ASX200 Afternoon Report August 22nd 2022

The ASX200 has dived today, taking its lead from a soft session on Wall Street on Friday, heightened by concerns that a car bomb that killed the daughter of a friend of Putin’s over the weekend might lead to a possible escalation in Ukraine by Russia.

Also playing a part, nerves ahead of this week’s Jackson Hole Economic Symposium titled “Reassessing Constraints on the Economy and Policy”, which lends itself relatively easily to another round of hawkish Fed speak and higher yields.

As well as the uncovering of another earnings bombshell. Joining the likes of Beach Energy, Bendigo Bank, Xero and TPG to be re-rated sharply lower this earnings season, Adbri fell -by 17.86% to $2.19 after disappointing half-year results.

The resumption of the uptrend in bond yields has rattled the interest rate-sensitive Consumer Discretionary, Real Estate and IT Sectors.

Flight Centre fell 2.65% to $17.28, Aristocrat Leisure fell 2.5% to $35.43, Dominoes Pizza fell 1.94% to $68.89, and Wesfarmers fell 1.43% to $48.21. Nick Scali added 3.8% to $10.39 after a good earnings report.

Apart from EML Payments which climbed by 10.61% to $1.17 after reporting strong revenues, it’s been a tough day in the office for tech stocks with BNPL names in the firing line. Block fell 6.3% to $107.62, Sezzle fell 6.3% to $0.75c, Zip fell 4.8% to $0.99c.

A decision by Russia’s Gazprom to shut the Nord Stream 1 gas pipeline for maintenance has driven coal mining stocks higher as buyers scramble for alternative energy supplies. Yancoal added 3.69% to $5.90, Whitehaven coal added 3% to $7.58, and New Hope coal added 0.4% to $4.95.

FMG and BHP recovered from early losses after China’s central bank cut its 5-year Loan Prime rate by 15bp to 4.30%, while the 1-year Loan Prime rate was cut by 5bp to 3.65%. FMG added 0.3% to $19.22. BHP added 0.1% to $41.59. Rio Tinto fell 0.45% to $98.09

A sea of red for the big banks. Westpac fell 1.9% to $21.76, NAB fell 1.1% to $30.57, CBA fell 0.78% to $99.17, ANZ fell 0.8% to $22.92 while Macquarie fell -1.72% to $179.17.

The ASX200 ended last week, rejecting the 200-day moving average, now at 7158. As noted last week, the ASX200 has not closed above the 200-day moving average in 16 weeks, and as suspected, this level bought out the sellers hungry for a piece of the action. While below the 200-day ma, the risks are for a deeper pullback to the 6990/70 area.

Source Tradingview. The figures stated are as of August 22nd, 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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