ASX 200 afternoon report: 5 September 2024

The ASX 200 trades 13 points (0.17%) higher at 7964 at 2.30pm AEST.

ASX 200 loses early gains amid RBA stance

The ASX 200 has given back a large chunk of its early gains for the day. Initially up by 41 points, it pared gains as Reserve Bank of Australia (RBA) Governor Michele Bullock pushed back against expectations of RBA interest rate cuts. This occurred during her speech at the Anika Foundation Fundraising Lunch in Sydney.

This comes just a day after the June national accounts showed that the Australian economy grew at the slowest pace of annual growth since the early 1990s recession. The RBA Governor reiterated, “While inflation has fallen substantially since its peak, it is still some way above the midpoint of the 2–3 per cent target range.” She noted that it is imperative to “return inflation to levels that mean it is in the background again – at which point it will no longer be distorting our economy.”

RBA's position on rate cuts

Yesterday’s sluggish June quarter growth was in line with the RBA's forecast of 0.9% in the August statement of monetary policy. Yet, with the RBA focused on stubborn inflation and lackluster consumer spending, it is unclear where the spark will come from to lift growth towards the RBA's target of 1.7% by year-end without preemptive rate cuts.

Governor Bullock pointed out, while it is “premature to think about rate cuts,” circumstances could shift, and “the board will respond accordingly.” This sentiment mirrors the rates market's stance, which is currently pricing in an 88% chance of a 25 basis points (bp) rate cut by year-end and two full 25 bp cuts by April 2025.

ASX 200 stocks

Energy sector

The ASX 200 energy sector has slumped 4.2%. As sliding global oil prices and downgrades to Woodside and Santos add to the woes.

• Woodside Energy, also trading ex-dividend, tumbled 6.65% to $25.05
• Santos lost 2.5% to $6.89
• Beach Energy dropped 4.1% to $1.11

Materials sector

The ASX 200 materials sector, down a whopping 5.32% already this week, has stopped the rot for now.

• BHP added 0.67% to $38.89
• Rio Tinto gained 0.19% to $105.89
• Fortescue slipped by 1.3% to $15.99, marking its first time below the $16.00 mark since November 2022
• Mineral Resources continued its tumble from favour, plunging 8.43% to $31.34

Financial sector

The big banks have gained, supported by the emergence of dip-buyers.

• ANZ added 1.71% to $30.98
• Westpacclimbed 1.41% to $31.57
• NAB was not far behind, adding 1.37% to reach $38.47
• Macquarie also joined the rally, gaining 1.26% to $219.85
• CBA edged up 0.46% to $140.61

Information technology sector

The IT sector has gained 2.21%.

• Appen skyrocketed 11.5% to $1.12
• Nextdc soared 9.21% to $17.55
• DroneShield gained 3% to $1.37
• EML Payments climbed 2.04% to $0.75

ASX 200 technical analysis

After yesterday's bruising sell-off, we are open to the idea that the ASX 200 has put in place its high for the month of 8116 in the first week of trading, just like it did in August at 8148. We are also considering the possibility that the ASX 200 has carved out a double top at 8148 and 8116.

Should the pullback deepen, initial support level is viewed at 7850. However, more likely downside objectives if the sell-off continues would be the 7675 area, which aligns with the 200-day moving average and trend channel support.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 5 September 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.}