ASX200 Afternoon Report September 7th 2022

The ASX200 trades 100 points lower at 6727 at 3.05pm

If the Labour Day long weekend was meant to provide a circuit breaker after the Fed Chairs' hawkish speech at Jackson Hole, then the bond market didn't get the memo as a surge higher in yields saw U.S equity markets extend their free fall overnight.

The weaker session on Wall Street was the backdrop for the local bourse to plunge 1.6% to its lowest level in seven weeks (6719.6) an hour after the opening bell, a move that it has struggled to unwind during the remainder of the session.

A reversal lower in crude oil on fears over higher interest rates, recession, and Covid lockdowns in China, along with a 6.9% fall in European natural gas prices, unleashed carnage in Energy stocks.

Beach Energy fell 6.4% to $1.69, Woodside fell 3.15% to $33.98, Cooper Energy fell 3.7% to $0.26c, Santos fell 2.14% to $7.77. New Hope Coal fell 4.37% to $5.47, Coronado coal fell 3% to $1.68, Whitehaven coal fell 2.2% to $8.61, and Yancoal fell 0.6% to $6.67.

News that the lockdown in Chengdu is set to be extended weighed on metals prices and the price of the big miners. FMG fell 2.75% to $16.00, BHP fell 2.4% to $36.38. Rio Tinto fell 1.8% to $89.15, and Mineral Resources fell 1.5% to $59.43.

The national accounts released today showed the Australian economy in the June Quarter expanded by a solid 0.9% and 3.6% YoY. It's the third consecutive quarter of economic expansion for the Australian economy.

Today's figures coincided with the start of the RBA's rate hiking cycle in May and come just one day after the RBA raised rates by 50bps to 2.35%, leaving Q3 as the one that should reveal the impact of the RBA's 225bp of rate hikes to date.

While the statement that accompanied yesterday's rates decision hinted at a more moderate pace of rate rises, more clues may be forthcoming from the RBA Governors' Speech at the Annika Foundation lunch tomorrow.

Nonetheless, stocks in the Financial Sector weren't in the mood to wait around. NAB fell 3% to $29.22, Westpac fell 2% to $20.84, CBA fell 1.86% to $94.31, and ANZ fell 1.5% to $22.25.

Defying the melt-up in interest rates, the IT sector held its ground, led by gains in Link Administration which added 2.4% to $4.30, and Computershare added 1.5% to $24.46. Appen added 0.83% to $3.65 and Megaport added 0.55% to $7.30.

Unable to withstand the heat of an unrelenting rise in the U.S dollar and in USDCNY, the AUDUSD is trading at .6715, eyeing the .6681 low from mid-June. A break/close below .6681 would then see the AUDUSD move towards the next level of support, .6530/00.

After today's acceleration lower, the ASX200 is vulnerable to a retest of the June 6407 low, with bounces expected to be met by sellers at 6850 and again at 7000.

Source Tradingview. The figures stated are as of September 7th, 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

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.