ASX 200 afternoon report: 27 February 2024

The ASX 200 trades five points (0.06%) higher at 7657 at 3.15pm AEDT.

Navigating market sentiment amidst earnings reports and inflation anticipation

The optimism that propelled the ASX 200 to within 20 points of its all-time high of 7703.6 yesterday has further subsided today as traders grapple with assimilating the latest slew of earnings reports in anticipation of a crucial inflation update tomorrow. Inflation data released towards the end of January indicated a moderation in inflation across key quarterly and monthly metrics, notably the monthly Consumer Price Index (CPI) indicator for December, which saw a year-on-year increase of 3.4%, falling short of the anticipated 3.7%.

For January, it is anticipated that the monthly CPI indicator will climb to 3.5% year-on-year, largely attributed to base effects.

Nevertheless, the prevailing trend of subdued inflation alongside a cooling labour market is expected to prompt the Reserve Bank of Australia (RBA) to shed its tightening stance in the coming months, paving the way for a 25 basis point (bp) rate reduction in August, followed by a subsequent 25 bp cut in November.

Today’s market movement

Turning to the notable moves that followed today's earnings reports. Coles' share price surged 5.64% to AUD 16.77 after reporting its underlying Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) increased 4.1% to AUD 1,900 million, and a fully franked interim dividend of 36 cents per share. The market's reaction to Coles' earnings report in stark contrast to that of rival Woolworths, whose share price fell 8.89% last week after its earnings report missed expectations and CEO Brad Banducci announced his shock retirement.

A tough day for property service group Johns Lyng, whose share price fell 15.14% to AUD 6.11 after reporting its profit after tax was down 7.3% to AUD 23.4 million. City Chic Collective was another to feel the heat after its earnings report disappointed investors. Its share price was trading 12.50% lower at AUD 0.49 at the time of writing.

ASX 200 stocks

Mining stock

A 4% fall in the price of iron ore overnight to $115.20 has weighed on the big miner stocks.

• Fortescue: -0.88% to $27.60
• Rio Tinto: -0.62% to $121.80
• BHP: - 0.08% to $43.93 after trading to a four-month low at $43.40 earlier in the session

Banking sector

In contrast, it is a better day for the big banks.

• NAB: +0.58% to $34.09
• Westpac: +0.46% to $26.15
• ANZ: + 0.28% to $28.45
• CBA: +0.86% to $116.92, within touching distance of its all-time high of $118.24

Energy sector

Concerns around shipping disruptions in the Red Sea have supported a rebound higher in the price of crude oil to $77.58 - offsetting a more hawkish Fed currently weighing on the demand side of the crude oil equation.

• Woodside: + 1.08% to $30.32
• Viva Energy: + 1.17% to $3.47

ASX 200 technical analysis

The decline from the Early February 7703 high to the mid-February 7489 low unfolded in three waves, usually indicative of a corrective or countertrend move. As such, providing the ASX 200 remains above the recent 7489 low, expect a retest and break of the 7703 high with scope to 7900.

ASX 200 daily chart

• ^{Source: TradingView. The figures stated are as of 27 February 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.}