• The ASX gained 2.7% on Friday after a huge rally on Wall St
  • US CPI rose less than expected
  • Risk sentiment is back 

The ASX 200 index is at the highest level since June after rising by 2.7% on Friday to 7,154. For the week, the ASX was up almost 4%.

Shares rallied across the board after the better-than-expected US CPI data triggered a huge rally in New York overnight.

The US headline inflation for October came in at 7.7% YoY versus forecast of 8%. It was down from 8.2% in September and noticeably better than the peak reading in June of 9.1%.

Still, figures continue to point to a broad price increase across the US economy, mainly in the services sector while prices of goods have benefited from some improvements in supply chains.

“Headline inflation seems to have peaked, but services-led price growth keeps accelerating year over year,” said Callie Cox, US Investment Analyst at eToro.

“But that’s the kind of inflation the Fed can control, because it’s more a function of demand than supply. We’re seeing early signs of a peak, and that could allow the Fed to take its foot off the break.”

Bond yields and the US dollar sank after the inflation report, pushing gold higher by 3%.

Janus Henderson’s Global Head of Fixed Income Jim Cielinski said the Fed still holds the key for equities.

“With inflation remaining stubbornly high, we think the rate will continue to rise through at least mid-2023,” Cielinski said.

“Even if the midterm elections change the balance of power in Washington, the biggest issue for investors remains inflation and how the Fed’s response will impact economic growth and corporate earnings.”

On the ASX today, all sectors except Utilities surged, with Tech gaining 4%. Tech-heavy Nasdaq finished over 7% higher overnight.

Block Inc (ASX:SQ2) jumped 12% after its NYSE-based parent rose 17%  amid risk-on sentiment. Shares in BNPL rival Zip (ASX:ZIP) also gained 20% today.

Meanwhile, there are unfounded reports that Sam Bankman-Fried (SBF) has been arrested on the tarmac at airport in the Bahamas. The FTX CEO has been trying to raise US$8bn to save FTX from bankruptcy.

Looking ahead to tonight’s session on Wall St, Britain will release a slew of data including GDP growth and balance of trade.

BIG CAP WINNERS

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Pro Medicus (ASX:PME) was the best performing large cap, up 11% on no specific news.

Tech darling Wisetech (ASX:WTC) also jumped 9% on no news.

Fund managers Pinnacle Investment (ASX:PNI) and Netwealth (ASX:NWL) rose by 12% on rising stock prices.

BIG CAP LOSERS

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Coal stocks were the worst performers on Friday.

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