ASX200 Afternoon Report September 21st Sep 2022

The ASX200 trades 105 points lower (-1.54%) at 6701 at 3.00 pm Sydney time.

The ASX200 has fallen to a two-month low today as traders brace for the worst and hope for the best ahead of tomorrow’s FOMC meeting.

The worst is a dreaded 100 bp rate hike which the market assigns a probability of 25% towards and would mark an intensification of the Federal Reserves’ battle to tame suborn inflation. The best – is a 75 bp rate hike which may be the catalyst for a relief rally.

Compounding today’s fall, the ASX200 is closed tomorrow for the Queens public holiday, restricting traders’ ability to react immediately to any fallout from the FOMC meeting.

The unrelenting march higher in U.S yields this week has weighed on the Interest rate-sensitive Real Estate Sector led by Domain Group, which fell 3.1% to $3.14, Mirvac group fell 2.9% to $2.03, and REA Group fell 2.9% to $119.27.

Also suffering under the strain of higher interest rates, the tech sector was pummelled. Sezzle fell 6.78% to $0.55c, its lowest level since late July. Zip fell 4.5% to $0.74c, Life360 fell 4.8% to $5.36 and Megaport fell 4.4% to $7.36.

A slump in the price of iron ore back towards $96.00 per tonne has weighed on iron ore behemoth FMG, which fell 3.82% to $16.64, Rio Tinto fell 3.25% to $91.62, BHP dropped 2.9% to $38.04, and Mineral Resources fell 2.11% to $70.07.

The big banks caught in a mood of risk aversion have bathed in a sea of red. NAB fell 1.4% to $29.79, CBA fell 1.3% to $95.25, ANZ fell 1.25% to $23.54, and Westpac fell 0.9$ to $21.68.

Supported by the price of thermal coal, trading around a record $440 per tonne and a proposed share buyback, Whitehaven coal added 5.27% to $9.09, and New Hope Corp added 4% to $6.18.

The view remains that the ASX200 has entered a period of sideways choppy range trading until the start of November. However, downside risks would escalate if the Fed delivers a 100bp rate hike tomorrow.

Source Tradingview. The figures stated are as of September 21st, 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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