ASX 200 afternoon report: 16 January 2024

The ASX 200 trades 87 points (-1.16%) lower at 7409 at 3.40 pm AEDT.

While there might have been a temptation to look past the sell-off in the ASX 200 in the first week of 2024; today's sell-off has delivered a more telling new year's blow, with the index falling back towards 7400, a level it last traded in mid-December. All eleven ASX 200 sectors are trading lower.

At first glance, a potential catalyst for today's sell-off could be rising tensions in the Middle East. However, this would typically see crude oil and gold trade higher and yields lower. Instead, the opposite has occurred. Gold stocks have been sold, crude oil trades lower, and US yields have rebounded following their reopening from the Martin Luther King holiday.

Instead, the likely cause of today's sell-off is a reaction to ECB officials pushing back against the pricing of early rate cuts. There is a concern that Fed Governor Waller may echo similar hawkish thoughts when he speaks early tomorrow morning to bring some sense of reality to rates markets that has gotten ahead of itself.

Today’s market movement

Resource sector

Much of today's damage at an index level came from falls in mining stocks as the price of iron ore fell to $127.50 per tonne overnight ahead of tomorrow's Chinese GDP release.

• Fortescue: -1.93$ to $26.71
• Rio Tinto: -1.68% to $126.27
• BHP: -1.60% to $46.49

Consumer-facing stocks

A 1.3% fall in the Westpac Consumer Sentiment Index in January and broker downgrades have weighed on consumer-facing stocks.

• Super Retail Group: -2.81% to $16.24
• Dominoes Pizzas: -2.73% to $57.01
• Coles: -1.74% to $15.52
• Woolworths: -1.55% to $35.65

Banking sector

After trading to a fresh cycle high yesterday, the big banks have weighed on the ASX 200 financial sector.

• NAB: -0.94% to $30.66
• Westpac: -0.84% to $23.10
• ANZ: -0.77% to $25.75
• CBA: -0.56% to $113.02

Gold mining sector

A sea of red for gold stocks today as higher yields supported the US dollar and undercut support for the yellow metal.

• Evolution Mining: -3.09% to $3.76
• Regis Resources: -2.06% to $2.13
• Silver Lake Resources: -1.90% to $1.16
• Northern Star Resources: -1.75% to $12.89

ASX 200 technical analysis

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 highlighted a potential double high/top in place at 7633, which bookended a double low, 6410 area from mid-2022.

With the ASX 200 today extending its decline from the top of its three-year 1200-point range, we remain wary of opening longs unless a sustained break of 7633 is viewed.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 16 January 2024. 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.}