ASX 200 Recovers After Initial Drop

• “Tech wreck” causes chaos across the globe.
• ASX 200 recovered quite nicely by the end of the session.
• New York was a mixed bag but saw an attempt to get up off of the floor, perhaps leading to more confidence in Australia.

The ASX 200 showed a strong recovery during Monday’s session, despite an initial selloff of risky assets. This was largely attributed to the Chinese DeepSeek AI story, as the open-source AI platform appears to rival many of the AI models developed by major technology companies. Furthermore, the platform is also free, raising the potential for significant disruption within the technology sector. Because of the massive losses in other assets, the ASX 200 may have been sold off initially to realise gains so that traders could cover what was going to be a massive selloff in certain assets in New York.

While the session on Monday in the United States was tumultuous, much of the losses were recovered by the close. Nevertheless, the NASDAQ 100 still ended the day with a loss of 2.73%, though it had been down as much as 4% earlier in the session. Should the US markets stabilise in the coming days, there is potential for a positive spillover effect on the Australian market.

Source: TradingView, ASX Chart, 28 January 2025 

Woolworths Group Limited (WOW)

Woolworths Group Limited recorded a modest gain of 0.54%, closing at AU$29.96. The market has been consolidating near the AU$30 level for an extended period, with Monday’s price action reflecting a continuation of this established pattern. With the next earnings call expected on 26 February,  traders appear comfortable, maintaining their positions, as the stock seems to be forming a potential base pattern. Trading volume is pretty steady, though unremarkable, suggesting no significant shifts in market sentiment. It is worth noting that the market has been trading within this range since early November, underscoring the level’s significance as a point of equilibrium for buyers and sellers.

Source: TradingView, WOW Chart, 28 January 2025 

Rio Tinto Limited (RIO)

Rio Tinto experienced an initial decline at the opening of Monday’s session but turned around to close at AU$118.33. The market is currently going sideways overall and consolidating around the 50-Day EMA. This movement suggests that traders may be seeking stability by positioning themselves in this well-known materials giant. With a dividend of AU$2.617 per share, Rio provides a source of income for those willing to ride through the volatility. The stock has also been supported by rising base metal prices, which appear to be a significant factor influencing recent price action. Traders are closely monitoring whether the strength in base metals will continue to lift this stock.

Source: TradingView, RIO Chart, 28 January 2025 

Commonwealth Bank of Australia (CBA)

The Commonwealth Bank of Australia gained 0.51% on Monday, closing at AU$158.65 as the market continues to consolidate near the highs. It was announced in recent days that CBA is selling its remaining stake in Bank of Hangzhou to New China Life Insurance for proceeds of approximately AU$940 million. This deal is slated for completion by mid-2025 and should significantly enhance CBA’s cash position. The bank’s next earnings call for CBA is on 12 February, with a projected earnings of AU$3.034, and a revenue estimate of AU$14.01 billion. As things stand right now, the market continues to threaten a breakout.

Source: TradingView, CBA Chart, 28 January 2025

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