ASX 200 afternoon report: 2nd of February 2023

The ASX 200 trades 12 points (0.16%) higher at 7514 at 3.00 pm Sydney time.

In a carbon copy of the price action viewed in the prior two sessions, the ASX 200 this morning traded to a fresh nine-month high before sellers again emerged to take the shine off early gains.

The disappointing performance comes despite a positive lead from Wall Street after Fed Chair Powell deviated from his hawkish script during this morning’s FOMC meeting, noting that the “disinflationary process has begun” and that it was “certainly possible” the Fed will keep its benchmark rate below 5%.

The persistent selling in the local market is likely a sizeable institutional player getting out of the Australian market in favour of global stock markets with a higher percentage of growth stocks than our value-laden index. Growth stocks are better positioned to benefit from an imminent Fed pause.

Or possibly on concerns the RBA still has a lot more work to do to break the back of stubborn inflation and speculation increases of a larger-than-expected RBA rate hike next week. More so after today’s strong rebound in building approvals which surged by 18.5% vs expectations of +1%.

IT sector

With those thoughts in mind, it’s no surprise that tech stocks have been the standout today.

• Megaport added 9.23% to $6.09
• Sezzle added 8% to $0.67c
• Life360 added 7.93%
• Wisetech Global added 7.5% to $63.99.

Consumer Discretionary stocks

Consumer Discretionary stocks have also gained today.

• Aristocrat Leisure added 3.2% to $35.38
• Flight Centre continued to gain altitude as it added 2.45% to $17.53
• Kogan group added 1.98% to $4.63
• Super Retail Group added 1.37% to $12.61.

Financial sector

The big banks have struggled with talk of a larger-than-expected RBA rate hike next week.

• NAB fell 0.5% to $31.58
• Westpac fell 0.34% to $23.52
• ANZ fell 0.28% to $25.20
• CBA is trading flat on the day at $110.12.

Mining sector

The big miners have fallen as the rotation from value to growth stocks gains traction.

• Rio Tinto fell 2.22% to $125.58
• Mineral Resources fell 1.75% to $88.67
• Whitehaven fell 1.39% to $8.16
• BHP fell 1.37% to $48.89.

Technical analysis

Over the past seven sessions, there has been a notable loss of upside momentum in the ASX 200. Additionally, the ASX 200 is overbought, and for the Elliott Wave followers, there is a five-wave advance from the October 6411 low, which warns of a possible pullback.

We continue to favour trimming longs ahead of the bull market 7632 high and looking to either buy a sustained break of the 7632 high or a pullback into the 7200/7000 support area.

ASX 200 daily chart

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