ASX 200 afternoon report: June 22, 2023

The ASX 200 trades a whopping 114 points (-1.55%) lower at 7200 at 3 pm AEST.

After an almost 4% rally during the first two weeks of June, the ASX 200 has returned to earth with a thud today after Fed Chair Powell noted in his Testimony to Congress overnight that policymakers see a compelling case for more rate hikes.

The Fed Chairs’ message was the same as the one delivered at last Thursday’s FOMC meeting. A message initially ignored by equity markets that latched onto the idea that a “pause” marked the end of the Fed’s fifteen-month tightening cycle.

As recent RBA and BoC meetings showed, a “pause” is only good if the data that follows cools. A point surely not lost on the Bank of England as it meets tonight just 24 hours after another upside surprise in inflation, with the market split between a 25bp rate hike or a supersized 50bp rate hike.

The prospect of higher interest rates weighed on the tech-heavy Nasdaq overnight, a move that has flowed through into a heavy 3.8% fall for the ASX 200 IT sector today. Megaport fell 5.9% to $7.34, Tyro Payments fell 4.83% to $0.98c, Technology Oner fell 4.33% to $15.45, and Xero fell 4.13% to $113.64.

The interest rate-sensitive Real Estate sector has fallen, led by a 3.66% fall by Dexus after it announced around $1bn in write-downs. Stockland Group fell 3.77% to $4.08, Charter Hall Group fell 3.61% to $10.67, and Mirvac fell 3.65% to $2.23.

No escape either for the interest rate-sensitive financial sector. Macquarie fell 2.5% to $175.99, ANZ fell 1.6% to $23.30, CBA fell 1.5% to $100.31, and Westpac fell 1.23% to $20.96.

The mining behemoths have fallen after easing measures announced by Chinese authorities to boost the Chinese economy have underwhelmed. BHP fell 2.23% to $45.19, Fortescue fell 1.75% to $21.62, and Rio Tinto fell 1.16% to $114.45.

ASX 200 technical analysis

The seven-day rally in the ASX 200 stalled this week ahead of the April 7391 high. The sell-off that followed has the ASX 200 again eyeing uptrend support at 7155 from the October 6411 low and the 200-day moving average at 7125. A sustained break below the 200-day moving average at 7125 and then below the May 7077 low would expose year-to-date lows at 6900.

ASX 200 daily chart

• _{TradingView: the figures stated are as of June 9, 2023. 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.}