ASX 200 afternoon report: 29th of March 2023

The ASX 200 trades 5 points higher (0.07%) at 7039 at 1.15 pm.

First Citizens' acquisition of the fallen Silicon Investment Bank on Monday has proved to be the tonic needed to calm nerves as the measure of fear on Wall Street, the VIX volatility index closed below 20 overnight – the level it was trading pre the banking crisis.

Improved risk sentiment has allowed the local market to return its focus to the latest economic data ahead of next Tuesday's RBA Board Meeting.

Yesterday's softer-than-expected retail sales data for February has been followed this morning by the release of cooler inflation data. The Monthly CPI indicator for February rose by 6.8%, lower than the 7.4% rise in January and well below the 8.4% peak of December 2022.

The lower inflation print indicates inflation peaked late last year. It increases the probability that the RBA will pause its aggressive rate hiking cycle at its Board Meeting next week – a prospect welcomed by the ASX 200 as it erased an early 0.3% loss.

Coal sector

Leading the index's charge into the green, the Materials Sector, after the iron ore price gained 2% overnight to $122.85.

• Fortescue added 2.33% to $21.04
• BHP added 1.44% to $45.04
• Mineral Resources added 1.02% to $81.86
• Rio Tinto added 0.90% to $115.47.

Energy sector

Building on its 4.14% rally yesterday, the Energy Sector has added another 1.42%.

• Woodside added 2.21% to $33.67
• Viva Energy added 1.32% to $3.08
• Beach Energy added 0.9% to $1.40
• Santos climbed 0.8% to $7.00.

Banking sector

The fallout from the banking crisis has prompted a large European Bank to downgrade the Australian banking sector, noting higher funding costs, competition for deposits, rising bad debts and tighter regulation.

• Bendigo Bank fell 2.62% to $8.54
• NAB fell 2.1% to $27.08
• Bank of Queensland fell 1.62% to $6.38
• Westpac fell 1.16% to $21.28
• CBA fell 0.8% to $95.29.

Lithium stocks

Takeover target Lithium miner Liontown Resources added 1.17% to $2.60.

• Galan Lithium added 5.12% to $1.08
• Pilbara Minerals added 3.77% to $4.00
• Allkem added 2.4% to $11.81.

Fellow takeover target United Malt, the subject of a $5 a share cash bid from Malteries Souffle, rose 2.44% to $4.61. The Australian market offers well-priced equities that represent value for the right buyer, looking for synergies, and access to new markets and products. There are currently nine live takeovers worth ~$60bn on the ASX. Expect more to come in the months ahead.

ASX 200 technical analysis

Tuesday's recovery in the ASX 200 aligns with our view that the ASX200 has been looking for a low. Providing it continues to hold above critical support at 6900, the pullback from the February 7567 high is viewed as a countertrend (an "ABC" Elliott Wave correction), and we expect the rally to extend initially towards 7200 before 7350.

ASX 200 daily chart

1. TradingView: the figures stated are as of March 29th, 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.