ASX 200 afternoon report: April 17, 2023

The ASX 200 trades flat at 7371 at 3.00pm AEST.

After reaching an eight-week high of 7391.2 this morning, the ASX 200 erased all its early gains, likely due to hotter-than-expected US economic data on Friday night that jolted hopes that the Fed is nearing the end of its rate-hiking cycle.

Surprisingly, the University of Michigan Consumer sentiment index rose to 63.5 vs 62 expected. At the same time, one-year inflation expectations rose to a five-month high of 4.6% in April from 3.6% in March.

The US interest rate market is now almost entirely priced for a 25bp rate hike at the May FOMC meeting in two weeks and a lot less sure about possible rate cuts into the end of the year.

RBA

Tuesday, 11.30am AEST will see the release of the minutes for the RBA’s April Board meeting. The RBA paused its rate hiking cycle and left the cash rate target unchanged at 3.60% “to assess the impact of the increase in interest rates to date and the economic outlook.”

In an address to the National Press Club the following day, the RBA Governor noted that a pause does not mean an end to rate rises and that further tightening of monetary policy “may well be needed to return inflation to target.”

The Board meeting minutes are expected to reiterate these comments and will be scrutinised for any signal on the timing or metrics that would prompt the RBA to act on its tightening bias and resume its rate-hiking cycle.

Consumer-facing stocks

Confident that tomorrow’s RBA minutes won’t contain a smoking rate hiking gun, consumer-facing stocks have gained.

• Aristocrat Leisure added 1.2% to $37.61
• Super Retail Group added 0.83% to $13.43
• Nick Scali added 0.8% to $9.71
• JB Hi-Fi added 0.46% to $45.76.

IT stocks

IT stocks have gained, led by EML Payments, whose share price added 13% to $0.65c after its CEO announced she would depart the company.

• Novonix added 2.83% to $1.09, reclaiming more than half of last week’s 4.83% fall
• Megaport added 2.8% to $4.42
• Wisetech Global added 1.5% to $68.11.

Banking sector

The banks have gained on hopes that Net Interest Margins won’t fall any further as competition in the sector eases.

• ANZ added 1% to $24.22
• NAB added 0.95% to $28.73
• CBA gained 0.61% to $99.71
• Westpac was steady at $22.26.

Coal sector

It was a mixed day for the big miners.

• Rio Tinto gained 0.16% to $121.30
• Fortescue was steady at $22.43
• New Hope Coal fell 9.48% to $5.25 after trading ex-dividend
• BHP fell 0.22% despite being granted court approval to buy OZ minerals which will be delisted after the close of business tomorrow.

Gold mining stocks

A tough day in the office for gold mining stocks as the price of bullion trades at $2004 and appears to have failed in its latest attempt to tackle three-year range highs at $2070.

• St Barbara fell 5.43% to $0.61c
• Silver Lake Resources fell 4.9% to $1.27
• Perseus Mining fell 4% to $2.39
• Regis Resources dived 11.78% to $2.14 after it lowered full-year production expectations.

ASX 200 technical analysis

After holding support at 6900, the ASX 200 last week reached the 7350 target we first pinpointed on March 28 here for a gain of ~4.5% in just nine trading sessions. At the halfway mark for April, the ASX 200 is up +2.58% month to date, which is about spot on for April.

While we wouldn’t rule out further gains into month end, we aren’t interested in chasing the market higher here, mindful that May - June typically see a pullback in the vicinity of 3-5%.

ASX 200 daily chart

1. TradingView: the figures stated are as of April 17, 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.