The trade
Will rate cuts propel ASX 200 growth amid CBA setbacks?
As the ASX 200 grapples with the impact of disappointing CBA earnings, positive developments such as Wall Street's gains and the RBA's recent rate cut offer a mixed outlook.
(AI video summary)
This video was created on 13 August for IG audiences by ausbiz.
ASX prospects and CBA impact
The Australia 200 (ASX 200) is navigating mixed signals this week. After reaching a record high yesterday, the ASX is retreating due to Commonwealth Bank of Australia's (CBA) in-line earnings report, which did not meet high market expectations, resulting in a 3.8% sell-off. Given CBA's significance, comprising 14% of the index, its performance can substantially impact the ASX 200.
However, the broader outlook remains positive. Gains on Wall Street and the Reserve Bank of Australia's (RBA) recent interest rate cut suggest the ASX 200 could continue upward once the short-term pullback stabilises. The 8630 mark serves as a critical support line for continued gains.
Influence of rate cuts on the Aussie dollar
The recent Reserve Bank of Australia (RBA) rate cut has caused the Australian dollar (AUD) to dip temporarily, reaching 0.6481.
The market was already anticipating this cut along with additional future reductions. This, combined with weaker-than-expected United States (US) inflation figures, has increased the likelihood of a US rate cut in September, providing further support for the AUD, which has rebounded to 0.6520.
US market trends and the Elliott wave
US stock indices, supported by optimistic inflation reports, continue to climb to record levels. According to the Elliott Wave Theory, the market is currently in a Wave III, suggesting a strong, impulsive move higher.
The US Tech 100 (Nasdaq 100) is nearing critical weekly trend channel resistance, which has not yet been broken. Investors await confirmation of the uptrend's continuation.
Commodity insights
Crude oil
Crude oil prices are slightly lower despite recent consumer price index (CPI) data that should theoretically support prices. Talks between President Trump and President Putin may ease tariff threats and resume Russian oil supply. Technically, oil has fallen below the significant $64, suggesting it could revert to its previous range, approaching $60.
Gold
Gold, on the other hand, is displaying signs of consolidation, potentially preparing for another attempt at the $3500-record high. A key indicator for resumed upward momentum would be a breakthrough above recent highs around $3450.
Cryptocurrency dynamics
Bitcoin and ethereum
Bitcoin is facing resistance near its record highs between 123,000 and 125,000. A break above this range would suggest a continuation of the uptrend.
Meanwhile, ethereum is moving towards its November 2021 high of $4868, while bitcoin consolidates.
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