ASX 200 afternoon report: May 3, 2023

The ASX 200 trades 101 points (-1.39%) lower at 7168 at 2.20pm AEST.

The ASX 200 has fallen to a four-week low at 7164.90, extending the sell-off that commenced yesterday after the RBA surprised the market and raised its official cash rate by 25bp to 3.85%.

Further fuelling trader nervousness, key central bank meetings over the next 24 hours, including the FOMC at 4am tomorrow and the ECB board meeting tomorrow at 11.15am, along with another aftershock for the US banking system overnight.

Just 24 hours after the final rights were read to the failed First Republic Bank, the market aimed and fired at a handful of other regional banking targets, including PacWest Bancorp (-27.8%), Western Alliance Bancorp (-15.1%), and HomeStreet Inc (-14.46%).

While US regulators dither over how to protect deposits at all banks, the market has signalled that vulnerable regional banks are fair game. The larger US banks will be the winners as they bid for the choice assets of the fallen and continue to grow.

Banking sector

No surprise then that the big banks have traded in a sea of red ink today.

• NAB fell 2.08% to $28.49 ahead of its trading update tomorrow
• Westpac fell 2% to $22.10
• ANZ fell 1.88% to $23.96
• CBA fell 1.89% to $98.23
• Macquarie Bank fell 1.55% to $178.41.

Energy sector

The Energy sector slumped as the price of crude oil tanked 5.3% overnight below $72.00 p/b, on US default and demand concerns.

• Woodside fell 3.46% to $32.21
• Santos fell 3.29% to $6.92
• Beach Energy fell 3.29%
• Viva Energy fell 2.15%.

Coal sector

Concerns over tighter monetary policy and slowing global growth have weighed on the big miners.

• Fortescue fell 3.79% to a five-month low of $20.05
• Mineral Resources fell 2.04% to $71.49
• Rio Tinto fell 1.84% to $109.09
• BHP fell 0.96% to $43.21.

Lithium sector

A mixed day for the Lithium sector.

• Pilbara Minerals gained 2.8% to $4.21
• IGO gained 1.37% to $13.70
• Liontown added 0.7% to $2.73
• Galan Lithium fell 1.5% to $1.00,
• Lake Resources fell 1.06% to $0.47c.

ASX 200 technical analysis

As noted previously, the ASX 200 typically sees a pullback in May/June of 3-5%. The RBA’s surprise rate hike yesterday appears to have been the catalyst for the May pullback to commence as noted here yesterday. We look for the sell-off to deepen towards the 7100-support area (200-day ma) in the sessions ahead.

ASX 200 daily chart

1. TradingView: the figures stated are as of May 3, 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.