ASX200 Afternoon Report August 29th 2022

The ASX200 trades 140 points lower at 6964 at 3.15 pm Sydney time.

A disastrous start to a new week for the ASX200 as it tumbled over 2% to a low of 6943.2 (-161 points) shortly after the opening following a blood bath on Wall Street on Friday night.

The carnage on Wall Street came after the world’s most powerful central banker Fed Chair Jerome Powell, dashed misplaced equity market “hopetimism” of an imminent dovish pivot, noting the Fed would continue to raise rates and keep them higher for longer as it digs in to fight inflation.

The Fed’s hawkish comments pushed U.S 2-year yields to 3.466%, the highest since the end of 2007. The rates market is now about 89% priced for a third consecutive 75bp rate hike at the September FOMC meeting and for a 3.80% terminal rate by the end of Q1 2023.

Leading the market lower, the IT sector fell 4.69%. As viewed during the first half of 2022, growth stocks are susceptible to higher interest rates. Life360 fell 8.54% to $4.82, Megaport fell 8.07% to $6.95, Zip fell 7.78% to $0.83c. Fellow Buy Now Pay Later Names Block and Sezzle each fell around 7.7%.

Material stocks have fallen as growth concerns re-emerge on the Fed Chairs’ hawkish comments. Bluescope steel fell 4.3% to $16.67, FMG fell 4.2% to $19.03 as it cut its dividend by 42%. South32 fell 3.3% to $4.10, Rio fell 2.3% to 96.41 and BHP fell 1.7% to $42.10.

Australian retail sales for July were much stronger than expected at +1.3% m/m (vs +0.3% expected), easing concerns of a consumer-led slowdown.

Nonetheless, the share price of the big banks has not been immune from the round of panic selling. Nor have consumer-facing stocks. NAB fell 2.5% to $29.84, CBA fell 2.25% to $96.11, Westpac fell 2% to $21.25, and ANZ fell 1.9% to $22.52.

JB Hi-Fi fell 4.54% to $40.58, Webjet fell 3.66% to $4.87, Harvey Norman fell 3.76% to $4.22 Kogan fell 3.47% to $3.34 and Coles group fell 2.1% to $17.29.

After a horrendous run that saw its share price fall over 80% from $20.05 to a low of $3.90 in May, a2M has surged 9% to $5.36 after reporting stronger than expected earnings and a $NZ150m on market share buyback.

The share price of energy giant Woodside is trading 1.64% lower at $35.37 ahead of the release of its 1H 22 earnings report tomorrow. Beach Energy fell 1.7% to $1.73, and Santos is trading 0.44% lower at $7.88.

Following today’s tumble, the ASX200 is testing a solid band of support 6960/40 area. Providing it holds, I would expect a retest of resistance and the top of the range 7130/50 area. Aware that much below 6960/40 would warn a deeper retracement is underway.

Source Tradingview. The figures stated are as of August 29th, 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

This content will only appear on Forex websites!

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.