ASX200 Afternoon Report June 27th 2022

The ASX200 has kicked off the new week, adding a whopping 129 points to be trading at 6708 at 2.45 pm Sydney time.

The rally follows a strong lead from U.S equity markets which rebounded 6.5% last week, supported by rebalancing flows for end of month and quarter. As well as a soft patch of economic data that has raised hopes the Fed may pivot earlier from its hawkish rate-hiking path and engineer an elusive “soft landing.”

Building on a 6% rally last week, the tech sector has added 2.8% today, enjoying the easing in interest rate hike expectations. Megaport (MP1) added 8% to $6.05, Afterpay owner Block (SQ2) added 5.6% to $104.00, Tyro Payments (TYR), added 5.5% to $0.86c, Seek (SEK) added 4.4% to $22.29 and EML Payments added 4.2% to $1.49.

After a 16% plunge during the first half of June, the Financial Sector has rebounded by 2.7% today. Commonwealth Bank (CBA) added 3.44% to $93.28, National Australia Bank (NAB) added 3.22% to $27.89 ANZ added 3.1% to $22.58, Westpac (WBC) added 2.36% to $19.94, and Macquarie (MQG) added 0.43% to $166.06.

The Energy sector has added 2.7% as crude oil stabilised near $107.50 per barrel ahead of this week’s OPEC+ meeting, expected to see a modest increase in production from the cartel. Beach Energy (BPT) added 4.26% to $1.65. Origin Energy (ORG) added 3.15% to $5.73. Woodside (WDS) lifted by 2.58% to $31.40, and Santos (STO) added 1.95%% to $7.36.

The Materials Sector has also recorded strong gains, supported by a 5% rally in iron ore and a 3% rally in coking coal futures in Asia. Fortescue Metals (FMG) added 3.8% to $17.94, BHP Group (BHP) added 3.57% to $41.45, Rio Tinto (RIO) added 2.61% to $104.05.

Elsewhere, Coal miners Whitehaven Coal (WHC) added 4.42% to $4.72, Coronado Coal (CRN) added 3.59% to $1.73, New Hope Coal added 2.78% to $3.33 and Yancoal (YAL) added 0.97% to $5.23.

Taking the gloss off an otherwise outstanding day, a production downgrade by gold mining heavyweight Evolution Mining (EVN) has weighed as it fell 20% to $2.71. Northern Star Mining (NST) fell 11.76% to $7.05, Newcrest Mining (NCM) fell 5.95% to $21.67, and Silver Lake Resources (SLR) fell 3.27% to $1.33.

Technically, the ASX200 needs to extend today’s recovery above resistance at 6750/6850ish to negate the technical damage caused by the rout in June. A prospect that seems reasonable due to continued rebalancing flows this week and new money entering the market in early July.

Source Tradingview. The figures stated are as of June 27th, 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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