ASX200 Afternoon Report July 28th 2022

The ASX200 trades 64 points higher at 6887 at 3.15 pm Sydney time. 

The ASX200 has roared to life today after this morning's FOMC meeting saw the Federal Reserve rates by 75bp as expected and crucially softened its hawkish rhetoric.

The Fed's gentler tone falls just short of a dovish pivot. However, it does remove the tail risks of a debilitating slowdown caused by hiking rates too aggressively into restrictive territory - an outcome that has bolstered risk assets.

The Materials sector has been the day's best performer on the back of stronger commodity prices. Mineral Resources added 7.25% to $52.34, OZ minerals added 6% to $18.26, and Lynas Rate Earths added 2.53% to $8.71. FMG climbed 2.2% to $18.58, BHP added 1.3% to $38.00. Rio Tinto bucked the trend, falling 0.6% to $96.43 as investors digested its earnings report yesterday, which ended its run of record results.

The BNPL sector continued its renaissance following a strong trading update from Sezzle last week, which noted a solid increase in customers and revenues. Building on yesterday's stunning 100% rally, Sezzle has surged another 34% to $0.95c. Tyro Payments added 17.6% to $0.83c, ZIP added 17% to $1.45 while Afterpay owner Block gained 4% to $103.61.

The Financial Sector remains a pillar of strength, building on last week's 4.39% gain. Macquarie Bank added 3% to $178.93, CBA added 1.1% to $99.98, NAB gained 0.6% to $30.32. Westpac added 0.4% to $21.15. ANZ traded flat at $22.73.

After falling off the radar in recent months, gold bugs have begun to stir as the price of bullion extended to $1740 post the FOMC meeting. Newcrest Mining added 2.3% to $7.52, Silver Lake resources added 2.1% to $1.44, Evolution Mining added 1.85% to $2.50, and Newcrest Mining added 0.3% to $18.57.

The only downer on an otherwise solid day was the release of softer than expected retail sales data for June, with growth slowing to 0.2% from 0.7% in May. Against the backdrop of rising rates, high inflation, falling house prices and consumer confidence, belt-tightening has commenced. JB Hi-Fi fell 2.53% to $41.98; Myer fell 2% to $0.49c, and Harvey Norman traded flat at $4.11.

The ASX200 has taken another good chunk out of the 6750/6950 resistance band that it needs to reclaim to negate the technical damage caused by the breakdown in June Until this occurs, the rally from the 6407 low is viewed as a bear market countertrend rally.

Source Tradingview. The figures stated are as of July 28th, 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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