Evening Wrap: ASX 200 slides as hawkish Fed hits mining stocks – gold, uranium, lithium under pressure
The ASX 200 took a hit today, with the S&P/ASX 200 (XJO) finishing 55.2 points lower at 8,911.1, a 0.82% decline from its session high and smack-bang on its session low. This comes as the hawkish tone of Wednesday's Federal Reserve meeting struck at investor confidence, triggering a selloff in the US bond market and sending the yield on 2-year US T-bonds soaring 13.2 basis points. The US dollar index also surged by 85 basis points as investors favored the currency in a higher US-domestic interest rate outlook environment.
As major commodities like gold and base metals are typically denominated in US dollars, the surge in the US dollar against its counterparts is seen as a negative for commodity prices and, by extension, commodity stocks. Higher benchmark yields also hurt 'long duration' stocks, i.e., those with the bulk of their forecast earnings set in the distant future, impacting Information Technology. Gold stocks and materials stocks took a hit, with modest losses across the board.
In contrast, defensive sectors with reliable earnings from staples of consumption like groceries, petrol, alcohol, and healthcare tended to prosper. The A2 Milk Company (A2M), Coles (COL), and Woolworths (WOW) led the Consumer Staples sector, which gained 0.73%. Within Health Care, 4DMedical (4DX), Cochlear (COH), Ramsay Health Care (RHC), CSL (CSL), and Telix Pharmaceuticals (TLX) all gained.
The Evening Wrap also includes detailed technical analysis on the Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch, as well as a list of the top gainers and losers on the ASX Top 300. Additionally, the article highlights interesting movers, such as Cauldron Energy (CXU), Atomic Eagle (AEU), and Lotus Resources (LOT), and provides a glimpse into the broader economic landscape, including upcoming holidays and non-trading days.
In summary, the ASX 200 took a hit today due to the hawkish Fed meeting and its impact on investor confidence and commodity prices. Defensive sectors and healthcare stocks performed well, while mining stocks and Information Technology suffered. The Evening Wrap provides a comprehensive overview of the day's market movements and key economic data, along with technical analysis and interesting movers.
