ASX 200 afternoon report: 18 January 2024

The ASX 200 trades 32 points (-0.44%) lower at 7360 at 2.15 pm AEDT.

A fifth consecutive day of falls for the ASX 200 today, following a rocky session on Wall Street, as robust US retail sales report sent US yields surging, undercutting support for stocks.

At today’s low of 7322, the ASX 200 has corrected 4% from the 7632.7 high it struck on the first trading day of 2024, and the damage may have been worse today if it weren’t for a weak December jobs report, which fostered an afternoon rally.

Within the details of the jobs report, the Australian economy lost a sizeable 65.1k jobs in December vs. the 15k gain expected. The unemployment rate remained unchanged at 3.9% due to a significant drop in the participation rate from 67.1% to 66.8%.

Make no mistake, the labour market is cooling, and following a recent run of softer inflation data, RBA rate cuts are coming. Q4 inflation data, scheduled for release on January 31st, will determine whether expectations of two 25 basis points RBA rate cuts become three in 2024. The more cuts, the merrier, as far as the ASX 200 is concerned.

Today’s market movement

Banking sector

Fresh prospects of RBA rate cuts buoyed the four big banks.

• NAB: +0.78% to $30.09
• Westpac: + 0.33% to $29.78
• CBA and ANZ gained about 0.15%, respectively

Energy sector

The ASX 200 Energy sector fell for a third day as the price of crude oil stagnated in the low $ 70s despite ongoing geopolitical tensions in the Middle East.

• Strike Energy: -3.2% to $0.45c
• Viva Energy: -1.32% to $3.36
• Santos: -1.25% to $7.54
• Woodside: -0.8% to $30.45
• Beach Energy: - 0.80% to $1.53

Mining sector

It was a mixed day for the big miners as the price of iron slipped again overnight towards $125 per tonne.

• Fortescue: +0.52% to $26.92
• Rio Tinto: +0.13% to $126.71
• BHP: -1.25% to $45.99,
• Mineral Resources: -1.45% to $58.50

IT sector

• Novonix: - 4.37% to $0.60c
• Appen: -2.7% to $0.45c
• Block: -1.21% to $97.70
• EML Payments: +22.15% to $0.91c after it elected to liquidate its cash-burning Irish subsidiary

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 this week extending its decline from the top of its three-year 1200-point range, we remain cautious unless a sustained break of the double top at 7633 is viewed. Or a corrective pullback is viewed towards the 200-day moving average at 7200.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 18 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.}