ASX200 Afternoon Report June 29th, 2023

The ASX200 trades 2 points higher (0.02%) at 7198 at 3.15 pm AEST.

Just a day after softer-than-expected inflation data pried opened the door to a possible pause from the Reserve Bank of Australia (RBA) at its Board meeting next week, the door appears to have been slammed shut as retail sales for May surprised to the upside today.

Defying expectations of a modest rise of 0.1% month-on-month (MoM), retail sales in May rose by 0.7% MoM following a flat result in April 2023 and a 0.4% rise in March 2023.

Ben Dorber, ABS head of retail statistics, said: "Retail turnover was supported by a rise in spending on food and eating out, combined with a boost in spending on discretionary goods.

"This latest rise reflected some resilience in spending with consumers taking advantage of larger than usual promotional activity and sales events for May."

Shoppers taking advantage of sales events is a sign of more cautious behaviour and won't overly concern the RBA. However, the rise in dining out is alarming and defies expectations of belt-tightening. The probability of an RBA rate hike next week has risen to 30% after falling to 15% yesterday.

Undeterred, the ASX200 IT sector is the best-performing sector, led by Tyro Payments, which added 7.57% to $1.17, Novonix added 4.75% to $1.0, EML Payments added 4.07% to $0.64c, and Appen added 2.54% to $2.42.

The big banks have gained, led by Australia & New Zealand Banking Group (ANZ), which added 1.62% to $23.80, Macquarie added 1.03% to $176.78, CBA added 0.53% to $100.08, and NAB added 0.36% to $26.35.

A mixed day for consumer-facing stocks as Bega Cheese fell 4.82% to a decade low of $2.96, and Bubs Australia fell 2.78% to $0.18c. Elsewhere Adair's added 4.78% to $1.54, Domino's Pizza added 2.44% to $46.54, and Harvey Norman added 1.61% to $3.46.

The ongoing wait for more stimulus in China has weighed on the big Miners. BHP fell 0.78% to $45.06; Rio Tinto fell 0.77% to $114.89. Falls also for Blue Scope Steel which lost 0.34%, and South32, which lost 0.66% to $3.75.

The ASX200 has spent the past three months trading sideways between resistance at 7370/7390 and support at 7075/7055. Until the ASX200 sees a sustained break of either of these levels, further sideways-range trading is expected. Aware that a sustained break of range extremes should see the ASX200 extend the move by 150 points (~2%) in the direction of the break.