ASX 200 afternoon report: 11 January 2024

ASX 200 follows Wall Street's positive lead

The ASX 200 trades 37 points (0.45%) higher at 7506 at 2.15pm AEDT. It has been a positive session for the ASX 200 today as it rebounded back above 7500, following a positive lead from Wall Street, ahead of the release of the latest US inflation data.

Annual US headline inflation is expected to increase to 3.2% year-on-year (YoY) from 3.1%, and core consumer price indiex (CPI) is expected to ease to 3.8% YoY from 4.0%.

While the core measure is still above the Federal Reserve's (Fed’s) 2% target, disinflation over the back half of 2023 has the six-month rate at around 2%. A ‘good number’ is likely priced into the market, and an adverse reaction is highly likely if the CPI numbers are hotter than expected.

Banks gain after inflation data dip

Unperturbed by the risk of a hotter-than-expected US inflation number, the big banks gained today, reassured by yesterday's faster-than-expected fall in inflation data, which reinforces the idea the Reserve Bank of Australia (RBA) is on hold until the middle of the year before the first of two rate cuts which take the cash rate back to 3.60%.

Macquarie gained 1.2% to $182.39, Westpac added 1.15% to $23.21, CBA gained 1.15% to $113.34, NAB gained 0.88% to $30.99 and ANZ added 0.74% to $26.02.

It has been a similar story for consumer-facing stocks that enjoyed yesterday's soft Australian inflation data and expectations of RBA rate cuts into the back half of 2024. JB Hi-Fi gained 3.71% to $56.71, Super Retail Group added 1.32% to $15.39, Aristocrat Leisure added 1.17% and Harvey Normans added 1.07% to $4.23.

Miners absorb iron ore price fall

The big miners have absorbed a 4% fall in the price of iron ore overnight to near $132.00 per tonne. Fortescue fell 1.31% to $27.20; Rio Tinto fell 0.30% to $128.52. BHP was trading flat near 47.87, and Mineral Resources gained 0.83% to $63.53 after falling over 6% yesterday.

An unexpected rise in US oil inventories overnight saw the price of crude oil fall 1.26% to $71.25 a barrel. A move that weighed on the ASX 200 energy sector, as it fell for a fifth straight session. Beach Energy fell 1.61% to $1.52. Santos fell 0.60% to $7.46. AGL Energy fell 0.21% to $9.30. Woodside bucked the trend as it added 0.57% to $31.05.

During the last quarter of 2023, we maintained a bullish stance on the ASX 200, looking for a test of the February 7567 high. While the February high was marginally exceeded, we note a potential double high/top in place at 7633, which bookends a double low, 6410 area from mid-2022.

With the ASX 200 showing signs of initial rejection from the top of its three-year 1200-point range, we would be wary of opening longs unless a deeper pullback or a sustained break of 7633 is viewed.

ASX 200 daily chart

^{The figures stated are as of 11 January 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}