ASX 200 afternoon report: 16th of February 2023

The ASX 200 trades 59 points (0.81%) higher at 7411 at 3.00 pm Sydney time.

Building on a positive lead from Wall Street, the ASX 200 found another gear higher following the release of softer-than-expected Australian labour market data.

Employment declined by 12k in January, the second negative print in a row, while the unemployment rate rose from 3.5% to 3.7% in January, to be just 0.1% below the RBA’s 3.8% end-of-year forecast. The rise in the unemployment rate came despite the participation rate dropping to 66.5%, falling further from the 66.8% high of November.

Despite the possibility of some seasonal effects in play over the holiday season, the RBA, currently under fire, will take some relief from the notion that the unemployment rate troughed in October at 3.4% and that there is further evidence of cooling in the labour market.

The Consumer Discretionary sectors led the charge higher, responding to the softer jobs data and lower bond yields. Super Retail Group added 3.5% to $12.39, supported by a strong earnings report showing profits surged 30%. Kogan added 1.9% to $3.77, Nick Scali added 2.6% to $10.42, and Myer added 2% to .88c.

IT stocks gained, led by Afterpay owner Block which added 8.96%. Fellow BNPL stock Zip added 8.11% to $0.60c, Megaport gained 7.6% to $6.37, and Sezzle added 7.27% to $0.59c.

After yesterday’s horror show, three of the big banks have been able to steady the ship. NAB added +0.97% to $30.65. ANZ added 0.73% to $24.96, and Westpac added 0.43% to $22.93.

The share price of CBA remains under siege, trading down another 0.8% at $102.96 ahead of its ex-dividend date. AMP fell 13.75% to $1.13 on news of investment losses and more outflows from its superannuation business.

Another tough day for coal mining stocks. New Hope coal fell 4.2% to $5.49, and Whitehaven coal fell 3.54% to $7.90 after their earnings updates missed the mark. Yancoal fell 3.12% to $5.59, which is affected by the NSW government’s new price cap policy under which Yancoal will not be compensated for the difference between market and price cap rates.

Technical analysis

After its rampaging run higher during the opening weeks of 2023, we shifted from a bullish view to a more cautious one in late January and suggested cutting longs ahead of the bull market 7632 high. Last week’s more hawkish-than-expected RBA meeting reinforced the pullback view, further amplified by a number of 1H 2023 earnings landmines.

We will look to start rebuying towards the 7200/7000 support area (uptrend support from the October 6411 low and the 200-day moving average), which represents a 5-7% pullback from the February highs.

ASX 200 daily chart