ASX 200 afternoon report: 5th of January

The ASX 200 is trading flat this afternoon and in an excellent position to lock in the 113 points (+1.63%), it gained after its stunning reversal higher yesterday.

Although some will be quick to point out that the ASX 200 gave back 40 points of early gains today, a flattish close on the day does seem like a small win after the violent sell-off that rocked the first trading day of 2023.

Unfortunately, for those hoping for a cleaner read on whether the U.S. economy is heading towards recession or a soft landing, economic data delivered overnight only further muddied the water.

The ISM manufacturing PMI, an excellent leading proxy for company guidance on earnings, fell more than expected (from 49 to 48.4). While at the same time, job openings fell less than expected, suggesting the Fed still has some work to do to take some pressure out of an overheated labour market.

Consumer sector

Nonetheless, it's been Consumer Discretionary names that have outperformed on the ASX today.

• Myer Holdings added 2.9% to $0.71c
• Domino's Pizza added 2.4% to $69.96
• Flight Centre added 2.2% to $14.93
• Kogan climbed by 2.1% to $3.94.

Banking sector

Banks have gained, led by Macquarie.

• Macquarie lifted 1.13% to $171.75
• NAB added 0.9% to $29.96
• Bendigo Bank added 0.4% to $9.87
• CBA climbed by 0.24% to $103.40.

Energy sector

It was a mixed day for the big miners.

• FMG added 0.33% to $21.04
• BHP flat at $45.99
• Rio Tinto traded 0.7% lower to $116.52.

Despite news yesterday afternoon that China plans to resume importing Australian coal, big coal miners have fallen.

• Whitehaven fell 2.19% to $8.92
• Coronado Coal fell 0.8% to $1.92
• New Hope fell 0.85% to $5.87
• Yancoal fell 0.2% to $5.77.

Energy stocks have underperformed after crude oil lost nine percent over the past two sessions on demand concerns as the U.S ISM manufacturing PMI fell deeper into contractionary territory and as China's bumpy reopening continues.

• Beach Energy fell 3.1% to $1.53
• Woodside fell 2.22% to $33.74
• AGL Energy fell 1.7% to $8.06
• Santos fell 1.1% to $6.89.

Technically, the recovery in the ASX 200 yesterday leaves Tuesday's sell-off below the 200-day moving average exposed as a false break lower. We believe that the pullback from the 7375 high is a correction rather than a lower reversal.

The AUD/USD is trading at .6808, and while it feels like it might want to try its hand supported by the China reopening, it needs to see a sustained break above the 200-day moving average now at .6860 and the mid-December .6894 high.

ASX 200 daily chart

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