ASX 200 afternoon report: 12 October 2023

The Lazarus-like recovery in the ASX 200 has extended for a sixth consecutive day, with the index set to close approximately 230 points (3.2%) above the 6,871 low point it hit just over a week ago.

As we first noted here on Tuesday, the tragic events in the Middle East over the weekend and the 75 bp tightening in financial conditions have prompted a more cautious tone from Fed speakers this week (Logan, Jefferson, Barr, Daly, Bostic, and Collins).

We consider the Fed's more cautious communique this week to be a pivot that clears the way for rate cuts if needed. The rebound on Wall Street this week suggests it shares our view.

Today's market movement

IT sector

• Appen: + 5.91% to $1.17
• Sezzle: + 3.97% to $17.30
• Humm Group: +3.53%
• Seek: +2.95% to $23.42

Banking sector

• CBA: +1.22% to $101.87
• ANZ: + 1.13% to $25.94,
• Westpac: +1.12% to $21.69
• NAB: + 1.06% to $29.60
• Macquarie: +0.69% to $171.14

Energy sector

The price of crude oil has retreated to $83.10 following reports that Iran was surprised by Hamas's attack on Israel. If these reports are accurate and Iran's denial gains credence, it could lessen the likelihood of the Biden administration intensifying sanctions on Iran.

• Strike Energy: -4.95% to $0.43c
• Cooper Energy: - 4.35% to $0.11c
• Santos: -1.55% to $7.64
• Woodside: - 0.11% to $35.87

Biotech behemoth CSL has declined 5.81% on news that the weight loss medication Ozempic has shown promising results for treating kidney disease, posing a challenge to CSL's Vifor division. The breach of horizontal support at $240 opens the possibility for CSL's share price to extend towards the trend channel support at $225.00.

ASX 200 technical analysis

Last week, we turned tactically bullish on the ASX 200 (just above 7000), looking for a rebound towards range (7440) highs and possibly year-to-date highs (7567). Stops on the bullish view are a sustained close below 6900/70. Aware that should the ASX 200 see a sustained close below 6900/70, the risks are for a test of 6750 before the 2022 lows at 6400.

ASX200 daily chart

_{TradingView. the figures stated are as of October 12, 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}