Evening Wrap: ASX 200 avoids wipeout as big banks, energy stocks steady ship, base metals, lithium and gold pain continues

The ASX 200 pared sharp early losses to close only slightly lower after US forces launched fresh strikes on Iran and revoked a key oil-sales waiver, sending Brent crude surging more than 3% and splitting the market cleanly — energy producers and defensive stocks surged while gold, materials, and technology bore the selling.

Be sure to click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all the key economic data in tonight's Evening Wrap. Also, I have detailed technical analysis on the Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch.

Let’s dive in!

The S&P/ASX 200 (XJO) finished 18.8 points lower at 8,785.1, 1.25% from its session low and just smack–bang on its session high. Despite the apparent heroics at benchmark level, in the broader-based S&P/ASX 300 (XKO) advancers still lagged decliners by 120 to 167.

Energy (XEJ) (+3.3%) was the session's clear standout — the entire sector was carried by an ICE Brent crude futures surge of 3.0% to US$76.35/bbl in Asian trade, extending an overnight gain of a similar magnitude, as fresh US military strikes on Iran and the revocation of Tehran's oil sales waiver reignited supply disruption fears.

Woodside Energy Group (ASX-WDS) chart

Oil and gas producers led: Karoon Energy (KAR) (+6.6%), Santos (STO) (+5.8%) — its biggest single-day gain since March — and Woodside Energy (WDS) (+3.2%) all surged. Coal stocks were also carried higher on the broader energy bid: Yancoal Australia (YAL) (+4.0%) and Whitehaven Coal (WHC) (+2.1%) both advanced. Fuel retailers and refiners joined the party — Viva Energy (VEA) (+3.3%) and Ampol (ALD) (+1.4%) were both firmer.

Utilities (XUJ) (+1.2%) had two distinct tailwinds working simultaneously. Origin Energy (ORG) (+1.8%) — with its substantial LNG production exposure — tracked the energy sector recovery directly. AGL Energy (AGL) (+0.8%) and APA Group (APA) (+0.6%) caught purely defensive flows.

Consumer Staples (XSJ) (+1.0%) has become the ASX's most reliable crisis beneficiary — cash must still be invested in equities, and on a day defined by geopolitical uncertainty, it flows to businesses dealing in the essentials of consumption. Endeavour Group (EDV) (+1.8%), Treasury Wine Estates (TWE) (+1.3%), Metcash (MTS) (+1.3%), and Woolworths (WOW) (+1.2%) all firmed.

S&P-ASX 200 Financials Sector Index chart – there's your rally! Good old big bank bench-press! 💪

Financials (XFJ) (+0.6%) were the most influential sector on the index today through sheer market capitalisation weight. The major banks opened sharply lower alongside the broader risk-off tone but recovered through the session as defensive capital flows found them an attractive destination — large, liquid, and paying franked dividends. ANZ (ANZ) (+1.2%), National Australia Bank (NAB) (+0.9%), Commonwealth Bank (CBA) (+0.9%), and Westpac (WBC) (+0.3%) all recovered their early losses.

The Gold Sub-Index (XGD) (-2.4%) retreated for the third time in four sessions as the oil surge delivered its now-familiar double blow: higher crude stokes inflation fears, which lifts benchmark bond yields, which raises the opportunity cost of holding non-yielding gold — and diesel cost pressures on mining operations rise simultaneously.

COMEX gold futures fell 0.8% to US$4,126/oz and COMEX silver futures eased 0.7% to US$60.88/oz in Asian trade. Genesis Minerals (GMD) (-4.5%), Ora Banda Mining (OBM) (-4.4%), Pantoro Gold (PNR) (-4.3%), and Evolution Mining (EVN) (-4.2%) all fell.

S&P-ASX 200 Materials Sector Index chart: Two speed market...

Materials (XMJ) (-2.0%) was caught in the same rising-yields environment as gold — base metals prices softened further with COMEX copper futures falling 1.1% to US$6.158/lb, adding to several days of weakness. The sector also sits firmly in the "risk-on" camp of securities that get trimmed when uncertainty spikes, regardless of the underlying commodity price direction. BHP (BHP) (-2.3%) fell, with the miner facing the additional headwind of unions launching industrial action that could affect its Port Hedland iron ore export terminal. Rio Tinto (RIO) (-2.6%), Nickel Industries (NIC) (-2.3%), and Sandfire Resources (SFR) (-1.2%) were also lower.

Communication Services (XTJ) (-2.1%) was dragged by two distinct headwinds. Telstra (TLS) (-3.0%) bore the brunt of a widespread network outage that triggered selling in the sector's largest constituent. Separately, the online classified names — typically sensitive to the same rising-yield, falling-growth-sentiment pressure that hit technology — also fell, though less severely than Telstra.

Information Technology (XIJ) (-1.9%) tracked the script — higher oil pushes inflation expectations up, which pushes benchmark bond yields up, which lifts the discount rate applied to the distant future earnings of high-P/E growth stocks, compressing their present value. WiseTech Global (WTC) (-7.3%) bore the heaviest selling, reversing much of this week's governance-driven rebound in what appeared to be straightforward profit-taking after a 5.7% gain on Tuesday. Weebit Nano (WBT) (-4.7%), Siteminder (SDR) (-2.3%), and Life360 (360) (-2.0%) were also lower.

Lithium stocks extended their two-day correction as GFEX lithium carbonate futures fell 2.9% to CNY 158,440/t — failing to sustain the recovery begun last week that many investors had hoped signalled a resumption of the current bull market. Core Lithium (CXO) (-12.1%), Wildcat Resources (WC8) (-5.2%), Liontown Resources (LTR) (-4.2%), IGO (IGO) (-3.6%), Mineral Resources (MIN) (-3.4%), Elevra Lithium (ELV) (-3.4%), and Pilbara Minerals (PLS) (-3.3%) were all lower.

Analysis

Here's the thing about having a bet each way (if one has done their analysis correctly to get there – i.e. one has correctly assessed a state of equilibrium in the demand-supply environment!!!):

• You stop cheering the market up or down 📣

• You don't care so much what the next candle delivers 🤷

• Despite the above, you remain frustrated because, naturally, you'd prefer a strong trend one way or the other! 🤦

I think at some point on the way up (i.e., in that +6,000 point April-June rally), I said something along the lines of: "This is trend following at its finest".

I expect I was FRP at the time.

Yet here I am at 1/2RP, and with the Comp at near-perfect equilibrium in the short term – sideways ST trend ribbon, price action, zebra candles – and I could really say the same thing: "This is trend following at its finest".

Because a good trend follower knows: up is a trend, down is a trend, but sideways is also a trend. It's just not a great trend to be FRP in my experience! ⚖️

Stuff to watch out for on the Comp:

• Tuesday's candle set's the 2-Jul candle' shigh as a peak, the second lower peak to 27191.

• That peak looks pretty tame as a point of supply (POS) for now, therefore I continue to view 26789-27191 as the major / critical supply zone that must be consumed if we are to get the 'next leg' of this Comp bull market.

• 24980-25015 remains the major / critical demand zone. If we start to see this zone being tested with some strong supply side candles (i.e., long black bodies closing near the low of the session, near or within the zone), then the Comp is at substantial risk of suffering a deeper correction, likely targeting at least the long term uptrend ribbon.

• Volume continues to contract as both sides of the market disengage – this is typical at this time of the year. It does leave the Comp vulnerable to a large move if one side grows substantially motivated to act (i.e., there could be little resistance to a wave of motivated buying/selling).

View

What a great time to be 1/2RP! Hey, I'd love a strong and convincing move one way or the other – preferably up, of course – because rampaging Comp bull markets are a wonderful place to allocate risk. But, it is what it is, and nothing I think or do is going to change it.

I, you – we're all price takers here. We get what we get... And in the meantime, we try to make our best guesses based on the demand and supply signals in our charts.

Our goal is to Analyse the technicals to understand the MOTN outcome. Then we must Accept it – even if it's at odds with our present positioning and thinking. Finally, we must Act – i.e., to manage our risk accordingly! 💪💪💪

(RP = Risk Position — it reflects my personal allowable capital allocation limit for my investments in US stocks. So 1/2RP is 50%, 2/3RP is 67% and FRP is 100% 🪣).

Key Levels

Dead simple! 26789-27191 is the key zone of supply vs 24980-25015 is the key zone of demand. In between = 1/2RP vs >= FRP and <= 1/3RP.

Analysis

Let's consider the indecision of last night's US trading, moderately negative leads from commodities prices, plus the fact that Comp futures are trading around 300 points lower at the time of writing – and can I say: Today's candle on the OTP is super impressive! 💪

That's a properly credible downward pointing shadow = BTD ✅

And it kicked in at a level that we, based on our expert analysis, would expect to see latent excess demand (i.e., the long term uptrend ribbon and the 8708-8656 demand zone) ✅

Good. But do you trust it? 🤔

Benefit of the doubt required? Perhaps. Because I agree that there's just too many of these demand-side showings at critical levels – and at seemingly critical points in time. This time, with mining stocks about to croak it, and with financials threatening to break-back-down through their long term trend ribbon. It was a properly dangerous moment there for the OTP at today's candle low! ⚠️🚨

But... There's always a but, huh?

We both know the big funds juiced today's trade... Yep, they manufactured that downward pointing shadow... By flipping their bets from riskier parts of the market into the relative 'safety' of the big banks.

There's your downward pointing OTP shadow!!! I mean, FFS! 🤦

So, the question is: Can we trust any rally built on FFS (Fund Flow Shenanigans! 😉) and not on broad based excess demand?

View

It kinda doesn't matter as far as I'm concerned! Because I'm 1/2RP on the OTP ⚖️ (i.e., my personal allowable capital allocation limit for my investments in Australian stocks is 50%).

Key Levels

8984-9022 is the key zone of supply, while demand is at 8708-8656 (now more than ever!).

***CHARTWATCH LIVE WEBINARS — NEW VIDEO DROPPED!!! 📺🍿***

Master Japanese candlesticks, master your trading! Plus ASX mining warning & is CSL's rally intact?

Today

• NZ RBNZ Official Cash Rate 🔼

  • Result: +0.25% p.a. to 2.50% as forecast

Later this week

Thursday

• 04:00 USA FOMC June Meeting Minutes

• 10:30 USA Weekly Unemployment Claims (218,000 forecast vs 215,000 previous)

Friday

• 00:00 USA June Existing Home Sales (4.2 million forecast vs 4.17 million in May)

Saturday

• TBC USA Fed Monetary Policy Report & Fed Chairman Kevin Warsh Senate address