ASX 200 afternoon report: 2 July 2024

The ASX 200 trades 29 points (-0.37%) lower at 7722 at 3.05pm AEST.

The ASX 200 has slipped for a second day running as concerns grow following Friday's first US presidential debate that a Trump victory would escalate US fiscal deficit concerns and inflame inflation.

Inflation fears weigh on ASX 200

The ASX 200 has its own inflation concerns, highlighted by last week's upside inflation surprise and the release of the Reserve Bank of Australia (RBA) meeting minutes for May today, which confirmed that a rate hike was considered at the June board meeting.

While the bank decided there was not enough evidence to support a hike in June, it noted that a rate hike in the future could be appropriate "if it was judged that inflation was returning to target more slowly than previously assumed."

Potential RBA rate hike in August

If quarter 2 (Q2) core consumer price index (CPI) inflation, due on 31 July, prints at 4% or higher, it will trigger a 25 basis point (bp) rate hike to 4.60% at the August board meeting. The interest rate market is currently assigning a 33% probability of an RBA rate hike in August.

ASX 200 stocks

Real estate sector

Unsurprisingly, the interest rate-sensitive ASX 200 Real estate sector has been today's worst-performing sector

• Charter Hall lost 2.57% to $10.98
• Goodman Group lost 2.4% to $34.16
• Doman slipped 1.68% to $2.92
• Stockland fell 1.65% to $4.18

Consumer-facing stocks

The prospect of an additional RBA rate hike has weighed on consumer-facing stocks, which continue to give back the gains that followed the Federal Budget in mid-May.

• Temple and Webster fell 2.42% to $9.29
• Domino's Pizza lost 2.68% to $34.82
• Baby Bunting lost 1.96% to $1.50
• Kogan fell 1.86% to $4.22

Financial sector

The ASX 200 financial sector, which rallied almost 14% in the first half of 2024 to a high of 7711.5, is set to record its first daily close below 7600 in two weeks

• NAB lost 1.03% to $35.70
• Westpac lost 0.5% to $27.07
• ANZ fell 0.47% to $28.31
• CBA slipped 0.37% to $125.72
• Macquarie edged 0.10% lower to $202.95

Mining sector

Despite a 3.24% rally in the price of iron ore overnight to $109.80, the mining giants have lost ground as concerns around the Chinese economy remain elevated.

• Mineral Resources lost 2.47% to $53.59
• Rio Tinto lost 1.04% to $119.40
• Fortescue slipped 0.74% to $21.59
• BHP lost 0.62% to $43.03

ASX 200 technical analysis

The ASX 200 has spent the past three months consolidating the rally from the November 6751 low to the early April 7910.5 high. After considering last week's 7654.2 low and uptrend support from the April 7492 low, we hold a positive bias, provided that the ASX 200 remains above support in the 7670/50 area on a closing basis. A sustained break above resistance at 7890/7910 would indicate that the recent period of consolidation is complete and that the uptrend has resumed towards 8000.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 2 July 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.}