ASX 200 afternoon report: July 18, 2023

The ASX 200 trades 17 points (-0.24%) lower at 7281 at 3.10 pm AEST.

A hawkish tone emerges from RBA Minutes

The ASX 200 is on track for a second day of declines this week as traders looked past a positive lead from Wall Street to focus on more hawkish than expected RBA meeting minutes.

The Minutes from the July meeting confirmed that the Board discussed two options: "Members discussed two options for monetary policy at this meeting: increasing the cash rate by a further 25 basis points, or holding the cash rate unchanged," before electing to keep rates on hold.

Upcoming economic indicators hold the key

The final paragraph of the Minutes noted that at the upcoming August meeting, "the Board would have the benefit of additional data on inflation, the global economy, the labour market and household spending, as well as an updated set of staff forecasts and a revised assessment of the risks."

The Minutes place the focus squarely on this Thursday's labour force report and next Wednesday's Q2 CPI data. The early expectations are for headline inflation to fall to 6.2% YoY from 7%. The RBA's preferred measure of core inflation, the Trimmed Mean, is expected to fall to 6.2% YoY from 6.6% previously.

Presuming the inflation numbers come in as expected, it supports the idea of a follow-up pause in August. However, if Thursday's labour force report is robust and headline inflation comes in at 6.4% or higher, it could be "game on" as the RBA is forced to respond to a tight labour market and sticky inflation.

Real estate sector

The interest rate sensitive ASX200 Real Estate Sector has been the weakest link today, led by Lend Lease.

• Lend Lease fell 5.09% to $8.12
• Stockland Group fell 2.4% to $4.08
• Domain fell 2.35% to $3.74
• Centuria Capital fell 1.93% to $1.66
  

Consumer-facing stocks

Decline was seen in consumer-facing stocks today.

• Metcash fell 3.73$ to $3.61
• Aristocrat Leisure fell 2.55% to $38.38
• Bubs Australia fell 1.90%
• Bega Cheese fell 1.90%
• Kogan saw a price gain of 7.69% to $6.16, bucking the overall trend

Materials and energy sectors

The heavyweight Materials and Energy Sectors have fallen as the world waits to see if China will pump prime it's slowing economy after growth numbers disappointed yesterday. There is an expectation that more stimulus measures will be announced at the July Politburo meeting at the end of July (28th to 30th) but no guarantees.

• Yancoal fell 1.6% to $4.90
• BHP fell 1.37% to $44.65
• Rio Tinto fell 1.08% to $116.58
• Woodside fell 0.95% to $35.60
• Mineral Resources fell 0.46% to $71.97

ASX 200 technical analysis

Last week's 3.7% rebound following the previous week's brutal 4% sell-down has created a V-shaped bottom at the 6998 low. We continue to look for a test of range highs 7360/90 area.

ASX 200 daily chart

• _{TradingView: the figures stated are as of July 11, 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.}