ASX 200 afternoon report: 19 September 2024

The ASX 200 trades 37 points (0.46%) higher at 8179 at 2.15pm AEST.

ASX 200 rises on US Fed rate cut and strong jobs data

The ASX 200’s record-breaking streak continues, marking the third consecutive day of all-time highs.

Today's gains were fuelled by the US Federal Reserve's (Fed's) decision to cut its key policy interest rate by 50 basis points (bp), with further cuts signalled. Meanwhile, the Australian jobs report for August, released at 11.30am, showed the labour market remains resilient, though not strong enough to prompt the Reserve Bank of Australia (RBA) to adjust its hawkish stance just yet.

Stronger-than-expected employment data

The August employment report revealed that the Australian economy added 47,500 jobs, well above the 25,000 expected by the market. The unemployment rate held steady at 4.2%, the highest level since November 2021, while the participation rate stayed at a record high of 67.1%.

The stronger-than-expected employment rise indicates that the labour market is cooling more slowly than anticipated. However, with the participation rate (supply) still at historic highs, the RBA is likely to keep rates steady at 4.35% during its board meeting next week. The central bank will wait for further data, starting with next Wednesday's monthly consumer price index (CPI) indicator, before making any adjustments.

RBA’s outlook in light of the Fed's move

While it is generally observed that the RBA follows the US Fed’s lead in cutting rates, there have been instances where their policies diverge, most recently in 2015. The RBA has maintained its stance that, despite slow economic growth, persistently high inflation will likely delay any rate cuts until 2025. However, the Fed’s 50 bp rate cut this morning could reduce the threshold for a dovish shift from the RBA in the coming months.

ASX 200 stocks
Mining sector

Today's record high was driven by gains in the big mining stocks following a ratings upgrade from a US investment bank:

• Rio Tinto surged 3.35% to $113.12
• BHP climbed 3.07% to $40.05
• Fortescue added 1.5% to $17.69

Uranium stocks

• Bannerman Energysurged 9.25% to $2.48
• Deep Yellow gained 6.93% to $1.23
• Paladin Energy climbed 6.18% to $9.70
• Silex Systems added 4.32% to $3.62

Real estate sector

The interest rate-sensitive real estate sector remains supported after breaking to a 17-year high last week:

• Centuria Capital surged 2.53% to $2.02
• Vicinity Centres climbed 2.12% to $2.41
• Scentre added 2.14% to $3.82
• GPT Group added 1.68% to $5.14

Financial sector

Also riding the wave of lower interest rates, the ASX 200 financial sector, up a stunning 27% this year, made a fresh record high today:

• ANZ gained 1.32% to $31.56
• Westpac added 0.65% to $33.37
• CBA climbed 0.63% to $144.24
• NAB edged 0.1% higher to $39.46

ASX 200 technical analysis

Following its break above the August 8148 high, we look for the ASX 200 to extend its rally towards weekly channel resistance at 8230/8250. A break above here would then open the way for the index to rally towards 8350. Conversely, a failure to break above trend channel resistance at 8230/8250 would warn of rotation lower towards support at 8000/7900.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 19 September 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.}