ASX 200 afternoon report: 12 June 2024

The ASX 200 trades 40 points (-0.53%) lower at 7714 at 2.25pm AEST.

After its thumping yesterday, the ASX 200 has fallen for a second session today. Tearing up most of last week's 2% gain in just two days.

Yesterday's unexpected and aggressive sell-off was the fourth in three months to hit the market out of the blue. Starting on 11 March and following similar occurrences on 3 April and 9 May.

Sell-off reasoning

While we cannot prove it, we suspect the culprit is a large offshore account with two possibilities. A large offshore account getting out of longs in the ASX 200. Or establishing shorts in the ASX 200 against a long position in another equity market, possibly with more tech exposure.

These types of flows in the local market are rather intriguing because they tend to stand out like footprints in the sand. However, from a rationale perspective behind the flows, the selling is possibly related to the low growth. The sticky inflation regime the Australian economy has found itself in or the Australian exposure to the Chinese economy, which continues to stutter.

Inflation data out of China today indicates the Chinese economy has yet to break its deflationary spiral. Inflation in May fell -0.1% from +0.1% in April, while producer prices fell by 1.4% year-on-year. The soft numbers support the case that more stimulus is required to support the economic recovery.

Consumer-facing stocks

• Bubs Australia dived 4% to $0.12
• A2Milk fell -3.73% to $6.83
• Graincorp fell 2.73% to $8.90
• Myer Holdings fell 2.34% to $0.62

IT stocks

IT stocks have fallen despite another record close for the Nasdaq overnight after Apple surged 7% to close above $200 for the first time.

• Wisetech Global fell 2.33% to $97.28
• Humm Group fell 1.76% to $0.41
• Megaport fell 1.58% to $12.44
• Life360 fell 1.53% to $13.49

Materials sector

Materials sector has fallen 3.38% this week after the price of iron ore fell below $105.00 per tonne overnight.

• Mineral Resources shed 3.79% to $63.99
• Rio Tinto fell 1.50% to $121.12
• Fortescue fell 1.50% to $23.25
• BHP group fell 0.77% to $43.41

Financial sector

• Macquarie Bank fell 1.03% to $191.86
• CBA fell -0.85% to $123.84
• NAB lost -0.50% to $34.69
• ANZ lost -0.28% to $28.82
• Westpac fell -0.04% to $26.69

Technically, the view remains that the ASX 200 will trade sideways this month between 7900 and 7600 before an eventual break higher towards 8000. A sustained move above resistance at 7900/10 would confirm that the next leg higher has commenced. On the downside, a sustained break below 7600 would open a deeper decline towards 7400.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 12 June 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.}