ASX200 Afternoon Report May 17th 2022

The ASX200 is trading 21 points higher at 7114 at 3.15 pm, on track for a third straight session of gains, albeit on light volumes.

Today’s rally is supported by reports that the damaging lockdowns in Shanghai will start to ease later this week, as well as relatively upbeat RBA meeting minutes, which showed that the RBA discussed a 40bp hike at its May meeting before opting to go for a 25bp rate rise.

Speculation that China’s lockdowns are set to ease and Germany’s intention to ban all Russian oil imports by year-end has supported the local Energy Sector as crude oil climbed as high as $115 p/b overnight.

Beach Energy (BPT) added 5.50% to $1.73. Santos (STO) added 2% to $8.25, AGL Energy (AGL) added 1.8% to $8.58. Woodside Petroleum (WPL) added 1.6% to $31.00, and Origin Energy added 1% to $6.90. Elsewhere coal miners Whitehaven coal (WHC) added 5.1% to $5.16, Coronado Coal (CRN) added 4.8% to $2.29, New Hope Coal (NHC) added 2.15% to $3.81. Yancoal (YAL) added 2% to $5.68.

A bounce in the price of iron and other metals has helped the big miners rebound after recent heavy losses. Fortescue Metals (FMG) fell 1.95% to $19.33. Rio Tinto (Rio) fell 1.3% to $105.74, BHP Group (BHP) added 0.2% to $45.39 Mineral Resources (MIN) added 5.1% to $57.85 and Lynas Rare Earths (LYC) added 5.5% to $9.33.

The ASX200 Financial Sector has climbed again, supported by another day of gains across the big four majors. Commonwealth Bank (CBA) added 1.7% to $105.40. Westpac (WBC) which added 0.82% to $24.58. National Australia Bank (NAB) added 0.6% to $31.52.  ANZ added .1% to $25.60. Macquarie (MQG) added 0.45% to $180.47.

The two-day rally in the IT sector has faltered. Sezzle (SZL) fell 6.5% to $0.65, Life 360 (360) fell 5% to $3.45, Seek (SEK) fell 4% to $24.36, Afterpay owner Block (SQ2) fell 3.75% to $114.75 while Zip (ZIP) fell 3.16% to fresh cycle lows at $0.92c.

The Health Care Sector has fallen, led by, Resmed (RMD), which fell 2.30% to $28.01. Ramsay Health Care fell 1.52% to $77.09. Bio-Tech behemoth CSL fell 1.08% to $274.32 and Cochlear (COH) fell by 0.80% to $210.56.

The rebound in Lithium names has continued in style today. Core Lithium (CXO) added 7.2% to $1.27, Allkem (AKE) added 5.25% to $12.03. Pilbara Minerals (PLS) added 4.62% to $2.72. Galan Lithium (GLN) added 2.9% to $1.43. Lake Resources (LKE) added 1.75% to $1.47.

Brambles (BXB) shares have fallen by 7.7% to $10.71 as CVC walked away from the pallet and distribution company citing “market volatility”.

Turning to the charts, after last week's panic selling pushed the ASX200 into our 7000/6950ish downside target, we moved to a neutral bias looking for a recovery towards resistance near 7200.

Source Tradingview. The figures stated are as of May 17th, 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