ASX200 RSI indicates oversold market
By Jasmeen Ara Islam Shaikh and Shruti Agarwal
Nov 19 (Reuters) – Australian shares slipped on Wednesday to finish at their lowest since early June, with a continued sell-off in banks outweighing gains in heavyweight mining stocks.
The benchmark S&P/ASX 200 fell 0.3% to finish at 8,447.9 points. It lost 1.9% on Tuesday, and is down more than 7% since hitting a record high on October 21.
The benchmark’s relative strength index (RSI) dipped below 30 for the first time since April on Monday, a threshold market participants consider indicative of an oversold market.
Financials lost 1.2%, hitting a six-month low. The relatively defensive sub-index has slumped 8% this month as bank earnings highlighted headwinds such as margin pressure, intense competition and rising costs.
“The big banks, after posting mixed results over the past couple of weeks and reaching some of the highest valuations in the world over the past year, appear to be undergoing a healthy pullback and reallocation of capital,” said Marc Jocum, senior product and investment strategist at Global X ETFs.
“Overall, the sector is rotating toward a more valuation-disciplined, growth-seeking posture.”
All the ‘Big Four’ banks traded in the red on Wednesday, with Commonwealth Bank of Australia and Westpac losing over 1% each. ANZ shed 2%, while National Australia Bank lost 0.7%.
Technology stocks closed 0.5% lower. The index remains anchored at its late-April lows.
Gold miners, however, advanced 2.3%, clocking their steepest rise in a week, as prices of the precious metal saw an uptick overnight. The broader mining sub-index followed with a 0.8% gain.
Meanwhile, data on Wednesday showed wages grew at a steady pace in the third quarter, adding to a raft of upbeat data that have dimmed expectations of near-term interest rate cuts in Australia.
Traders are pricing in a 90% chance of the Reserve Bank of Australia holding rates at its next meeting in December.
On the other side of the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index slipped 0.1% to 13,326.90 points.
(Reporting by Jasmeen Ara Shaikh and Shruti Agarwal in Bengaluru; Editing by Sonia Cheema)
