Stronger wages data unable to boost the ASX200 after soft CBA trading update

After failing to break the top of the range yesterday, despite RBA communique that offered the best of both worlds (optimistic on growth yet pessimistic on the prospect of rate hikes before 2024), the ASX200 is eyeing the downside today following a soft trading update from Commonwealth Bank of Australia (CBA).

While CBA's cash profits rose to $2.2 billion in the three months to September, the bank's profitability as measured by the Net Interest Margin (NIM) was "considerably lower" due to intense competition in the mortgage space.

In response, the share price of CBA has fallen 6.20%, to be trading near $101.00, shaving a whopping 30 points of the index. The share price of the other big four banks are also trading lower in sympathy.

Offering little in the way of assistance for the index, the release of stronger than expected Australian Q3 wages data to 0.6% q/q, the highest reading since the first quarter of 2020, taking the annual pace of growth to 2.2%. Still well short of the 3-3.5% range needed to help inflation return sustainably within the RBA's 2-3% target band.

Where to now for the ASX200?

The chart below shows that the ASX200 has been capped late by the seemingly impenetrable layer of horizontal resistance at 7480/88. On the downside, the index has uptrend support at 7330, coming from the October 2020, 5779 low, reinforced by the early November 7311 quadruple low.

For the bullish bias to remain and expectations of a retest and break of the August 7632 high, the ASX200 needs to hold above support and recent range lows at 7330/10 and then break and close above 7480/88.

Aware that a failure to hold support at 7330/10 would likely see the ASX200 undertake a deeper pullback, initially towards support in the 7200/7150 band coming from the 200-day moving average and the September 7145 low.

Source Tradingview. The figures stated areas of November 17th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Open a Forex.com account, or log in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

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. 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.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor