Australia 200 afternoon report: 13 March 2025

The Australia 200 trades 32 points (-0.41%) lower at 7754 as of 3.00pm AEDT.

Australia 200 drops amid trade war concerns

The Australia 200 is poised for its 15th day of losses over the past 19 sessions after an attempt to rally today fell short at an intraday high of 7821.

The retreat from the day's highs occurred after a major United States (US) investment bank downgraded its rating of Australian equities to 'underweight', highlighting concerns over Australia's exposure to trade war risks and elevated valuations.

US inflation analysis dampens rate cut hopes

Further contributing to the downside pressure, a deeper analysis of last night's cooler-than-expected US inflation report (which was the basis for gains on Wall Street overnight) is unlikely to prompt the Federal Reserve (Fed) to soften its cautious stance on interest rate cuts.

The cooler components in last night's report, such as airfares and car insurance, are not included in the Fed's preferred inflation measure, the core personal consumption expenditures (PCE) price index.

Furthermore, evidence of strong goods inflation has led economists to revise their forecasts upward for core PCE, which, if correct, will see the three-month seasonally adjusted rate rise to 3.3% from 2.4% in January. On top of that, we are still months away from seeing the inflationary impact of tariffs on prices.

Signs of potential Australia 200 recovery

Returning to the Australia 200, when looking for signs of a potential base, there are two things we would like to see aside from the volume of sell orders abating.

1. Capitulation-type low where the market sells off aggressively, perhaps due to forced margin selling and then closes higher on the day, which we are yet to see.
2. The performance of the big banks and Australia 200 financial sector is crucial to any recovery in the index.

Australia 200 stocks

Financial sector

Today, the major banks showed a mixed performance:

• Westpac slipped 0.96% to $29.77
• Macquarie Group lost 0.8% to $197.47
• Commonwealth Bank of Australia fell 0.2% to $144.56, trading almost 14% below its high of $167.92 on 14 February
• Australia and New Zealand Banking Group traded flat at $28.41
• National Australia Bank remained steady at $33.93

Coal sector

The coal miners had a tough day after a 3% drop in coking coal prices, coupled with an Australian investment bank cutting its coal price forecast due to soft demand. The timing of the downgrade is curious given coking coal has already fallen over 70% from its March 2022 high.

• New Hope fell 8.21% to $3.74
• Whitehaven Coal lost 5.53% to $5.55
• Coronado Global Resources slipped 4.59% to $0.52
• Yancoal, which went ex-dividend, dived 12.73% to $5.28

Consumer sector

Despite a strong 4% rise in the Westpac Consumer Sentiment Index earlier this week, consumer-facing stocks on the Australia 200 struggled.

• Cettire dropped 3.28% to $0.89
• Baby Bunting sank 3.47% to $1.67
• Myer fell 2.27% to $0.75
• Kogan declined 2.33% to $4.58

Mining sector

While iron ore prices remained steady at around $100 per tonne, this has provided little relief to the major miners.

• BHP slipped 1.5% to $38.38, nearing its September low of $38.38
• Rio Tinto fell 1.12% to $115.91
• Fortescue lost 1.11% to $15.81 after hitting a 25-month low of $15.33 yesterday

Australia 200 technical analysis

Following the Australia 200 sliced through several key support levels last week, we highlighted the 7600 area (from the early August 7628 low) as the next downside level to where we thought the decline could extend.

Having approached within 100 points of the 7628 low yesterday, we are now watching for signs of basing (see above) that could signal a recovery, potentially taking the index back towards the 8000–8050 range.

Australia 200 daily chart

• _{Source: TradingView. The figures stated are as of 13 March 2025. 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.}