Australia 200 afternoon report
The ASX 200 faces its third consecutive loss as ex-dividend impacts from companies like Santos and Wesfarmers, along with a retreat in the healthcare sector, weigh down the index.
The Australia 200 trades 25 points (0.28%) lower at 8902 as of 2.25pm AEST.
The Australia 200 (ASX 200) is on track for a third consecutive day of losses after dropping 36 points (0.40%) in early trading to a low of 8891.2, marking its first move below the 8900 level in almost two weeks.
Today's losses in the ASX 200 are primarily driven by several stocks going ex-dividend, including Santos, Wesfarmers, and Woolworths. Additionally, investors are retreating from the healthcare sector, which has declined more than 14% since CSL reported two weeks ago.
Tomorrow brings the eagerly anticipated Australian second-quarter (Q2) gross domestic product (GDP) release. The expectation is for a rise of 0.5% quarter-on-quarter (QoQ), lifting the annual growth rate to 1.6% (from 1.3% previously), in line with the Reserve Bank of Australia's (RBA) forecast for June 2025.
If this forecast proves accurate, it will support the case for further easing of RBA monetary policy, reaffirming the idea that the Australian economy is growing at a pace significantly below its potential growth rate of 2.5% - 3%.
The Australian interest rate market is pricing in 25 basis points (bp) of rate cuts for the RBA’s 4 November meeting and a cumulative 32 bp of rate cuts for the RBA’s 9 December meeting.
With funds moving out of the healthcare sector, the ASX 200 financial sector has provided some refuge.
The big mining stocks had a mixed day.
It was a strong day for the gold miners as bullion hit a fresh record high of $3508, driven by investors flocking towards the safety of hard assets, including precious metals.
After spending the last two weeks of July consolidating its gains above 8600, the ASX 200 marched higher in August, hitting a fresh record high at 9054.5 last week, some 25% above its April low of 7169 and 105% above its Covid-19 crash low of 4402.
With the relative strength index (RSI) on the weekly chart at its most overbought level since August 2021 and the formation of a 'loss of momentum' type weekly candle last week, there is increasing caution about the ASX 200’s upside prospects from here.
If the ASX 200 were to close below short-term support around 8850 and then below support at 8770 - 8750, it would indicate that a medium-term high is in place at 9054.5, suggesting a deeper pullback initially towards 8620 - 8600 with potential to 8400. Until then, allow the uptrend to extend.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.