Evening Wrap: ASX 200 dips to 2-month low as Fed angst kicks in

The S&P/ASX 200 closed 106 points lower, down -1.56%.

The market was sold down rather aggressively as investors brace for another aggressive round of interest rate hikes in the US. The angst has the ASX 200 closing at a fresh 2-month low.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

More aggressive selling and distribution in the lead up to the Fed decision. The ASX 200 undercut recent lows to close at lows not seen since 20 July.

• 10 out of 11 sectors declined

• Materials led to the downside amid a sharp decline in iron ore prices

• Rate sensitive sectors including Utilities, Real Estate and Tech also underperformed

• Defensive sectors including Staples and Healthcare were relative outperformers

• Telcos was the only green sector

• 85% of the top 200 companies declined

Stocks

• Air New Zealand (ASX: AIZ) +8.4% expects EBIT for the first-half of FY23 to be between $200m to $275m

  • The airline said it has continued to see strong forward sales over the first three months of the financial year, operating at approximately 70% of FY19 capacity 

• Washington Soul Pattinson (ASX: SOL) 4.96% posted 154.4% profit after tax growth to $834.6m for FY22

  • A final dividend of 43 cents per share was declared, up 16.1% on FY21. Plus a 15 cents per share special dividend

• Viva Energy (ASX: VEA) +4.56% has entered into a binding agreement to acquire 710 Coles Express sites for $300m

• Whitehaven Coal (ASX: WHC) +3.8% plans to acquire up to 240m shares (approximately 25% of issued shares) under a share buy-back proposal

• Brickworks (ASX: BKW) +0.4% reported FY22 underlying net profit growth of 159% to $746m

• Coles (ASX: COL) -0.9% will sell its fuel and convenience retailing business to Viva Energy

  • Coles CEO: “Viva is well-placed to make the most of opportunities to grow the Express business into the future, while we will strengthen our focus on our omnichannel supermarket and liquor businesses and our ambition of becoming Australia’s most sustainable supermarket group.”

• Imugene (ASX: IMU) -13% has dosed its first patient to evaluate the safety of the company’s novel cancer-killing virus CF33-hNIS 

Quick bites 

• German government mulls 8bn euro injection into Uniper to nationalise the gas giant, according to Bloomberg

• US Atlanta Fed GDPNow Model downgraded real GDP growth in the third quarter of 2022 to 0.3% from 0.5% a week ago and almost 3% in late August

Economy

• Westpac-Melbourne Institute Lending Index fell -0.36% in August from +0.49% in July

  • The index indicates the likely pace of economic activity relative to trend three to nine months into the future

  • This is the first negative print since the start of the year

  • "The current loss of momentum reflects a combination of policy tightening, a less supportive global backdrop and a cooling labour market," the report said

• The Fed is widely expected to hike rates by 75 bps at 4:00 am AEST on Thursday

  • The market is still pricing in an 18% possibility of a 100 bps hike

• The S&P 500 has rallied at least 1% on every Fed decision day since the hiking cycle started in March:

  • 16 March +2.2%

  • 4 May +3.0%

  • 15 June +1.5%

  • 27 July +2.6%

  • Average gain: 2.3%

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange fell -1.2%

Latest news

Scans

Post market charts

S&P/ASX 200: A 1.29% bounce on Tuesday was not enough to get us out of the woods. The market sold off aggressively on Wednesday, undercutting recent lows. It's not a good look if a bounce is getting completely erased the next day. Brace yourself for volatility (but enjoy the public holiday on Thursday).

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

S&P/ASX 200 Energy: Starting to tighten. Will supply tightness and OPEC push prices higher? Or will demand fears and higher interest rates see prices go lower?

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

S&P/ASX 200 Tech: Starting to roll over.

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

S&P/ASX 200 Discretionary: Also holding onto dear life.

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