ASX 200 afternoon report: August 31, 2023

The ASX 200 trades 7 points (0.10%) higher at 7305 at 3.10 pm AEST.

ASX 200's strong recovery

A fortnight ago, the ASX 200 was down ~4.3% in August. However, after its thumping 2.5% rally this week, it is now down just 1.50% for the month. This week's rally has come on the back of a favourable tailwind from US equities, lower US bond yields, and a softer-than-expected Australian inflation number, which likely keeps the RBA on hold for a third month at 4.10% when it meets next week.

While it is tempting to think a new month will bring better fortunes, September is historically the worst month of the year for the ASX 200, with an average negative return of -2.29% over the past decade.

The bumpy conditions could start as early as tonight, with a raft of important economic data set to drop over the next 48 hours, including inflation reports in Europe and the US and a critical labour market report in the US tomorrow evening. The seatbelt fasten light remains switched on.

The ASX 200 market movement

Returning to the local market, while it was quiet at an index level, some fireworks were still left over at a stock level to sign off on a busy reporting season.

Mayne Pharma dived 18.95% to $3.85 after reporting a $317.4 million loss. City Chic fell 11.11% to 44c, extending its decline after it reported a $24 million loss yesterday. The share price of Harvey Norman gained 4.04% to $4.00 after it posted a higher-than-expected FY23 profit of $539.52 million.

Elsewhere, the iron ore miners were solid, led by Rio Tinto, which added 0.7% to $113.00, Fortescue added 0.33% to $21.49, and BHP added 0.25% to $4.83. After trading ex-dividend, energy giant Woodside and coal miner Whitehaven fell 4% and 9.23%, respectively.

The big banks are trading higher after another second night of soft economic data in the US, which has weighed down global bond yields. Westpac gained 0.94% to $21.93, ANZ added 0.90% to $25.27, Macquarie gained 0.64% to $178.24, and NAB gained 0.57% to $29.01.

It was a mixed day for lithium miners, with IGO gaining 5.68% to $13.98 after it reported a 13% increase in revenues to $1.02 billion and a 66% increase in NPAT to $549 million. Lake Resources gained 4.65% to 23c, while Galan Lithium fell 3.33% to 72c.

ASX 200 technical analysis

Besides a five-day trading window in late July/early August and two days in early July, the ASX 200 has spent the past five months trading sideways between 7370 and 7050ish. We expect that range to hold for a few more weeks before the ASX 200 makes its move.

ASX 200 daily chart

• _{TradingView: the figures stated are as of August 31, 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.}