ASX200 Afternoon Report August 23rd 2022

The ASX200 trades 66 points lower at 6980 at 2.45 pm Sydney time. 

The ASX200 is on track for its worst two days performance since late June as rising bond yields rattle equity markets ahead of this week's Jackson Hole Economic Symposium for central bankers.

In the past, the Fed has used Jackson Hole to flag policy pivots. However, with inflation still uncomfortably high, a dovish pivot is unlikely. U.S interest rate markets are 50% priced for a third consecutive 75bp rate hike for the September FOMC meeting.

Tracking U.S yields higher, Australian yields are also rising again. 1-year yields are trading at 2.90%, at cycle highs. While 2-year yields are at 3.19%, their highest level in a month.

Despite a rebound in the ANZ Consumer Confidence Index to its highest level since June, the retail facing Consumer Discretionary, and Consumer Staples Sectors have fallen.

Star Entertainment fell 3.17% to $2.75, Domino's Pizza fell 3% to $66.12, while Flight Centre fell another 1.54% to $16.98. Nick Scali added 1.9% to $10.71, extending gains following yesterday's strong earnings report.

Amongst Consumer Staples, Coles Group fell 2.95% to $8.37 ahead of its earnings report tomorrow. Graincorp fell 3.13% to $8.36. Woolworths fell 2.47% to $38.07, and Metcash fell 2.1% to $4.19.

The share price of EML Payments has retraced all of yesterday's gains falling by 10% to $1.01. BNPL stock Sezzle fell 4.8% to $0.70c, joined by Zip which fell 4.6% to $0.94c. Shares in electronic design software company Altrium surged 20% to $35.86 after reporting a solid increase in revenues and profits.

A decision by Russia's Gazprom to shut the Nord Stream 1 gas pipeline has driven the price of Newcastle futures well over $400 per tonne and the price of coal mining stocks. New Hope coal added 3.2% to $4.95. Whitehaven coal added 2.8% to $7.75, Coronado Coal added 1.41% to $1.80 and Yancoal added 1% to $5.96.

A warning from Saudi Arabia that it could cut production should a nuclear deal with Iran lead to the return of sanctioned Iranian oil has supported energy names. Woodside added 2.7% to $33.94, Santos added 2.5% to $7.58, and Beach Energy added 1.2% to $1.70. 

For the second day running, the share price of the big banks has bathed in a sea of red. Westpac fell 2% to $21.37, NAB fell 1.9% to $29.94, CBA fell 1.5% to $97.46, ANZ fell 1.75% to $22.44 while Macquarie fell 3.5% to $172.37.

Despite an 8.8% rise in the share price of Ansell to $27.36 after it reported inline earnings and more optimistic guidance, the Health Care Sector is trading lower. Resmed fell 2.25% to $33.06, CSL fell 2.2% to $289.05 and Cochlear fell 1.6% to $216.94.

The ASX200 ended last week, rejecting the 200-day moving average at 7152. The downside follow-through over the past 24 hours has the ASX200 testing our 6990/70 pullback target. If this support level fails to hold, look towards wave equality at 6915 for signs of possible basing.

Source Tradingview. The figures stated are as of August 23rd, 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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