Evening Wrap: ASX 200 slips on rate hike pain as RBA Governor Bullock warns “We’re staring down the barrel”

The S&P/ASX 200 closed 16.6 points lower, down 0.19%.

The ASX 200 pared sharp early losses on hopes today's widely expected rate rise to 4.35% might be the last. Governor Michelle Bullock signalled the Board has room to "wait and watch" rather than commit to further tightening. An overnight Iranian strike on a UAE energy facility reignited Middle East fighting, driving oil 5.8% higher and reasserting the familiar energy-up, everything-else-under-pressure dynamic across markets.

Be sure to click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all the key economic data in tonight's Evening Wrap. Also, I have detailed technical analysis on the Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 16.6 points lower at 8,680.5, 0.7% from its session low and just 0.2% from its high. In the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by a concerning 105 to 177.

Energy (XEJ) (+0.9%) bounced as ICE Brent crude futures surged 5.8% overnight to above US$114/bbl after an Iranian strike on a UAE energy facility reignited fighting in the Middle East, before easing 0.8% to US$113.54/bbl in Asian trade. Most energy stocks remained lower on a two-session basis, however. Woodside Energy (WDS) (+1.9%), Karoon Energy (KAR) (+1.9%), Beach Energy (BPT) (+1.3%), and Viva Energy (VEA) (+1.2%) all advanced.

Utilities (XUJ) (+0.7%) tracked the energy sector higher, given the sizeable earnings overlap between the ASX's major utility companies and energy production. Origin Energy (ORG) (+0.9%), AGL Energy (AGL) (+0.4%), and APA Group (APA) (+0.4%) were all firmer — though like energy stocks, most remain lower on a two-session basis.

Information Technology (XIJ) (+0.8%) extended its run as US tech stocks continued to demonstrate strength near record highs. WiseTech Global (WTC) (+5.2%) was the standout, appearing to reflect positive reception at its Macquarie Australia Conference presentation. Xero (XRO) (+3.9%) also gained.

Communication Services (XTJ) (+0.7%) continued to track the broader tech recovery. OOH!Media (OML) (+2.0%) and Telstra (TLS) (+1.1%) were both firmer.

Real Estate (XPJ) (+0.4%) staged a late session rally after the RBA decision and subsequent press conference, with local benchmark risk-free yields falling on Bullock's less hawkish tone — a tailwind for this bond-proxy sector. Stockland (SGP) (+3.7%), Mirvac (MGR) (+2.6%), and Scentre Group (SCG) (+1.3%) were the notable movers.

S&P/ASX 200 A-REIT (XPJ) index chart

Consumer Staples (XSJ) (+0.4%) steadied after Monday's heavy falls. Metcash (MTS) (+2.6%) and The A2 Milk Company (A2M) (+2.3%) were among the stronger names. The supermarket majors diverged — Woolworths (WOW) (+0.8%) firmed while Coles (COL) (-0.3%) was weighed by a Bell Potter downgrade to Hold.

The Gold Sub-Index (XGD) (-0.8%) tracked sharp overnight losses in precious metals. Higher energy prices have pushed up benchmark bond yields, which raises the opportunity cost of holding non-yielding gold. COMEX gold futures recovered slightly, up 0.6% to US$4,559/oz in Asian trade, but the overnight damage set the tone. Regis Resources (RRL) (-5.9%) — which agreed to acquire Vault Minerals in a $10.7 billion merger — and DPM Metals (DPM) (-4.1%) were the sharpest fallers.

Materials (XMJ) (-0.5%) were broadly lower as commodity price leads were sharply negative overnight in response to surging energy prices, though COMEX copper futures recovered 1.0% to US$5.904/lb in Asian trade.

Base metals stocks bore the brunt — Sims (SGM) (-4.0%), Capstone Copper (CSC) (-3.4%), Nickel Industries (NIC) (-2.4%), and Sandfire Resources (SFR) (-1.0%) all fell. James Hardie Industries (JHX) (-2.6%) was also lower.

Lithium and rare earths stocks slid further in the absence of commodity price leads — Chinese markets remain closed for Labor Day — with Vulcan Energy Resources (VUL) (-3.4%), Elevra Lithium (ELV) (-3.3%), Iluka Resources (ILU) (-2.4%), and Lynas Rare Earths (LYC) (-1.7%) all weaker. PMET Resources (PMT) (+3.2%) was a notable exception.

Financials (XFJ) (-0.5%) also rallied following the RBA decision as the bond market pared back expectations for further hikes, but most names closed lower. Westpac (WBC) (-2.3%) was the heaviest drag after its half-year result. ANZ (ANZ) (-0.9%) and National Australia Bank (NAB) (-0.6%) also fell, despite NAB receiving three separate broker rating upgrades in response to its first-half results released on Monday. Commonwealth Bank (CBA) (+0.4%) was the only major to finish higher.

Consumer Discretionary (XDJ) (-0.4%) remained under pressure as Governor Bullock's post-meeting press conference acknowledged the rate rise would be hard on households, with few signs that consumer sentiment would recover quickly. Education stocks were again the sharpest fallers — IDP Education (IEL) (-7.1%) and G8 Education (GEM) (-8.8%) — with Guzman Y Gomez (GYG) (-6.3%) and Breville Group (BRG) (-3.2%) also lower.

Today's best gainers in the ASX 300

Today's worst losers in the ASX 300

ChartWatch

Nasdaq Composite Index

Analysis

If Friday’s candle was “Solid… but squint and there’s tiny cause for some nagging concern,” as per my analysis yesterday, then Monday’s candle would be: “Less-solid… and there’s a tiny bit more cause for some nagging concern”.

Its incremental. Not tectonic shift stuff.

Both downward and upward pointing shadows, the former slightly longer than the latter. Small black body, close almost smack-bang at the midpoint of the day. A bit of a nothing candle, really, but when combined with Friday’s smidge of an upward pointing shadow… still nothing.

I don’t want to overstate what is really a very, very small supply side showing!

However, I admit that I get a little more sensitive about these very, very small supply side showings after we’ve had a face-ripping run. Like the one we just had.

It’s “increase very slightly the chance of a pullback” stuff… not “well, clearly we just saw the end of the bull market” stuff.

Volume is a bust. There aren’t many takers either way here. That can work both ways:

• If there’s a motivated seller, their impact will be greater in a demand side vacuum.

• If there’s a motivated buyer, their impact will be greater in a supply side vacuum.

Anyways, I’ve wasted too much time today on a candle that doesn’t deserve such onerous inspection! So, let’s just call a spade a spade, or an otherwise impeccable set of demand side control credentials just that… and say: FRP intact!

View

FRP (RP = Risk Position — it reflects my personal allowable capital allocation limit for my investments in US stocks. So 1/2RP is 50%, 2/3RP is 67% and FRP is 100% 🪣). I don't know what's going to happen next, only that right now, the chart above remains a picture of excess demand.

Key levels

There are no key supply zones to contend with. The old all-time high supply zone of 23722-24020 will likely act as a short term zone of demand, however the short-term trend ribbon (presently 23680-24102) is now the key zone of demand. If the price closes back below this range, the supply-side is very likely back in control of the Comp's price.

S&P/ASX 200 (XJO)

Analysis

If this is your first experience of ChartWatch, you may be thinking: this guy doesn't really say much. I didn't learn a thing about technical analysis 🤷.

In my defense, I didn't have much to work with today! I can't regale you with incredible insights into trends, price action, candles, volume and volatility when there's very little of any in the current chart.

That's technical analysis, or that's trend following, more specifically. Sometimes, the technicals aren't clear, and the best thing to do is to do nothing. If one has one's risk settings correct, then doing nothing is doing something. ✅

I offer, that's the case here on the S&P/ASX 200, aka The Old Tin Pot. But, to ensure that I do at least some technical analysis here today, I offer our standard ChartWatch checklist:

• ST trend ribbon ⬇️ + price is below the ST trend ribbon + short term trend ribbon is acting as a zone of dynamic supply ⚠️

• LT trend ribbon ➡️ price is below the ST trend ribbon + short term trend ribbon is acting as a zone of dynamic supply ⚠️

• Price action = falling peaks and falling troughs = supply reinforcement and demand removal = sell the rally + 🚫FOMO + 🚫HOFU + 🚫BTD ⚠️

• Candles are predominantly supply-side in nature (i.e., black-bodied and or upward pointing shadows = pervasive programmed sell orders dominant + ✅STR + 🚫FOMO + 🚫HOFU + 🚫BTD ⚠️

= ⚠️⚠️⚠️⚠️

Today's candle with its decent downward pointing shadow was far from a write off — particularly on a day where interest rates went up. Still, the everything else suggests retaining my cautious approach to risk.

View

I remain 1/2RP 🪣 on the OTP (i.e., my personal allowable capital allocation limit for my investments in Australian stocks is 50%).

Key levels

9022 is the key point of supply. Beyond that, it's the 9201, the all time high. The OTP is below the short-term trend ribbon (presently 8762-8769) — definitely not a good look! It also must reclaim the long term trend ribbon (presently 8686-8858) to stave off a retracement back to the 8262-8379 lows.

(Glossary of acronyms! Old Tin Pot (OTP): S&P/ASX 200 | MOTN: More Often Than Not | FOMO: Fear Of Missing Out | HOFU: Holding On For Upside | BTD: Buy The Dip | STR: Sell The Rally | RP: Risk Position)

Economy

Today

• AUS Reserve Bank of Australia ("RBA") Meeting

  • Official cash rate: +0.25% p.a. to 4.35% p.a. as forecast

  • Press conference with Governor Bullock Quotes:

    • The recent increases in interest rates seek to contain price increases after the impacts of energy price increases. We must get on top of inflation now before it really gets away from us.

    • Spending will need to growth more slowly for a time to restore the balance between demand and supply. Higher fuel prices alone will not address this.

    • Monetary policy settings are “a bit restrictive”.

    • Australians are poorer as a result of this shock to energy prices and all the other prices that are being impact, but there’s no way out of that. The trade-off is much worse.

    • If you look at our forecasts, we have growth going down to about 1.1%, so it’s pretty anaemic growth. That’s not a great outcome for Australia. Yes its possible that we have given too much weight to the inflationary risks and we haven’t given enough weight to the possibility that consumption may pullback a lot. There’s always that risk. If things change, we will change.

    • It’s not unreasonable for firms to want to recover their costs but controlling demand it will be harder for them to do so.

    • Even if the conflict is resolved quickly, the effects are going on for the rest of the year. So we’re still in a worse position than where we were.

    • Yes, it’s hard (on households). There’s nothing we can do about the oil prices. We’re staring down the barrel.

    • This gives us space now to see what happens.

• ALL DAY CHN Markets closed for Labor Day

Later this week

Wednesday

• 00:00 USA April ISM Services Purchasing Managers Index ("PMI") (53.8 forecast vs 54.0 in March)

• 00:00 USA April JOLTS Job Openings (6.87 million forecast vs 6.88 million in March)

Thursday

• No major economic news announcements scheduled for this day

Friday

• 00:00 USA April Non-Farm Payrolls

  • Employment change: +60,000 forecast vs +178,000 in April

  • Average Hourly Earnings: +0.3% m/m forecast vs +0.2% m/m in March)

  • Unemployment Rate: unchanged at 4.3% forecast

Saturday

• 00:00 USA April Preliminary University of Michigan Consumer Sentiment (49.3 forecast vs 49.8 in March)

Latest News

Interesting Movers

Trading higher

• +5.8% Ventia Services Group (VNT) - awarded a $340 million contract by the Victorian government to deliver road maintenance services across the Grampians and Eastern metropolitan regions.

• +5.2% WiseTech Global (WTC) - appeared to reflect positive market reception following a presentation at the Macquarie Australia Conference.

• +4.2% Flight Centre (FLT) - reaffirmed full-year underlying profit guidance of $315–350 million after a solid first nine months of the year.

• +3.1% Vault Minerals (VAU) - agreed to merge with Regis Resources to form the third-largest ASX-listed gold miner in a $10.7 billion deal, under which Regis will acquire Vault via scheme of arrangement and hold a 51% stake in the combined entity.

Trading lower

• -9.4% Codan (CDA) - billionaire philanthropist Pamela Wall sold approximately 8 million shares worth just over $300 million in a block trade.

• -6.8% Magellan Financial (MFG) - announced plans to hand its $5.3 billion Global Equities funds to Vinva Investment Management from early June, and to cut fees and scrap performance charges entirely.

• -6.7% Catalyst Metals (CYL) - updated the market on completion of its Trident open pit mining operation in WA, noting the next stage involves establishing a decline for underground mine development over coming months.

• -5.9% Regis Resources (RRL) - fell on the announcement of its $10.7 billion merger with Vault Minerals, under which Regis will acquire Vault via scheme of arrangement and hold a 51% stake in the combined entity.

• -3.5% Sonic Healthcare (SHL) - Morgan Stanley downgraded to Underweight from Equal-weight and cut its price target to $20.30 from $24.20.

• -2.8% Accent Group (AX1) - Citi downgraded to Neutral from Buy and cut its price target to $0.57 from $1.25, noting yesterday's FY26 EBIT downgrade was larger than expected even after adjusting for one-off restructuring costs.

• -2.3% Westpac (WBC) - half-year cash earnings of $3.5 billion were in line with consensus, up just 0.1% on the prior period, with net interest income a touch soft and expenses down approximately 2% excluding notable items.

• -1.7% Medibank (MPL) - flagged it remained on track to meet its FY26 outlook but noted shifting consumer behaviour across the private health insurance sector amid cost-of-living pressures.

• -0.6% National Australia Bank (NAB) - received three separate broker rating upgrades in response to its first-half results released on Monday, but the stock edged lower nonetheless.

Broker Moves

Life360 Inc (360)

• Retained at overweight at Morgan Stanley; Price Target: $30.00

29Metals (29M)

• Retained at hold at Morgans; Price Target: $0.26

The a2 Milk Company (A2M)

• Retained at hold at Bell Potter; Price Target: $6.75 from $8.35

• Retained at outperform at CLSA; Price Target: $7.80 from $10.60

• Retained at neutral at UBS; Price Target: $10.40

Alcoa Corporation (AAI)

• Retained at neutral at UBS; Price Target: $105.00

Aristocrat Leisure (ALL)

• Retained at outperform at Macquarie; Price Target: $63.00

Eagers Automotive (APE)

• Retained at buy at Bell Potter; Price Target: $29.25 from $28.50

Austral Resources Australia (AR1)

• Retained at buy at Bell Potter; Price Target: $0.17

Aroa Biosurgery (ARX)

• Retained at buy at Morgans; Price Target: $0.77 from $0.79

Accent Group (AX1)

• Downgraded to neutral from buy at Citi; Price Target: $0.57 from $1.25

• Retained at hold at CLSA; Price Target: $0.50 from $0.80

• Retained at neutral at Jarden; Price Target: $0.70 from $1.20

• Retained at underweight at Morgan Stanley; Price Target: $0.55 from $1.04

• Retained at sector perform at RBC Capital Markets; Price Target: $0.80 from $1.30

Chrysos Corporation (C79)

• Retained at buy at Bell Potter; Price Target: $9.00 from $9.40

Charter Hall Group (CHC)

• Retained at buy at UBS; Price Target: $24.50

Coles Group (COL)

• Downgraded to hold from buy at Bell Potter; Price Target: $22.80 from $22.35

Coronado Global Resources Inc (CRN)

• Retained at outperform at Macquarie; Price Target: $0.60 from $0.75

Deterra Royalties (DRR)

• Retained at overweight at Morgan Stanley; Price Target: $4.46

Dexus (DXS)

• Retained at neutral at UBS; Price Target: $6.68

Endeavour Group (EDV)

• Retained at buy at Bell Potter; Price Target: $3.85 from $4.15

• Retained at neutral at Citi; Price Target: $3.45 from $3.70

• Retained at outperform at CLSA; Price Target: $4.50 from $4.70

• Retained at hold at Jefferies; Price Target: $3.50 from $3.60

• Downgraded to underweight from neutral at JPMorgan; Price Target: $3.10 from $3.50

• Retained at equal-weight at Morgan Stanley; Price Target: $3.90

• Retained at hold at Morgans; Price Target: $3.30 from $3.65

• Retained at sector perform at RBC Capital Markets; Price Target: $3.50 from $4.00

• Retained at neutral at UBS; Price Target: $3.45 from $3.60

Epiminder (EPI)

• Retained at speculative buy at Morgans; Price Target: $2.23 from $2.33

Flight Centre Travel Group (FLT)

• Retained at buy at Citi; Price Target: $16.75

Fortescue (FMG)

• Retained at underweight at Morgan Stanley; Price Target: $19.40

• Retained at neutral at UBS; Price Target: $19.40

Genesis Minerals (GMD)

• Retained at buy at UBS; Price Target: $10.15

Goodman Group (GMG)

• Retained at buy at UBS; Price Target: $33.92

GPT Group (GPT)

• Retained at buy at UBS; Price Target: $5.40

IDP Education (IEL)

• Retained at buy at UBS; Price Target: $5.15 from $8.05

IGO (IGO)

• Retained at underweight at Morgan Stanley; Price Target: $8.00

ImpediMed (IPD)

• Retained at speculative buy at Morgans; Price Target: $0.02 from $0.05

JB Hi-Fi (JBH)

• Retained at buy at Citi; Price Target: $85.00

Lifestyle Communities (LIC)

• Retained at neutral at UBS; Price Target: $5.80

Mirvac Group (MGR)

• Retained at neutral at UBS; Price Target: $1.97

Minerals 260 (MI6)

• Retained at buy at Bell Potter; Price Target: $1.35

Mineral Resources (MIN)

• Retained at buy at UBS; Price Target: $73.00

Megaport (MP1)

• Retained at buy at Citi; Price Target: $15.00

National Australia Bank (NAB)

• Upgraded to neutral from negative at E&P; Price Target: $38.00

• Retained at neutral at Macquarie; Price Target: $40.50 from $42.00

• Retained at underweight at Morgan Stanley; Price Target: $37.20 from $38.50

• Upgraded to trim from sell at Morgans; Price Target: $36.10 from $34.56

• Upgraded to hold from lighten at Ord Minnett; Price Target: $37.00

• Retained at buy at UBS; Price Target: $48.50 from $50.50

Nine Entertainment Co. Holdings (NEC)

• Retained at outperform at Macquarie; Price Target: $1.15

Navigator Global Investments (NGI)

• Retained at buy at UBS; Price Target: $3.80 from $3.60

Northern Minerals (NTU)

• Retained at speculative buy at Ord Minnett; Price Target: $0.05

Oohmedia (OML)

• Retained at outperform at Macquarie; Price Target: $1.40

Paladin Energy (PDN)

• Retained at overweight at Morgan Stanley; Price Target: $13.65

Pinnacle Investment Management Group (PNI)

• Retained at outperform at Macquarie; Price Target: $25.11 from $25.25

• Retained at neutral at UBS; Price Target: $16.75 from $15.15

PEXA Group (PXA)

• Retained at outperform at CLSA; Price Target: $16.40 from $17.70

• Downgraded to underweight from neutral at Jarden; Price Target: $11.35 from $12.40

• Retained at outperform at Macquarie; Price Target: $19.05 from $18.35

• Retained at neutral at UBS; Price Target: $15.70

QBE Insurance Group (QBE)

• Retained at outperform at Macquarie; Price Target: $25.10

Rio Tinto (RIO)

• Retained at neutral at UBS; Price Target: $160.00

Regis Resources (RRL)

• Retained at outperform at Macquarie; Price Target: $9.50

South32 (S32)

• Retained at overweight at Morgan Stanley; Price Target: $4.85

Sandfire Resources (SFR)

• Retained at underweight at Morgan Stanley; Price Target: $16.00

Sonic Healthcare (SHL)

• Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $20.30 from $24.20

Sigma Healthcare (SIG)

• Retained at neutral at Citi; Price Target: $3.20

• Retained at buy at Jarden; Price Target: $3.60

• Retained at overweight at JPMorgan; Price Target: $3.50 from $3.40

• Retained at overweight at Morgan Stanley; Price Target: $3.20

• Retained at sector perform at RBC Capital Markets; Price Target: $2.60 from $2.50

• Retained at buy at UBS; Price Target: $3.40 from $3.35

Saluda Medical, Inc. (SLD)

• Retained at speculative buy at Morgans; Price Target: $2.94 from $3.07

Transurban Group (TCL)

• Retained at buy at Citi; Price Target: $16.10

The Lottery Corporation (TLC)

• Retained at neutral at Citi; Price Target: $5.10

Universal Store Holdings (UNI)

• Retained at buy at Citi; Price Target: $11.40

Vicinity Centres (VCX)

• Retained at buy at UBS; Price Target: $2.65

Viva Energy Group (VEA)

• Retained at outperform at Macquarie; Price Target: $3.30

Ventia Services Group (VNT)

• Upgraded to outperform from hold at CLSA; Price Target: $6.20 from $6.00

• Retained at outperform at Macquarie; Price Target: $6.45

• Retained at accumulate at Ord Minnett; Price Target: $6.10 from $6.05

• Retained at buy at UBS; Price Target: $6.80

Westpac Banking Corporation (WBC)

• Retained at neutral at Citi; Price Target: $39.00

• Retained at underperform at Macquarie; Price Target: $32.00

Whitehaven Coal (WHC)

• Retained at overweight at Morgan Stanley; Price Target: $9.50

Wisetech Global (WTC)

• Retained at buy at Citi; Price Target: $65.65 from $65.35

Scans