ASX200 Afternoon Report 7th of April 2022

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The ASX200 is trading 42 points lower at 7448 at 3 pm Sydney time, on track for a second day of losses.

The local market's brave run at all-time highs is increasingly tenuous, struggling to digest the RBA's hawkish pivot earlier this week and minutes from the March FOMC meeting that indicate that one or more 50bp hikes "could be appropriate."

Also paying on investors' minds, surging Covid cases in China that warn the Covid genie is well and truly escaped the bottle, despite strict lockdowns in Shanghai sparking concerns over supply chains and the outlook for commodities.

The U.S. interest rate market is pricing 225 points of rate hikes on top of the 25bp hike already signed, sealed, and delivered in March, which would be the fastest rate of tightening since the 1994 cycle that upended stock markets.

Rising yields and souring risk sentiment sparked another round of falls in local IT stocks. Life 360 (360) fell 5.65% to $5.11, Block (SQ2) fell 4.2% to $170.84, cloud computing company Megaport (MP1) fell 4.25% to $13.08, while Altium (ALU) lost 3.3% to $33.55.

Fears that higher interest rates will eat into household budgets have weighed on consumer-facing stocks. Nick Scali (NCK) fell by 2.8% to $11.00, Domino’s Pizza (DMP) slumped 2.5% to $81.30, JB Hi-Fi (JBH) fell 1.85% to $51.43, Harvey Norman (HVN) fell 2% to $5.03, while Aristocrat Leisure (ALL) fell 1.40% to $33.39.

The Big Banks, which typically do well in April as investors chase them ahead of their chunky dividend payments in May, are trading lower. ANZ lost 0.7% to $27.16, Westpac (WBC) dropped 0.6% to $24.09, Commonwealth Bank (CBA) lost 0.7% to $10494 and National Australia Bank (NAB) lost 0.64% to $32.35. Better news for beaten up fund manager Magellan (MFG), trading up 11.7% at $17.28 on news outflows have decelerated.

Reports that the International Energy Agency (IEA) had agreed to release oil reserves combined with lower demand from lockdowns in China have weighed on the price of crude oil, now trading at $97.70 p/b, as well as ASX200 listed oil stocks. Beach Energy (BPT) fell 1.90% to $1.56, Woodside Petroleum (WPL) fell by 2.2% to $33.03, Santos (STO) fell by 1.2% to $7.92.

EU sanctions on Russian coal imports are behind a 1.62% rise in the share price of coal mining heavyweight New Hope Corporation (NHC) to $3.77. After raising funds to assist with " green projects ", including decarbonization, Fortescue Metals (FMG) added 0.55% to $21.78. Rio Tinto (Rio) lifted by 0.3% to $119.20. BHP Group (BHP) is trading flattish at $51.39.

The hot money continues to race for the door in Lithium names. The share price of Liontown Resources (LTR) has imploded by over 20% over the past three days to $1.78. Vulcan Energy (VUL) dropped 4.9% to $9.59, Pilbara Minerals (PLS) fell 3.58% to $3.23, while Avz Minerals (AVZ) fell 1.75% to $1.13.

After hitting a 10-month high at .7661 earlier in the week, the AUDUSD has given back all its post-RBA gains and fall below .7500c on the hawkish details released in the March FOMC minutes and softer Australian Trade Balance data for February.   

ASX200 Daily Chart April 7th

Source Tradingview. The figures stated are as of April 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

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