ASX 200 afternoon report: 14 December 2023

The ASX 200 trades 115 points (1.58%) higher at 7373 at 1.30 pm AEDT.

The ASX 200 has today punched to a 4 ½ month high at 7375.2, after US equity markets hit the turbochargers following this morning's dovish Fed meeting.

As widely expected, the Fed kept its federal funds target rate unchanged at 5.25%-5.50%. Notably, the all-important median "dot" showed no more rate hikes for the first time since March 2021, and three rate cuts expected in 2024. The dovish FOMC meeting and this morning's mixed Australian labour force report for November has convinced the Australian interest rate market of the validity of a second 25bp RBA rate cut by November next year.

Within the labour force report details, the Australian economy added 61.5k jobs in November vs. the 11.5k expected. The unemployment rate rose to 3.9% from a revised 3.8%, as participation rate surged to a record high of 67.2% from 67%. At first glance, the unemployment rate rising to 3.9%, further from its 3.4% low of October 2022 and above the RBA's forecast of 3.8% by year-end, shows that the labour market is cooling. However, the 61.6k surge in employment and the participation rising to a record high suggests it will be a slow process.

Today’s market movements

IT sector

Buoyed by prospects of interest rate cuts in 2024, the IT sector soared, led by

• Wisetech Global: + 4% to $72.86
• Xero:+ 2.18% to $110.86
• Altium: +2.31% to $47.92
• Seek: + 2.85% to $25.23

Mining sector

The big miners continue to run free, supported by the price of iron ore trading at $133 per tonne.

• Mineral Resources: +6.4% to $65.42
• Fortescue: +1.78% to $27.19
• Rio Tinto: +1.24% to $131.10
• BHP: +1.09% to $48.40

Financial services sector

The big banks have been a pillar of strength, gaining around 0.8% on the day. However, the impact of cropical Cyclone Jasper has resulted in another tough day for insurance stocks, as climate change continues to wreak havoc with their forecasts.

• Suncorp: -2% to $13.55
• QBE: -3.94% to $13.88
• IAG: - 2.54% to $5.56

Lithium sector

After a torrid run, the Lithium sector has rebounded, as the Fed's rising tide lifts all boats and as questions continue around the marginal cost of lithium production.

• IGO: + 9.38% to $8.23
• Galan: + 9.47% to $0.52c
• Core Lithium: + 9.18% to $0.27c
• Pilbara: + 7.59% to $3.76

ASX 200 technical analysis

We have been tactically bullish on the ASX 200 in recent months, doubling down on our bullish call after the Australian interest rate market began to price in rate cuts last week. Our upside target of 7380/7400 has now been reached. Should the ASX 200 break above 7400 on a sustained basis, it would lead to a push towards the February year-to-date 7567 high.

ASX 200 daily chart

• _{Source TradingView. The figures stated are as of 14 December 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.}