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S&P/ASX 200 rallies as CBA share price bounces, can it last?

The S&P/ASX 200 (INDEXASX: XJO) and All Ordinaries (INDEXASX: XAO) delivered an unexpectedly positive day on Tuesday, with the CBA share price jumping, reversing a run of losses to post a 1.4 per cent gain. Could the ASX 200 be primed for a bounce-back?

Eight of the 11 sectors in the ASX 200 were higher, with energy and financials leading the way, gaining 2.8 and 2.7 per cent respectively. Energy gained on the back of news that supply may not be sufficient to offset Russian oil losses with Woodside Energy Group (ASX: WDS) gaining 3.3 per cent and the BHP Group Ltd (ASX: BHP) share price up 1.7 per cent despite another 11 per cent fall in the price of iron ore.

ASX 200 hits 2020 low

The chart below shows an ETF that tracks the ASX 200, the SPDR ASX 200 ETF (ASX: STW). Get our free report on STW by clicking here.

The financials sector was by far the biggest contributor though, with the Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank (ASX: NAB) gaining 2.4 and 3.8 per cent. The driving factor was seemingly cautious commentary from the Reserve Bank after several weeks of stoking fears of a recession due to aggressive rate hikes. The Governor questioned the current ‘market’ assumption that the cash rate will reach 4 per cent before the end of the year and suggested that unemployment does not need to rise in order to combat inflation that is nearing 7 per cent.

CBA share price under pressure

Healthcare, utilities hit, Origin gains AACo loses CEO

The hardest-hit sectors in the ASX 200 were the key beneficiaries of recession concerns, being healthcare and utilities which fell nearly 1 per cent each. However, the more diverse Origin Energy Ltd (ASX: ORG) managed to deliver a 4 per cent gain on the rallying oil price. NZ Consumer Confidence has fallen to the lowest level since the GFC as aggressive action from the central bank is having a clear and present impact on the property sector and the economy.

Parts of the coal mining sector were sold off heavily after the Queensland government announced an unexpected increase in royalties on those companies located in the state that are set to extract additional revenue while prices remain high. Whitehaven Ltd (ASX: WHC) shares were a rare winner, gaining 7.7 per cent due to the location of its assets. Shares in GrainCorp (ASX: GNC) finished 5 per cent higher after confirming guidance for $590 to $670 million in profit, a 90 per cent improvement on 2021. Strong demand for grain and oilseeds were behind the result.

US markets jump, Tesla job cuts & Kellogg’s set to split

Global sharemarkets bounced back on Tuesday rallying on commentary from the Federal Reserve that suggests rates should ‘only’ hit 3.8 per cent by the end of the year. In a rare outcome, both value and growth stocks gained more than 2 per cent, the third time since 2020. The Nasdaq and S&P500 both gained 2.5 per cent and the Dow Jones 2.2 per cent as President Biden sought to sate fears of an impending recession and spike in unemployment. Biden is considering a holiday on gasoline taxes to reduce cost of living pressures but it may well add to inflation fears.

Existing homes sales fell 3.4 per cent on a month to month basis but 8.6 per cent year on year as signs the property market is slowing continue to grow. Shares in Tesla Inc (NASDAQ: TSLA) gained more than 12 per cent after management announced their intention to cut costs by increasing layoffs. Kellogg (NYSE:K) gained 3 per cent after announcing plans to split into three individual businesses. These will be Global Snacking Co, North America Cereal, and Plant Co, with the latter focusing on plant-based foods.

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