Evening Wrap: ASX 200 at fresh all-time highs, RBA rate cut expectations rise on weak unemployment data

The S&P/ASX 200 closed 77.2 points higher, up 0.90%.

In a nutshell:

• The ASX 200 hit its 10th record high of the year, reversing yesterday's 0.79% dip

• Market experienced a broad-based rally, with all sectors green and strong participation

• Australia's unemployment rate unexpectedly spiked to 4.3%

Let's dive in.

ASX 200 Session Chart

ASX 200 closed up 77.2 points (Source: Market Index)

Markets

• Record breaking session: The S&P/ASX 200 hit its 10th record high of the year, rallying 0.90% to close at best levels. The market experienced a sharp 0.2% rally in the minutes that followed the surprisingly weak Australian employment data report at 11:30 am AEST.

• Key takeaways from today: The local sharemarket continues hitting record highs despite choppy conditions - big rallies one day, gap downs that somehow finish breakeven the next, then tumbles the following day. Overall, this signals resilience amid a persistent wall of worries, with Macquarie recently releasing interesting insights explaining their newfound bullishness (while admitting they were very late to the party). You can read some of the key takeaways here

• Rate cut expectations jump: Markets have increased the probability of an August RBA rate cut to 94%, up from 90% before the labour force release, after unemployment unexpectedly jumped to 4.3% from 4.1%

• Broad-based rally: Breadth was very strong, with 162 S&P/ASX 200 constituents (81%) closing flat or higher, every sector finished higher, led by Industrials and Financials

• Banking sector rebounds: The Big Four banks staged a strong recovery after Wednesday's weakness, with CBA gaining 1.8% to $180.80, Westpac up 1.2%, and both ANZ and NAB advancing 1.1%. Interestingly, the market is at record levels but CBA is still ~5% away from its record 25-Jun close, suggesting the rest of the market is doing the heavy lifting.

• Property stocks surge: Rate-sensitive real estate names rallied on easing expectations, with Mirvac jumping 3.2% to $2.24, while Scentre Group and Charter Hall both gained 1.9%. The soft employment data drove the Australian 10-year yield 2 bps lower to 4.35% (a slight decrease but the 10-year has basically been trading around the 4.3% level since September 2023).

• Individual stock movements: CAR Group fell 2.9% to $36.35 following CEO Cameron McIntyre's departure announcement and FY25 guidance, Droneshield showed some cracks and slipped 9.0%.

Economy

• Labour market softening accelerates: Employment rose by just 2,000 jobs in June (vs 20,000 expected), while 34,000 Australians became unemployed, pushing the jobless rate to its highest level since November 2021.

Interesting Movers

Trading higher

• +9.52% Ioneer Ltd (INR) – SPP raises $2.2m

• +7.92% Weebit Nano Ltd (WBT) – No news, tech strength

• +7.40% Australian Ethical Investment Ltd (AEF) – FUM update

• +7.14% Silver Mines Ltd (SVL) – No news

• +2.4% Breville Group (BRG) – UBS upgrade

Trading lower

• -10.10% Droneshield Ltd (DRO) – No news, stock rallied ~40% in last three sessions

• -6.57% Metals X Ltd (MLX) – No news

• -5.36% Brazilian Rare Earths Ltd (BRE) – No news

• -4.83% Elsight Ltd (ELS) – No news

• -4.48% Ora Banda Mining Ltd (OBM) – Slight weakness for most gold stocks, poor guidance earlier this week

• -4.35% 29METALS Ltd (29M) – Production report

• -4.26% AMA Group Ltd (AMA) – No news

Broker Notes

Alpha HPA (A4N)

• Retained at Outperform at Macquarie; Price Target: $1.42

Aussie Broadband (ABB)

• Retained at Outperform at Macquarie; Price Target: $5.05

Australian Clinical Labs (ACL)

• Retained at Neutral at Macquarie; Price Target: $3.15

Amplitude Energy (AEL)

• Retained at Buy at Bell Potter; Price Target: $0.28 from $0.27

• Retained at Outperform at Macquarie; Price Target: $0.38 from $0.27

Ansell (ANN)

• Retained at Neutral at Macquarie; Price Target: $33.00 from $31.05

Amotiv (AOV)

• Retained at Outperform at Macquarie; Price Target: $10.90

Atturra (ATA)

• Initiated at Buy at Ord Minnett; Price Target: $1.05

AUB Group (AUB)

• Retained at Outperform at Macquarie; Price Target: $35.45

Bega Cheese (BGA)

• Retained at Outperform at Macquarie; Price Target: $6.40

Breville Group (BRG)

• Retained at Buy at UBS; Price Target: $35.50 from $33.10

CAR Group (CAR)

• Retained at Buy at Citi; Price Target: $42.60

• Retained at Neutral at Macquarie; Price Target: $39.00

Canyon Resources (CAY)

• Retained at Speculative buy at Canaccord Genuity; Price Target: $0.35

Codan (CDA)

• Retained at Outperform at Macquarie; Price Target: $17.00

Coles Group (COL)

• Upgraded to Neutral from Underweight at JPMorgan; Price Target: $20.00

CSL (CSL)

• Retained at Outperform at Macquarie; Price Target: $347.50 from $360.30

Evolution Mining (EVN)

• Retained at Hold at Bell Potter; Price Target: $7.95 from $8.10

• Retained at Buy at Canaccord Genuity; Price Target: $8.50 from $8.80

• Retained at Neutral at Citi; Price Target: $7.60 from $7.70

• Retained at Underperform at Macquarie; Price Target: $7.00 from $6.30

• Downgraded to Trim from Hold at Morgans; Price Target: $7.00 from $7.40

• Retained at Lighten at Ord Minnett; Price Target: $6.35 from $6.75

• Retained at Sell at UBS; Price Target: $6.60 from $6.70

Generation Development Group (GDG)

• Retained at Overweight at Morgan Stanley; Price Target: $5.65

Genesis Minerals (GMD)

• Retained at Outperform at Macquarie; Price Target: $5.70 from $5.10

GQG Partners Inc. (GQG)

• Retained at Outperform at Macquarie; Price Target: $2.90 from $2.80

Helloworld Travel (HLO)

• Retained at Hold at Morgans; Price Target: $1.76 from $1.91

Healius (HLS)

• Retained at Neutral at Macquarie; Price Target: $1.20 from $1.40

Harvey Norman Holdings (HVN)

• Retained at Outperform at Macquarie; Price Target: $5.50

Integral Diagnostics (IDX)

• Retained at Outperform at Macquarie; Price Target: $3.20

IGO (IGO)

• Downgraded to Neutral from Buy at Goldman Sachs; Price Target: $4.00 from $4.40

IPH (IPH)

• Retained at Outperform at Macquarie; Price Target: $6.75

Jumbo Interactive (JIN)

• Retained at Outperform at Macquarie; Price Target: $13.90

Johns Lyng Group (JLG)

• Downgraded to Hold from Buy at Jefferies; Price Target: $4.00 from $3.20

• Downgraded to Equal weight from Overweight at Morgan Stanley; Price Target: $4.00 from $3.40

LendLease Group (LLC)

• Retained at Buy at Citi; Price Target: $6.80

Lovisa Holdings (LOV)

• Retained at Outperform at Macquarie; Price Target: $33.40

Liontown Resources (LTR)

• Downgraded to Sell from Neutral at Goldman Sachs; Price Target: $0.48 from $0.63

Matrix Composites & Engineering (MCE)

• Downgraded to Hold from Speculative buy at Bell Potter; Price Target: $0.28

• Downgraded to Hold from Buy at Bell Potter; Price Target: $0.28

MAAS Group Holdings (MGH)

• Retained at Outperform at Macquarie; Price Target: $4.95

Monadelphous Group (MND)

• Retained at Outperform at Macquarie; Price Target: $17.40

Megaport (MP1)

• Retained at Outperform at Macquarie; Price Target: $14.30

Nick Scali (NCK)

• Retained at Outperform at Macquarie; Price Target: $19.90

Neuren Pharmaceuticals (NEU)

• Retained at Outperform at Macquarie; Price Target: $18.60

Northern Star Resources (NST)

• Retained at Neutral at UBS; Price Target: $17.60 from $23.00

NexGen Energy (Canada) (NXG)

• Retained at Speculative buy at Bell Potter; Price Target: $13.55

• Retained at Buy at Bell Potter; Price Target: $13.55 from $16.90

NEXTDC (NXT)

• Retained at Outperform at Macquarie; Price Target: $13.82 from $22.10

Pilbara Minerals (PLS)

• Downgraded to Sell from Neutral at Goldman Sachs; Price Target: $1.10 from $1.75

Pro Medicus (PME)

• Retained at Neutral at Macquarie; Price Target: $258.90 from $257.40

Pinnacle Investment Management Group (PNI)

• Retained at Outperform at Macquarie; Price Target: $25.10

Qantas Airways (QAN)

• Upgraded to Buy from Neutral at Citi; Price Target: $8.00 from $9.60

Ramsay Health Care (RHC)

• Retained at Outperform at Macquarie; Price Target: $38.35 from $37.70

• Retained at Outperform at Macquarie; Price Target: $39.80 from $37.70

ResMed Inc. (RMD)

• Retained at Outperform at Macquarie; Price Target: $45.90 from $48.00

Reliance Worldwide Corporation (RWC)

• Retained at Outperform at Macquarie; Price Target: $5.55

SiteMinder (SDR)

• Retained at Outperform at Macquarie; Price Target: $6.09

SEEK (SEK)

• Retained at Outperform at Macquarie; Price Target: $24.24 from $26.75

Sonic Healthcare (SHL)

• Retained at Neutral at Macquarie; Price Target: $25.50 from $28.30

Santos (STO)

• Retained at Buy at Citi; Price Target: $8.89 from $6.50

• Retained at Outperform at Macquarie; Price Target: $8.65 from $8.85

Universal Store Holdings (UNI)

• Retained at Outperform at Macquarie; Price Target: $9.80

Virgin Australia Holdings (VGN)

• Initiated at Neutral at Citi; Price Target: $3.30

• Initiated at Buy at Goldman Sachs; Price Target: $3.60

• Initiated at Buy at UBS; Price Target: $3.90

Ventia Services Group (VNT)

• Retained at Outperform at Macquarie; Price Target: $5.00

Vysarn (VYS)

• Initiated at Overweight at Wilsons; Price Target: $0.65

Woolworths Group (WOW)

• Upgraded to Neutral from Underweight at JPMorgan; Price Target: $31.00 from $30.50

Scans