The ASX200 is trading 6 points lower at 7311, 50 points below its intraday high, as the Materials Sector gave up early gains and reversed lower mid-morning.
China's damaging Covid lockdown creates a massive amount of short-term uncertainty around commodity prices and for the ASX200 Materials sector, now 10% below its April highs.
Once the latest outbreak is under control, Chinese authorities will unleash another round of stimulus on their slowing economy. Until then, it's a shoot first, ask questions later type market for commodity-related ASX200 stocks.
Mineral Resources (MIN) fell 3% to $54.35, Fortescue Metals (FMG) fell 2.7% to $20.05, BHP Group (BHP) fell 0.59% to $47.38, while Rio Tinto (Rio) fell 0.76% to $110.99.
Following the RBA's first interest rate hike in 12 years yesterday, the big banks have wasted little time passing on rate hikes to mortgage holders, a move that has weighed on Consumer Discretionary stocks.
JB Hi-Fi (JBH) has fallen by 4.16% to $50.05 as the company elected not to provide FY22 guidance due to local and global uncertainties; Domino's Pizza (DMP) fell 2.57% to $67.42, Harvey Norman (HVN) fell 0.6% to $4.96. Nick Scali has fallen 0.7% to $9.96 after the company cited increased "freight costs" on sales.
After a stomach-churning 10% fall in April, it's been another tough day for local IT stock as traders assume the brace position ahead of tomorrow morning's FOMC meeting. The market is fully priced for a 50bp hike tomorrow before 50 bp hikes in June, July, and September.
ZIP (ZIP) fell 11.26% to $1.02 after the company announced this morning, they are releasing a large volume of shares from an escrow account over the coming weeks. Life 360 (360) fell 5.17% to $3.67, Tyro Payments (TYR) fell 4.58% to $1.15. Megaport (MP1) fell by 4.37% to $8.09. EML Payments (EML) fell by 4.11% to $1.61. Appen (APX) and Afterpay owner Block (SQ2) fell by more than 3%.
Travel stocks have given back a good chunk of their gains from earlier in the week as Flight Centre (FLT) said its operations are being hindered by a lack of airline carrier service and staff. Flight Centre (FLT) fell 6.64% to $21.26, Corporate Travel (CTD) fell 2.72% to $24.28, Webjet (WEB) fell 2% to %5.88 and Qantas (QAN) fell 1.21% to $5.72.
Crude oil is holding above $103.00 as the market continues to juggle the impact of China lockdowns, the likelihood of a complete European embargo on Russian oil and the outcome of tomorrow night's OPEC+ meeting, which will see members greenlight a modest 432k bpd oil output increase for June. Not enough to ease a structurally undersupplied market.
Beach Energy (BPT) added 1.23% to $1.65, Santos (STO) added 1.19% to $8.08. Origin Energy (ORG) added 0.36% to $6.94. Woodside Energy (WPL) added 0.2% to $31.25.
In a trading update a surge in ANZ half-year profits has supported the Financial sector. Commonwealth Bank (CBA) added 0.67% to $103.00, National Australia Bank (NAB) added 1.09% to $32.45. ANZ added 0.77% to $27.47, Westpac (WBC) added 0.63% to $24.05. Macquarie added 1.26% to $206.01.
Stocks in the Lithium space remain under pressure, led by AVZ Minerals which provided a disappointing update on its African exploration project, falling 18.69% to .81c. Vulcan Energy (VUL) fell 5.9% to $7.66, Lake Resources (LKE) fell 4.87% to $1.66. Core Lithium (CXO) fell 3.95% to $1.22 and Liontown (LTR) resources fell 3.2% to $1.37.
With the ASX200 continuing to rotate either side of the 200-day moving average at 7350, we remain neutral on the local bourse. A break/close below uptrend support and recent lows 7230ish would warn that a deeper correction is underway. While a break/close above 7450 is needed for the ASX200 to set up a fourth run at the herculean resistance at 7620/7640.
The AUDUSD is trading higher at .7114, supported by March retail sales that rose by a stronger than expected 1.6%, yesterday's 25bp RBA rate hike and some gentle squaring up of AUDUSD shorts ahead of tomorrow morning's FOMC meeting.
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