ASX 200 Market Outlook: All Sectors See Red After Hawkish RBA Hold

The Reserve Bank of Australia kept the cash rate at 3.6% as expected but delivered a distinctly hawkish tone. Policymakers warned that inflation risks have “tilted to the upside”, with Governor Bullock signalling the board remains dissatisfied with current price pressures. February’s meeting now hinges on the trajectory of inflation, placing extra weight on the January 26 quarterly CPI release.

Bond markets reacted swiftly: Australia’s 3-year yield climbed to 4.15%, while the 1-year sits at 3.97%. Bloomberg data shows a 25bp hike now fully priced by June, compared with November before the meeting. AUD/USD gained 0.4%, although further upside may be limited given a hawkish outcome has been priced for weeks.

The ASX 200 fell 0.45% in its worst session in six days, with all 11 sectors trading lower following the RBA’s stance.

View related analysis:

ASX 200 Slides as Hawkish RBA Weighs on All Sectors

ASX 200 Market Snapshot

A 3-bar evening star reversal formed on the ASX 200 daily cash chart.
Information Technology (XIJ), Health Care (XHJ) and Energy (XEJ) led all 11 sectors lower.
Materials (XMJ) pulled back from its record high for a second straight session.
Market breadth weakened: 66 stocks advanced, 123 declined and 11 finished unchanged.

Chart analysis by Matt Simpson - source: ASX, LSEG

ASX 200 Futures (SPI 200) Sector Analysis

The daily chart shows bearish momentum returning around the 200-day EMA and monthly pivot. Daily volumes remain below the 20-day average, although they are slightly higher than yesterday’s. While price holds beneath last week’s high, the bias still favours a move towards 8500.

Take note that the FOMC meeting could influence the ASX 200 via Wall Street’s reaction. I suspect the Fed will lean slightly hawkish, which may lift the US dollar and weigh on US indices. That said, the ASX also has a tendency to firm into the new year from around mid-December.

Chart analysis by Matt Simpson - Source: TradingView, ASX SPI 200 Index Futures

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.