ASX 200 edges lower despite Wall Street gains as financials drag

Image Source : Krish Capital Pty Ltd

Index Update: The Australian share market closed lower on Wednesday despite a strong rally on Wall Street. The S&P/ASX 200 fell 10.70 points (0.13%) to 8,396.90 after hitting a new 50-day high earlier in the session. Profit-taking in major banks weighed on the index, which remains virtually unchanged over the past five days and is 2.53% below its 52-week high. Six of 11 sectors closed higher, with Energy being the top performer, gaining 2.22% for the day and 2.30% over the week.

Macro Update: According to the latest data from the Australian Bureau of Statistics (ABS), the monthly Consumer Price Index (CPI) indicator rose by 2.4 per cent in the 12 months to April 2025. Annual trimmed mean inflation reached 2.8 per cent in April, marking a slight increase from 2.7 per cent in March, and reflecting relative stability over the past five months. Housing inflation also saw a modest rise, climbing to 2.2 per cent in April from 1.8 per cent the previous month.

Top Market Movers: On Wednesday, Web Travel Group (ASX: WEB) led the gainers, surging 12.39% to AUD 5.26, followed by Generation Development Group (ASX: GDG) up 6.88% to AUD 5.44, and Block, Inc. (ASX: XYZ) rising 4.86% to AUD 96.19. On the downside, ALS Limited (ASX: ALQ) fell 7.60% to AUD 16.30, Mineral Resources Limited (ASX: MIN) dropped 5.47% to AUD 22.45, and Liontown Resources Limited (ASX: LTR) declined 5.47% to AUD 0.605.

Commodity Update: The dollar held firm on Wednesday as upbeat U.S. economic data and expectations for strong tech earnings lifted sentiment. Easing trade tensions between the U.S. and Europe and calmer global bond markets added to the optimism. U.S. consumer confidence exceeded forecasts ahead of key jobs data. Gold rose 0.01% to USD 3,328.35, silver gained 0.33%, copper dipped 0.20%, and Brent crude increased 0.73% amid tighter Venezuelan export restrictions.

Our Stance: Despite Wednesday’s slight dip in the ASX 200, the broader outlook remains cautiously optimistic. Profit-taking in major banks is a normal short-term correction after recent gains, while positive sector performances, especially in Energy, show resilience. Steady inflation readings and easing global trade tensions support this view. With Wall Street rallies and stable commodity prices boosting confidence, the Australian market seems positioned for modest growth in the near term, barring unexpected economic shocks.

The S&P/ASX 200 closed 10.70 points lower, marking a challenging trading session characterized by the formation of a small bearish candlestick pattern on the daily chart. This occurred alongside elevated trading volume, suggesting a degree of caution or uncertainty among market participants. Despite the minor pullback, the index remains above the 50-period Simple Moving Average (SMA), which now serves as a crucial support level. This technical base is important for maintaining the current uptrend. A key support level is visible at 8,250.40, which traders should closely monitor. Holding above this area would help reinforce recent gains and sustain bullish sentiment. On the weekly chart, the index also holds above the 21-period SMA, adding a layer of long-term technical strength. This multi-timeframe alignment above the 50-SMA on the daily and the 21-SMA on the weekly signals potential for continued upward momentum.