ASX 200 afternoon report: 17 October 2024

The ASX 200 trades 51 points (0.62%) higher at 8335 at 2.30pm AEDT.

ASX 200 retreats after record high

The ASX 200 soared to a new record high of 8284.50 today before erasing nearly 50 points of early gains after a strong labour report dashed hopes of an Reserve Bank of Australia (RBA) interest rate cut before year-end.

Unexpected job growth challenges

The Australian economy added 64,100 jobs in September, stronger than the 25,000 gain the market had expected. The unemployment rate remained at 4.1%, unchanged from a downwardly revised 4.1%, despite the participation rate increasing to a record high of 67.2%.

Bjorn Jarvis, Australian Bureau of Statistics (ABS) head of labour statistics, said: “With employment rising by around 64,000 people and the number of unemployed falling around 9,000, the unemployment rate remained at 4.1 per cent, where it has generally been over the past six months.”

Consistent job growth defies market predictions

Job growth has exceeded forecasts in seven of the last eight months, defying expectations of cooling and leaving the small fall in jobs in March (-4580) looking like an anomaly. The RBA's forecast for the unemployment rate is to rise to 4.3% by the December quarter. However, if the current trend in the jobs data continues, the unemployment rate appears more likely to retrace back to 4%, where it was in May.

RBA rate cut hopes hinge on CPI data

Today’s job numbers leave hopes of an RBA rate cut depending almost entirely on the receipt of a subdued third quarter (Q3) consumer price index (CPI) number on 30 October. Before the jobs data was released, the rates market was pricing in 11 basis points (bps) of RBA rate cuts by the end of the year and 47 bps of cuts by May 2025. This has since been pared back to 7 bps and 39 bps respectively.

ASX 200 stocks

Banking sector

Following the lead of the big banks on Wall Street, Aussie banks marched confidently higher.

• Bank of Queensland surged 4.49% to $6.98
• Westpac climbed 2.05% to $32.40
• NAB rose 1.21% to $38.91
• ANZ edged 0.91% higher to $31.69
• CBA added 0.79% to $140.91

Financial services

Today's rally followed an earnings update, which showed solid gains across the business, including a 76% year-on-year (YoY) increase in the platform's net cashflows to $750 million and a 5% quarter-on-quarter (QoQ) increase in Platform Assets under Management (AUM) to $78.1 billion.

• AMP surged 14.76% to $1.55

Real estate stocks

Real estate stocks remain in vogue despite the paring back of RBA rate cut expectations today.

• Goodman climbed 2.35% to $37.64
• Charter Hall added 1.57% to $16.46
• Mirvac rose 1.61% to $2.22
• Dexus gained 1.60% to $7.61

Energy sector

After a wicked 6.5% rout, the price of crude oil has stabilised today near $70.50 as API crude inventories in the US fell by 1.58 million barrels after soaring by 10.90 million barrels last week

• Beach Energy gained 1.02% to $1.23
• AGL Energy added 0.56% to $11.69
• Santos climbed 0.36% to $6.98
• Woodside Energy edged 0.04% higher to $24.95

Nuclear energy

Following news earlier this week that Alphabet (Google) plans to power its data centres using nuclear energy from small modular reactors (SMRs), Amazon is reportedly exploring a similar option.

• Silex Systems surged 5.07% to $5.07
• Paladin Energy jumped 8.86% to $12.78
• Deep Yellow climbed 8.54% to $1.55
• Bannerman Energy advanced 8.36% to $3.50

Mining sector

China’s National People's Congress (NPC) standing committee is expected to meet later this month to provide more specifics about the content and size of fiscal stimulus to supplement the monetary policy easing measures announced in late September.

• Mineral Resources lost 3.1% to $47.58
• Fortescue slipped 1.4% to $20.17
• BHP fell 1% to $43.11
• Rio Tinto lost 0.55% to $120.11

Entertainment stocks

Star Entertainment's woes persist, as the New South Wales (NSW) Independent Commission ruled that the casino operator’s license will stay suspended until at least 31 March. A hefty $15 million fine has also been levied for continuous compliance failures. Star's shares remain in a trading halt until the end of the week.

• Star's shares last traded at $0.26, from its high of $5.72 in 2018

ASX 200 technical analysis

This week, the ASX 200 tested multi-week trend channel resistance, which sits in the 8300/10 range. A sustained breakout above this level could pave the way for a move toward 8450 by year-end.

However, a failure to close above 8300/10, coupled with a drop through support at 8110/00, would suggest a medium-term high and indicate a deeper pullback is underway.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 17 October 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.}