Evening Wrap: ASX 200 slumps as rate cuts obituary officially read at RBA press conference... Long live rate hikes!

The S&P/ASX 200 closed 38.5 points lower, down 0.45%.

Interest rate cuts are dead on the table; hikes are very much alive and kicking! A bit of a double whammy for the Australian share market today, and the impacts where felt deeply in those sectors most likely to be negatively impacted by higher domestic interest rates.

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 S&P/ASX 200 in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 38.5 points lower at 8,585.9, 0.45% from its session high and just 0.06% from its low. In the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by a rather decisive 100 to 181.

Fund flows: Not great, could have been far worse...

As you can see in the intraday chart above, there was a very brief spike in the ASX 200 a.k.a. the Old Tin Pot just as the interest rate decision was announced. Clearly a few hedge funds had factored in some probability of a hike, but it was back to the prior downward drift pretty quickly thereafter.

Then, at about 3:33 pm, you can see when Governor Bullock started speaking at the post-meeting presser:

“there was no cut on the table and certainly no one suggested there should be a cut”

“if inflation continues to be persistent and looks it looks like it is not coming back down towards the Board’s target… the board might need to consider whether or not to keep interest rates where they are in fact at some point to raise them”

Cuts are dead on the table; hikes are very much alive and kicking!

A bit of a double whammy there – but it's hardly news…

Still, the hawkish tone of Bullock's commentary caused the Aussie dollar to strengthen against the major currencies, and those 2-year government bond yields we’ve been watching so closely – that we've laid the blame for the ASX 200’s demise since the October high squarely on – soared 🚀!

Ouch 🥊🥊

It was no surprise then, that high P/E (long duration), and bond proxies were hit the hardest today. Information Technology (XIJ) (-1.3%), Health Care (XHJ) (-1.0%), Communication Services (XTJ) (-0.8%) and Utilities (XUJ) (-0.7%) were among the biggest casualties.

Gold Sub-Index (XGD) (-1.5%) is another sector that despises higher risk-free yields – because not only does it not have a yield – but you usually need to hire someone with a shotgun to sit on top of your gold to make sure nobody nicks it. Read as: As risk-free rates rise, so too does the opportunity cost of owning gold.

Defensives like Consumer Staples (XSJ) (-0.2%) and Financials (XFJ) (-0.1%) and were least hardest hit. If not for the XFJ holding up – because to be fair it could have been lumped in the same basket as bond proxies – it could have been a really bad day for the Old Tin Pot! 😱

Today's best blue chip gainers

Today's worst blue chip losers

ChartWatch

S&P/ASX 200 (XJO)

Analysis

If a picture tells a thousand words, then what does the above chart tell you? 🧐

Should you be bold or conservative with your capital allocation? 🤷

To be fair, the chart above is just a bunch of lines and squiggles… to the untrained eye that is! But to your keen eye, that’s now been acutely honed to read information only in terms of D vs S = P, it speaks volumes about who's in control of the ASX 200's price (a.k.a. the Old Tin Pot).

But whatever your eye tells you, your brain must also remind you that no matter how convincing the signals might be in those lines and squiggles – the future is unknown – and anything can happen!

This means the best we can do is make our plans based on the evidence at hand... and then suck it and see!

For long-time sufferers of my rantings here in ChartWatch, you know exactly what those last few sentences mean… For those who are newly acquainted with my waffle… let’s use a checklist to help clarify who’s in control of the OTP’s price:

(Consistent with demand-side control = ✅ vs Consistent with supply-side control = ❌)

1. Short and long term trend ribbons: ⬇️/↔️, short term downtrend ribbon is expanding (i.e., getting stronger) vs long term trend ribbon contracting (i.e., converging towards a transition to downtrend), the price is not above either ribbon, and arguably both ribbons are acting as zones of dynamic excess supply = ❌❌.

2. Price action: Falling peaks and rising troughs (i.e., supply reinforcement vs demand reinforcement) but we're closing in on the next trough at 8563 = ⚖️

3. Candles: Mixed, possibly still a very slight skew towards demand-side (i.e., white-bodied candles and or downward pointing shadows), but today's supply-side showing at the short term trend ribbon is a disturbing development = ⚖️

❌❌⚖️⚖️

Hardly a glowing endorsement of strong demand-side control, is it!? My model's overarching concept of MOTN (More Often Than Not) is instructive here. Ask yourself: is this a set of technicals we'd ordinarily associate with "MOTN the price goes up"? 🤔

View

I remain comfortable at 1/3RP 🪣 (i.e., my personal allowable capital allocation limit (Risk Position) for my investments in Australian stocks is 33%).

Key levels

8383 is the closest point of demand. A close below this price would confirm the new long term downtrend (i.e., that the bull market in ASX stocks is over! 🤯). The short term trend ribbon is the closest zone of supply (presently 8635-8685). In the absence of other confirming demand-side control signals, the ASX 200 must close back above this zone to demonstrate the demand-side is back in control.

Economy

Today

• AUS Reserve Bank of Australia (RBA) Cash Rate & Statement of Monetary Policy

  • Outcome: No change at 3.6% forecast = one of the most flagged RBA decisions in the last 10 years.

  • Takeaways: Probably one of the most excruciating press conferences afterwards with some of the most ineffectual questions ever asked of an RBA governor... that is, for what I could bear listening to before I switched off... The only item of interest I took away (because obviously Governor Bullock was never going to be drawn on her next move...) was that she quite casually talked about the next move being a hike, as in: "if the inflation data gets worse we'll be forced to consider a hike". Sure, we know that's the case – that's her job – but her language made it very clear that cuts are no longer part of the Board's calculations.

Later this week

Wednesday

• 02:00 USA November JOTS Job Openings

• 05:00 USA 10-y Bond Auction

• 12:30 CHN November Consumer Price Index (CPI) & Producer Price Index (PPI)

  • CPI: +0.7% p.a. forecast vs +0.2% p.a. in October

  • PPR: -2.0% p.a. forecast vs -2.1% p.a. in October

Thursday

• 06:00 USA Federal Reserve December FOMC Meeting

  • -0.25% to 3.75% forecast

  • Economic projections (plus Dot Plot), and FOMC Statement also due

• 06:30 USA Federal Reserve Chairman Jerome Powell press conference

• 11:30 AUS November Employment

  • Change: +20,300 forecast vs +42,200 in October

  • Unemployment rate: 4.4% forecast vs 4.3% in October

Friday

• 05:00 USA 30-y Bond Auction

Latest News

Interesting Movers

Trading higher

• +25.5% Immutep (IMM) – Immutep enters into Strategic Collaboration with Dr. Reddy's.

• +13.2% EDU Holdings (EDU) – Change of Director's Interest Notice, Becoming a Substantial Holder, and Becoming a substantial holder, (Mr Peter Mobbs acquired 2,143,000 shares worth $1,553,675 in on-market trades, he now owns 5.0% of the company; Microequities Asset Management also became a major shareholder with a 5.5% holding), rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +11.0% Metal Powder Works (MPW) – No news, general strength across the broader Defence sector today.

• +8.2% Lumos Diagnostics Holdings (LDX) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +7.4% Sunrise Energy Metals (SRL) – No news, bounced in the wake of the recent sharp selloff.

• +7.0% Argosy Minerals (AGY) – No news, general strength across the broader Lithium sector today, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +6.1% Elsight (ELS) – No news, general strength across the broader Defence sector today, rise is consistent with prevailing short and long term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +5.3% 4DMEDICAL (4DX) – No news, rise is consistent with prevailing short and long term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +5.2% Elevra Lithium (ELV) – No news, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +4.4% Collins Foods (CKF) – No news, bounced in the wake of the recent sharp selloff.

Trading lower

• -21.3% Bapcor (BAP) – 1H26 & FY26 Guidance Update, fall is consistent with prevailing short and long term downtrends, one of the most Featured (highest conviction) stocks in ChartWatch ASX Scans Downtrends list 🔎📉

• -20.0% Caprice Resources (CRS) – Vadrians Strike and Dip Extension with Gold to at least 400m.

• -20.0% Terracom (TER) – No news, pulled back in the wake of recent sharp rally.

• -12.2% Dateline Resources (DTR) – Response to Media Speculation, general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

• -10.5% Felix Gold (FXG) – Continued negative response to 8-Dec Successful $18m Placement, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

• -7.8% Locksley Resources (LKY) – Investor Presentation, general weakness across the broader Critical Minerals sector today.

• -7.0% NRW Holdings (NWH) – Downgraded to hold from buy at Jefferies; Price Target: $5.25.

• -6.9% Horizon Minerals (HRZ) – No news since 08-Dec Land Use Agreement Signed With Marlinyu Ghoorlie.

Broker Moves

Atturra (ATA)

• Initiated at buy at Canaccord Genuity; Price Target: $1.15

Bapcor (BAP)

• Retained at neutral at Citi; Price Target: $3.10

• Retained at outperform at RBC Capital Markets; Price Target: $3.70

Bega Cheese (BGA)

• Retained at outperform at Macquarie; Price Target: $6.80

BHP Group (BHP)

• Retained at sector perform at RBC Capital Markets; Price Target: $44.00

Breville Group (BRG)

• Retained at buy at Citi; Price Target: $36.03

• Retained at outperform at Macquarie; Price Target: $39.20

Bubs Australia (BUB)

• Retained at hold at Bell Potter; Price Target: $0.17 from $0.17

Cobram Estate Olives (CBO)

• Retained at hold at Bell Potter; Price Target: $2.90

Collins Foods (CKF)

• Retained at neutral at Macquarie; Price Target: $11.70

Coles Group (COL)

• Retained at outperform at Macquarie; Price Target: $26.10

Capstone Copper Corp. (CSC)

• Retained at buy at UBS; Price Target: $16.00

Domino's Pizza Enterprises (DMP)

• Retained at neutral at Macquarie; Price Target: $15.30

Endeavour Group (EDV)

• Retained at underperform at Macquarie; Price Target: $3.50

Epiminder (EPI)

• Initiated at speculative buy at Morgans; Price Target: $2.33

Guzman Y Gomez (GYG)

• Retained at outperform at Macquarie; Price Target: $31.10

Harvey Norman Holdings (HVN)

• Retained at neutral at Macquarie; Price Target: $7.60

Insurance Australia Group (IAG)

• Retained at neutral at Macquarie; Price Target: $9.10

Inghams Group (ING)

• Retained at neutral at Macquarie; Price Target: $2.30

JB Hi-Fi (JBH)

• Retained at outperform at Macquarie; Price Target: $121.00

• Initiated at sector perform at RBC Capital Markets; Price Target: $101.00

Medibank Private (MPL)

• Retained at neutral at Macquarie; Price Target: $4.70

Metcash (MTS)

• Retained at neutral at Macquarie; Price Target: $3.50

Nick Scali (NCK)

• Retained at outperform at Macquarie; Price Target: $28.20

NIB Holdings (NHF)

• Retained at underperform at Macquarie; Price Target: $5.60

National Storage REIT (NSR)

• Upgraded to equal-weight from underweight at Morgan Stanley; Price Target: $2.86 from $2.55

NRW Holdings (NWH)

• Downgraded to hold from buy at Jefferies; Price Target: $5.25

PLS Group (PLS)

• Retained at overweight at Morgan Stanley; Price Target: $2.85

Pro Medicus (PME)

• Retained at overweight at Morgan Stanley; Price Target: $350.00

QBE Insurance Group (QBE)

• Retained at outperform at Macquarie; Price Target: $23.90

• Retained at hold at Ord Minnett; Price Target: $22.00

Steadfast Group (SDF)

• Retained at neutral at Macquarie; Price Target: $4.90

Sandfire Resources (SFR)

• Retained at sell at UBS; Price Target: $16.65 from $15.55

Sigma Healthcare (SIG)

• Retained at underperform at Macquarie; Price Target: $2.90

Super Retail Group (SUL)

• Retained at neutral at Macquarie; Price Target: $17.30

Suncorp Group (SUN)

• Retained at neutral at Macquarie; Price Target: $19.60

Temple & Webster Group (TPW)

• Retained at outperform at Macquarie; Price Target: $24.15

Treasury Wine Estates (TWE)

• Retained at neutral at Macquarie; Price Target: $6.40

Universal Store Holdings (UNI)

• Retained at outperform at Macquarie; Price Target: $10.20

Vista Group International (VGL)

• Retained at neutral at UBS; Price Target: $2.80 from $3.65

Wesfarmers (WES)

• Retained at neutral at Macquarie; Price Target: $86.00

Scans