Evening Wrap: ASX 200 bounces, Australian inflation eases in August, US futures inch lower

The S&P/ASX 200 closed 93 points higher, up 1.44%.

The Bank of England bond buying spree helped lift the local sharemarket from dangerous lows, Energy and Materials stocks extended gains, Australia's inflation rate eases to 6.8% in August and US futures inch lower after Wednesday's big rally.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

Bank of America's emergency bond buying scramble helped global equity markets bounce from recent lows. The ASX 200 experienced some selling towards close, down from session highs of 2.04%.

• All 11 sectors advanced

• Energy and Materials extended their bounce back amid a broad-based rally for commodity prices on Wednesday night

  • Most iron ore majors rallied 2%

  • Coal stocks returned close to all-time highs, most up 4-10%

  • Copper stocks bounced with large caps up 2-10%

• Telcos, Healthcare and Discretionary also outperformed the market

• Staples, Utilities and Tech underperformed

• 86% of the Top 200 advanced

Announcements

• Premier Investments (ASX: PMV) +14.6% posted FY22 revenue growth of 5.2% to $1.498bn and 4.9% net profit growth to $285.2m

  • Total global sales for the first 7 weeks of FY23 were up 46.7% compared to 1H22

• Anson Resources (ASX: ASN) +14% discovered multiple new lithium-rich zones as part of recently completed resource definition drilling at its Paradox Lithium Project in Utah, United States

• 29 Metals (ASX: 29M) +10.2% renewed an underground mining services agreement with Byrnecut Australia for a further five years

• Global Lithium (ASX: GL1) +7% signed a MoU with Korea's SK On to explore business opportunities including the development of downstream lithium assets

• Core Lithium (ASX: CXO) +0.45% revealed a partial selldown by Ganfeng. The Chinese lithium manufacturer is no longer a substantial shareholder of the company

• Iress (ASX: IRE) -16.5% downgraded its FY22 profit guidance to $54-58m from $63-72m due to timing delays to the conversion of new sales opportunities

Economy

• Australian inflation was 6.8% in August from 7.0% in July

  • "The largest contributors, in the 12 months to August, were New dwelling construction, up 20.7 per cent and Automotive fuel, up 15.0 per cent," said Dr David Gruen AO, Australian Statistician

  • "The slight fall in the annual inflation rate from July to August was mainly due to a decrease in prices for Automotive fuel. This saw the annual movement for Automotive fuel fall from 43.3 per cent in June to 15.0 per cent in August."

• Australian job vacancies declined to 471,000 in August from 461,000 in May

  • “The number of job vacancies declined by 2 per cent over the three months to August 2022, although remained elevated in historical terms and are still more than double pre-pandemic levels," said Lauren Ford, Head of Labour Statistics at the ABS

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange rose 0.7%

Latest news

Post market charts

A solid bounce. It's a start but a lot more is needed. What we don't want is for this rally to be sold into over the next few days. We're heading into October, which, from a seasonal perspective, typically marks the recent low.

Source: Sentiment Trader

What's interesting is that the Bank of England bond buying triggered a broad-based decline in global yields. The US 10-Year Treasury yield fell -5.4% overnight from 3.95% to 3.73%. However, it's already started to creep back up, now at 3.83%.

US Government Bonds 10 Year Yield (Source: TradingView)

S&P/ASX 200: Again, it's a start. But as we said on Wednesday's wrap, volatility remains very high and the market can easily defend the low one day and then rip below it the next.

XJO chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Energy and Materials: The relief buying overnight and a weaker US dollar helped lift commodity markets on Wednesday night. The Resource indices are beginning to bounce from recent lows, but much like the broader ASX 200, more is needed.

The Energy Index is still struggling to close towards session highs, but better than Wednesday where it closed around breakeven after a 3.4% rally in early trade.

XEJ chart (Source: TradingView, Annotations by Market Index)

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