ASX200 Afternoon Report August 11th 2022

The ASX200 trades 64 points higher at 7057 at 3.20 pm Sydney time.

The ASX200 has traded to a two-month high, supported by a thumping rally on Wall Street after U.S inflation numbers provided a downside surprise. Headline CPI for July printed flat vs 0.2% expected, leading the year-on-year rate lower to 8.5%. Core CPI rose by 0.3% vs 0.5% expected, leaving the annual rate steady at 5.9%.

Despite the positive reaction in the equity markets, the bond market and Fed speakers have proved harder to impress. Previously reliable Fed doves Kashkari and Evans reiterated that higher interest rates are required, and that rate cuts in 2023 are "unrealistic". The interest rate market is 50% priced for a third consecutive 75bp rate hike, for when the Fed next meets in September.

Nonetheless, the ASX200 is looking increasingly comfortable above the psychological 7000 level, and there was no way it as going to let the bond market vigilantes rain on today's "peak inflation" parade.

The Materials sector stormed higher, supported by another rally in coal mining stocks, as the EU's ban on Russian coal as part of the EU's fifth sanctions package commenced overnight. Yancoal added 2.4% to $5.10, Coronado Global added 2.2% to $1.74, New Hope coal added 1.45% to $4.24 and Whitehaven coal added 0.6% to $6.41.

BHP added 1.8% to $38.99, FMG added 1.22% to $19.06, while Rio Tinto fell 3.63% to $95.55 after it went ex-dividend.

Overnight the tech-heavy Nasdaq closed at its highest level in three months, a move that supported local tech names. Novonix added 11.86% to $3.30, Life360 added 10% to $5.23, Afterpay owner Block added 8.88% to $126.93, Seek added 5.22% to $24.59 and Tyro Payments added 3.7% to $1.11. Computershare fell 4.46% to $23.13 following its earnings miss yesterday.

CBA shares have fallen -0.4% to $100.63, continuing their slide back towards $100 following yesterday's earning report, which noted a slump in the bank's NIM. ANZ added 1.43% to $23.81, Westpac added 1.04% to $22.44, NAB added 0.76% to $30.46 and Macquarie added 1.45% to $178.67.

The share price of QBE surged by 3.6% to $12.58 after its earnings report beat expectations, while Telstra fell 1.37% to $3.96 after providing softer guidance.

Following the strong rally on Wall Street overnight that ran straight over the signs of loss of momentum noted earlier in the week, the ASX200 has scope to extend its rally towards the 200-day moving average at 7166.

Source Tradingview. The figures stated are as of August 11th, 2022. 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

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