ASX 200 Morning Outlook: Real Estate Reeling Post RBA (GMG, GPT, SCG)

A bout of risk-off sentiment weighed on appetite for risk assets early in the European session on Tuesday after weak earnings from Palantir (PLTR) fanned fears that the bullish AI theme may have run its course. This saw currency traders favour the Japanese yen during the risk-off move, sending the New Zealand and Australian dollars lower against major peers.

The ASX 200 was already under pressure on expectations of fewer RBA rate cuts, with the central bank’s own forecasts now allowing for just one more in 2026. The Australian share market extended losses into the close, with US futures also weakening amid thin trade.

 

 

 

ASX 200 Market Snapshot

• The ASX 200 fell 0.9% on Tuesday in its worst and most volatile session in five days, closing at a five-week low.
• Ten of eleven ASX sectors declined, led by Utilities (XUJ) and Materials (XMJ), while Health Care (XHJ) was the only sector to finish flat.
• Market breadth was weak with only 37 advancers, 152 decliners, and 11 unchanged stocks.

Chart analysis by Matt Simpson - source: ASX, LSEG

 

 

Risk Aversion Rises as Small and Mid-Caps Lag ASX 200

The ASX 20 / ASX 200 ratio continued to rise, showing that large-cap stocks are doing the heavy lifting to support the Australian share market. Yet despite the ASX 20’s outperformance, the broader ASX 200 fell to a five-week low. Typically, we want to see small- and mid-cap stocks participate in a rally for it to be considered healthy — a feature clearly lacking at this stage.

The Consumer Discretionary (XDJ) / Consumer Staples (XSJ) ratio is also trending lower alongside the broader index, another sign that all is not well for the wider market. While this usually indicates investors are favouring the relative safety of staples over discretionary stocks, both sectors are currently declining — adding another layer of risk aversion to sentiment.

Chart analysis by Matt Simpson - Source: ASX, LSEG

 

Real Estate (XRE) Stung by RBA, Bears Eye Breakouts on GMG, SCG, GPT

While the ASX real estate index was only the third worst performer on the day, the index and some of its mega cap stocks are on the verge of a breakdown.

• The ASX real estate sector (XRE) found support just above 4,000, but it saw a clear daily close beneath the 2020 and 2022 highs. Given the double top around 4250 and swift bearish reversal from the October high, further losses could await for the broader index.
• Goodman Group (GMG) printed a volatile bearish engulfing day, or a closing Marabuzo candle. Its daily open and high failed to test the monthly pivot point and formed a lower high relative to Friday’s bearish pinbar. A break of the September low or monthly S1 pivot (32.08) assumes bearish continuation.
• Scentre Group (SCG) also formed a bearish engulfing day, though its daily high perfectly respected the 50-day EMA (4.10) and monthly pivot point 4.11) as resistance. Bears are now seeking a break of the September low or $4 handle to assume bearish continuation. Note the potential bearish breakaway gap that occurred last week which could signify a major top has been seen.
• GPT Group (GPT) is another real estate stock that gapped lower last week and is considering a break of its September low. A break of which could clear the way for a decline towards the $5 handle, near its 200-day EMA.

Chart analysis by Matt Simpson - Source: TradingView

 

 

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge