greater Fosterville project in Victoria to the company’s portfolio. S2R closed yesterday at $0.17, implying 37.1% share price growth in a year.
• Bell Potter maintained their BUY rating on ANZ Bank (ASX:ANZ), with a $30 price target. Macquarie have also maintained their Outperform rating on ANZ, at the same $30 target. ANZ closed yesterday at $27.43, implying 9.4% share price growth in a year.
• Trading Central have identified a bullish signal in Newfield Resources (ASX:NWF), indicating that the stock price may rise from the close of $0.44 to the range of $0.51 - $0.53, within 24 days.