ASX 200 afternoon report: May 30, 2023

Navigating debt ceiling uncertainties

The ASX 200 trades 11 points (-0.16%) lower at 7206, at 3.45 pm AEST, consolidating yesterday's rally that followed the weekend's announcement of an eagerly awaited US debt ceiling deal.

Weighing on the potential for a follow-up rally today is the absence of a strong lead from offshore equity markets, with US and UK stock markets closed overnight for public holidays. An element of caution also overhangs the relief rally.

Congress still needs to vote on the proposed debt deal later this week, and while it's likely to be a formality, it is the final signpost investors would like to see before waving goodbye to the debt ceiling drama for another two years.

Local housing crisis amid rising inflation expectations

Bringing some interest to an otherwise light data calendar today, building approvals fell by 8.1% in April, missing economist expectations for a 2% rise. Total building approvals are now down by 24.1% compared to a year ago. With immigration surging, the housing shortage is becoming worse by the month.

Attention now turns to the release tomorrow of the Monthly CPI indicator for April. The market is looking for headline inflation to rise by 6.4% YoY. As it is the first month of the new quarter, it will not include any updates from the sticky services sector and therefore is unlikely to contain any unpleasant surprises.

Today's market highlights:

Paladin, the uranium miner, saw a sharp decline, dropping 19.55% to $0.54c. Trading halted amid rumours that Namibia might nationalize certain mining assets.

Coal mining sector

• Whitehaven Coal led the dip in coal miners, falling 0.98% to $6.07
• New Hope Coal down 0.72% to $4.82
• Yancoal witnessed a dip of 0.21%, taking the stock price to $4.79.

Banking Sector

• ANZ led the fall among the big banks, with a drop of 1.73% to $23.34
• Macquarie dropped 0.71% to $175.05
• CBA decreased 0.74% to $98.83
• NAB slipped 0.45% to $26.45
• Westpac dipped 0.3% to $21.10.

Lithium sector

After a striking eight-week rally from their March lows, lithium stocks began to deflate.

• Vulcan Energy declined 4.88% to $3.70
• Galan Lithium slipped 3.54% to $0.96c
• Core Lithium down 3.57% to $1.02
• Lake Resources saw a decrease of 1.87% to $0.53c.

Gainers of the day

• Qantas climbed 2.41% to $6.58 following news of future growth plans, including new bag tracking technology and boarding changes
• Appen added another 5.17% to $2.85, following up on yesterday's 10% rally after a broker upgrade
• Humm Group rose 2.38% to $0.43c, continuing its rally after ASIC reversed its decision to place a stop order on its BNPL products.

ASX 200 technical analysis

While the ASX 200 continues to navigate sideways above the formidable bedrock of support ranging from 7100 to 6900—braced by the 200-day moving average, uptrend support, and year-to-date lows—our stance remains neutral.

However, downtrend resistance sits at 7300, a remnant of the February high at 7567 and should the ASX 200 forge a sustained break above this 7300 mark, it would likely catapult us into a test of the 7400 threshold.

ASX 200 daily chart

_{TradingView: the figures stated are as of May 30, 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.}