ASX 200 afternoon report: 27 August 2024

The ASX 200 trades 12 points (0.16%) lower at 8076 at 2.45pm AEST.

ASX 200 hits four-week high before easing

After yesterday's robust session of gains, which kicked off the final week of August, the ASX 200 has adopted a more cautious tone today.

The index is trading 12 points lower mid-afternoon after hitting a four-week high of 8107 earlier in the session. This comes ahead of a packed calendar featuring Nvidia's eagerly anticipated earnings report on Thursday morning and a key Australian inflation update tomorrow morning.

Key inflation update expected tomorrow

Last month, the monthly Consumer Price Index (CPI) indicator for June rose by 3.8% in the 12 months to June, easing from 4.0% in May. The core reading (annual trimmed mean) eased to 4.1% from 4.4% in May.

As July is the first month of the new quarter, this monthly CPI indicator will only provide updates on about 60% of the basket. Additionally, it will be skewed towards goods rather than the troublesome service components such as dining out, medical services, and transportation.

However, good news on the inflation front is anticipated tomorrow due to a sharp fall in energy prices following the start of the federal government's energy rebates. Headline inflation in July is expected to fall to 3.3% year over year (YoY), while the annual trimmed mean is expected to ease to 3.7% YoY- both edging closer to the Reserve Bank of Australia’s (RBA) 2-3% inflation target.

RBA rate cuts anticipated by year-end

The expected step down in inflation partially explains why the Australian interest rate market is currently pricing in 30 basis points (bp) of RBA rate cuts by year-end and a cumulative 77 bp of cuts by May 2025.

ASX 200 stocks

Today's action-packed earnings calendar has provided a wide range of beats and bombshells.

Healthcare stocks

• Nanosonics surged over 17% to $3.17, fuelled by revenues in the second half of the year 14% higher than those in the first half

Building and restoration stocks

• Johns Lyng initially plummeted 33% before paring losses, to be trading 25% lower at $4.19 following an unexpected miss on revenues and sales

Energy sector

• Woodside Energy climbed 4% to $27.44, thanks to a higher-than-expected interim dividend of 69c per share, despite a 14% decline in underlying profit to $1.63 billion

Mining sector

• BHP’s share price gained 2% to $41.65 after it reported revenues were up 3% for the year to $55.7 billion, and underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose 4% to $29 billion
• Mineral Resources gained 1.97% to $46.01
• Fortescue added 1.86% to $18.63
• Rio Tinto added 0.74% to $111.87

Financial sector

• National Australia Bank (NAB) fell 1.23% to $37.29
• Commonwealth Bank of Australia (CBA) lost 1.10% to $137.29
• Westpac slipped 0.78% to $30.43
• Australia and New Zealand Banking Group (ANZ) fell 0.40% to $29.55

ASX 200 technical analysis

The ASX 200's rebound from the 7600/7500 support level, which includes the 200-day moving average, has reinforced its importance as the downside level to watch going forward.

While all the focus is currently on the topside and whether the ASX 200 can break its all-time 8148 high, we wouldn't be surprised to see a retest of the 7600/7500 level before year-end.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 27 August 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.}