ASX 200 afternoon report: 10 December 2024

The ASX 200 trades 34 points (-0.41%) lower at 8388 as of 3.15pm AEDT.

ASX 200 recovers as RBA maintains rates

The ASX 200 pared almost half of its early losses this afternoon after a dovish shift from the Reserve Bank of Australia (RBA) at its final board meeting of the year. As widely expected, the RBA kept its official cash interest rate on hold today at 4.35% for a ninth consecutive meeting. The decision was accompanied by a dovish shift in tone.

Inflation and wage pressure insights

In the accompanying statement, the RBA noted that while higher interest rates were working to bring demand and supply closer to balance, 'measures of underlying inflation are around 3.5 percent, which is still some way from the 2.5 percent midpoint of the inflation target.' However, the RBA also noted that 'wage pressures have eased more than expected in the November Statement on Monetary Policy' and that 'some of the upside risks to inflation appear to have eased.'

The sentence that included the statement that the Board was not 'ruling anything in or out' was dropped and replaced with the observation that 'the Board is gaining some confidence that inflation is moving sustainably towards target.' The statement concluded with the familiar mission statement: 'The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.'

Market implications and future outlook

The dovish pivot that observers thought might follow last week's disappointing third-quarter (Q3) gross domestic product (GDP) print has been laid out in today's statement and is expected to be reinforced in the press conference that shortly follows. While it would be premature for the RBA to unroll its mission accomplished flag, today's dovish pivot paves the way for a potential February rate cut, pending further softening in the incoming data, which includes:

• The November labour force report (Thursday, 12 December)
• Westpac Consumer Confidence, (Wednesday, 18 December)
• Monthly consumer price index (CPI) indicator, (Wednesday, 8 January)
• The December labour force report, (Thursday, 16 January)
• National Australia Bank (NAB) Business Confidence, (Thursday, 23 January)
• Fourth-quarter (Q4) consumer price index, (Wednesday, 29 January)

ASX 200 stocks
Financial sector

• NAB dropped 2.4% to $37.80
• Westpac lost 1.95% to $32.22
• ANZ fell 1.27% to $29.66
• CBA slid 1.05% to $157.66

Technology sector

• Megaport plunged 6.24% to $7.36
• Zip fell 4.84% to $2.96
• Wisetech Global lost 4.45% to $125.47
• Life360 slipped 4.2% to $23.02

Mining sector

Resource stocks responded positively to China's announcement late yesterday afternoon about adopting 'moderately loose' monetary policies and more proactive fiscal measures in 2025. This shift from 'prudent' to 'moderately loose' is considered significant, shifting to a setting not used since the 2008 - 2010 financial crisis.

• Mineral Resources surged 8.04% to $36.92
• Fortescue climbed 5.5% to $20.30
• Rio Tinto increased 3.95% to $124.21
• BHP rose 2.88% to $41.77

ASX 200 technical analysis

The ASX 200 has today extended its pullback from the multi-week trend line resistance we have been following since the halfway mark of 2024.

A sustained break above trend channel resistance, currently at about 8510, would signal that a more impulsive move higher is underway.

Otherwise, we expect more of the two-step forward, one-step back price action viewed since September. On the downside, a sustained break below the 8350 area would be the first indication that the ASX 200 has topped and that a deeper decline is underway.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 10 December 2024. 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.}