Australia 200 afternoon report: 27 May 2025

The Australia 200 trades 23 points (0.28%) higher at 8384 as of 2.30pm AEST.

US tariff news and European strength lift Australia 200

After a subdued start to the session, the Australia 200 (ASX 200) experienced a brief surge of renewed bullish enthusiasm around lunch. This momentum pushed the index towards the 8400 level it has spent the past seven sessions consolidating below.

With Wall Street closed for the Memorial Day long weekend, the local market looked to European equity markets for direction. The Germany 40 (DAX 40) closed roughly 1.7% higher, while the France 40 (CAC 40) gained 1.21%.

This strength was driven by United States (US) President Trump's decision to delay the implementation of 50% tariffs on European Union (EU) goods until 9 July.

Inflation data awaited by markets

Tomorrow sees the release of the Australian monthly consumer price index (CPI) indicator for April. Market expectations point to headline inflation easing to 2.3% in April from 2.4% previously. Meanwhile, the trimmed mean is expected to remain steady at 2.7%.

Numbers in line with these expectations will keep hopes intact for follow-up 25 basis point (bp) Reserve Bank of Australia (RBA) interest rate cuts in July and August. This outlook has provided strong support for interest rate-sensitive sectors, particularly consumer discretionary and financials.

Monthly performance highlights tech sector strength

With three trading sessions remaining in May, the Australia 200 has entered the period when month-end rebalancing flows typicallymake their presence felt. Among its peers this month, the tech-heavy US Tech 100 (Nasdaq 100) has led with a gain of 6.87%, just slightly ahead of the Germany 40, which has risen 6.8%.

The US 500 (S&P 500) is up 4.20%, while the Japan 225 (Nikkei 225) has gained 4.28%. The Australia 200 has increased 3.24%, outperforming the FTSE 100, which has advanced 2.63%.

Australia 200 stocks

Technology sector

Building on the theme of tech stock outperformance, the Australia 200 information technology sector has been the standout performer. The sector has surged an impressive 17.54% this month, demonstrating strong investor appetite for technology companies.

• Megaport gained 2.25% to $13.20
• WiseTech Global rose 1.92% to $106.81
• Computershare increased 1.51% to $40.31

Consumer discretionary sector

Lower interest rates typically boost consumer spending and reduce borrowing costs for businesses.

• Temple & Webster rose 1.8% to $20.52
• Super Retail Group added 1.44% to $14.10
• JB Hi-Fi gained 1.6% to $108.98

Banking sector

The major banks also participated in the advance:

• Westpac increased 0.8% to $31.50
• Macquarie rose 0.7% to $208.67
• ANZ gained 0.58% to $28.82
• Commonwealth Bank of Australia edged up 0.5% to $174.73
• AMP fell 2.32% to $1.26 as a class action relating to superannuation overcharging commenced today.

Mining sector

Iron ore  has extended its recent decline, trading at $95.80 per tonne today in Asian markets. The weakness stems from concerns about cautious demand and overcapacity issues in the Chinese steel sector. This commodity weakness weighed on major mining companies:

• Mineral Resources declined 3.61% to $23.21
• Fortescue slipped 0.64% to $15.44
• Rio Tinto lost 0.53% to $114.60
• BHP fell 0.26% to $38.47

Australia 200 technical analysis

From its mid-February record high of 8615, the Australia 200 fell 16.78% to its early April low of 7169. This decline exhibited more corrective characteristics rather than impulsive selling, suggesting the underlying trend remains intact.

After rebounding from the April low to within 2.2% of its record high, our preferred scenario remains for a period of consolidation and range trading lasting several weeks. This consolidation will likely occur in a higher range of 8400 - 7950, which is above the 8200 - 7730 range we suggested at the end of last month.

Australia 200 daily chart

• _{Source: TradingView. The figures stated are as of 27 May 2025. 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.}