ASX 200 afternoon report: 20 August 2024

The ASX 200 trades 16 points (0.20%) higher at 7996 at 3.30pm AEST.

ASX 200 continues upward trend

The ASX 200 is primed for an eighth straight day of gains, mirroring the mood on Wall Street. Investors are increasingly optimistic that Thursday's Federal Open Market Committee (FOMC) meeting minutes and Federal Reserve Chair Powell's remarks at Jackson Hole will signal a potential interest rate cut in September.

Divergence in RBA stance

The situation in Australia contrasts sharply. The Reserve Bank of Australia’s (RBA) August board meeting minutes revealed that while the board considered raising rates, it ultimately decided that the case to leave rates unchanged was stronger.

The minutes noted, "Underlying inflation had fallen very little over the prior year in quarterly terms and, while the June quarter outcome had been in line with the staff's forecast, inflation was still some way above target."

In the final paragraph of the minutes, it was highlighted that "based on the information available at the time of the meeting, it was unlikely that the cash rate target would be reduced in the short term, and that it was not possible to either rule in or rule out future changes in the cash rate target."

ASX 200 stocks

Materials sector

The materials sector has snapped its six-day losing streak on the back of bargain-hunting in the big miners.

• Fortescue gained 1.18% to $17.21
• BHP added 0.92% to $40.09
• Rio Tinto added 0.49% to $110.34

Mining sector

It was a dark day for Yancoal, as the market digested its earnings report, which saw a 21% decline in revenue and a 57% fall in profits after tax to $420 million.

• Yancoal dived 13.79% to $6.00

Banking sector

The big banks have moved to boost their margins by slashing interest rates on term deposits. This move aligns with expectations in the interest rate market of rate cuts from the RBA. Currently, the Australian interest rate market has 20 basis points (bp) of RBA rate cuts priced for December, with a cumulative 75 bp expected over the next 12 months, bringing the cash rate down to 3.60%.

While the banks' adjustments to term deposit rates reflect shifts in the underlying market prices, they are not being matched by equivalent reductions in lending rates, allowing the banks to enjoy increased profits in the interim.

• ANZ gained 0.64% to $29.92
• CBA added 0.45% to $139.87
• Macquarie edged higher by 0.13% to $209.96

ASX 200 techinical analysis

The ASX 200's rebound from the 7600/7500 support area, which includes the 200-day moving average, has reinforced its importance as the downside level to watch going forward.

While current focus is on whether the ASX 200 can test and break its all-time high of 8148, a retest of the 7600/7500 level before year-end would not be surprising.

ASX 200 daily chart

• _{Source: TradingView. The figures stated are as of 20 August 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.}