ASX 200 afternoon report: 17 October 2023

The ASX 200 trades 31 points (0.44%) higher at 7057 at 3.20 pm AEDT.

The ASX 200 trades 31 points (0.44%) higher at 7057 at 3.20 pm AEDT.

ASX 200 decreases after RBA’s meeting

After a blistering 1% rally to start today's session, the ASX 200 has trimmed a good chunk of its gains after more hawkish than-expected RBA meeting minutes.

RBA board members under new Governor Michele Bullock, noting that the "Board has a low tolerance for a slower return of inflation to target than currently expected" and that "further tightening of policy may be required should inflation prove more persistent than expected."

We have consistently noted that after last month's robust labour force report, we thought the chance of one more 25bp rate hike to 4.35% before year-end was underpriced.

Q3 inflation report

Whether a hotter-than-expected Q3 inflation report next Wednesday, sees the RBA deliver an unwelcome Melbourne Cup Day rate rise surprise, will depend on how geopolitical events in the Middle East play out over the next three weeks.

If tensions in the Middle East were to escalate between now and then, talk of a rate hike could be replaced with conversations around rate cuts.

Today's market movement

IT sector

Returning to markets, the IT sector has rebounded, taking its lead from the Nasdaq, which locked in a 1.18% to start the week.

• ZIP: +7.14% to $0.30c
• EML Payments: + 4.23% to $1.11
• Megaport: + 4.25% to $11.53
• Block: + 2.66% to $70.72

Resources sector

Chatter around further Chinese stimulus measures to be unveiled in the coming weeks helped by iron ore price add 2.59% overnight to $117.25 per tonne.

• Mineral Resources: + 2% to $63.53
• Rio Tinto: + 1.68% to $117.66
• BHP gained 1.33% to $45.78
• Fortescue: + 1.3% to $21.82

Banking sector

• Macquarie: + 0.73% to $168.93
• Westpac: + 0.73% to $21.46
• NAB: + 0.69% to $29.33
• CBA: 0.35% to $101.04

Consumer-facing stocks have fallen on talk that the RBA has unfinished business hiking rates.

• Harvey Norman: - 2.12% to $3.69
• Myer: - 1.9% to $0.51c,
• Super Retail Group: -1.3% to $$12.13
• JB Hi-Fi: - 1.28% to $45.90.

Healthcare sector

The ASX 200 healthcare sector, which fell to a three-and-a-half-year low yesterday, stumbled again.

• Telix Pharma: - 1.25% to $10.28
• Pro Medicus: - 1% to $81.42
• Bionic ear company Cochlear: - 0.71% to $253.28
• Biotech giant CSL: - 0.59% to $238.42

ASX 200 technical analysis

In late September, we turned tactically bullish on the ASX 200 (just above 7000), looking for a rebound towards range (7440) highs and possibly year-to-date highs (7567). Stops on the bullish view are a sustained close below 6900/70ish.

ASX 200 daily chart

_{TradingView: the figures stated are as of October 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.}