ASX200 Afternoon Report June 20, 2023

The ASX200 trades 68 points (0.90%) higher at 7363 at 4.00 pm. With US equity markets closed overnight for the Juneteenth holiday, the ASX200 has today taken its lead from action from Chinese authorities to stimulate its flagging economy. The rally has been broad-based, with all eleven sectors trading higher.

The People's Bank of China's (PBoC's) reduction of the 1-year medium-term lending facility (MLF) last week was replicated by cuts this morning of a similar magnitude to the one-year and the five-year Loan Prime Rate (LPR). While more needs to be done to revive the Chinese economy, recent rate cuts signal a change in policy direction by authorities and are likely to be followed by further easing measures in the weeks ahead.

The energy sector has led todays rally. Heavyweight Woodside gained 2.34% to $36.35 after it confirmed that an oil project off the Mexican coast would proceed. AGL added 2.84% to $11.05, Santos added 2.38% to $7.75, and Strike Energy added 2.15% to $0.48c.

The prospect of more stimulus in China buoyed the mining behemoths. BHP added 1.54% to $46.81, Rio Tinto added 0.83% to $117.61, Mineral Resources added 0.6% to $73.82, while Fortescue added 0.5% to $22.45.

The release of the Reserve Bank of Australia (RBA) meeting minutes this morning noted that members discussed two options at the June meeting - increasing the cash rate by 25 basis point (bp) or holding the cash rate unchanged. The more dovish-than-expected minutes have supported the financial sector. NAB added 1.61% to $26.48, Westpac added 1.47% to $21.46, CBA added 1.2% to $101.70, and ANZ added 0.72% to $23.79.

A mixed day for the Lithium sector as Lake Resources plunged over 20% for a second day running to $0.29c after noting yesterday that its project in Argentina would be delayed by six years and cost around twice as much as initially expected. Elsewhere Iluka added 2.36% to $11.70, Pilbara Minerals added 2.3% to $4.93, and IGO added 2.2% to $15.23. The rises in the latter two following a broker upgrade.

After seven straight sessions of gains, including a break above critical resistance at 7250 coming from the downtrend from the February 7567 high, the ASX200 is eyeing the April 7391 high. A sustained break above 7390 would open the way for a push to the year-to-date (YTD) high at 7567.

The AUD/USD is trading at .6802 (-0.68%), consolidating after its almost 7% rally over the past 11 sessions.