Evening Wrap: ASX 200 bounces, gold and coal miners rally, US futures higher

The local sharemarket recouped most of Tuesday's losses, coal and gold stocks were among the best performers, Westpac posts some ugly forward-looking data and a quick chart dump for Resource companies.

Let's dive in.

Markets

Ho ho ho. Merry Christmas! The ASX 200 closed a little off session highs of 1.63% but managed to recoup most of Wednesday’s decline. Is this the beginning of the Santa rally or just a technical rally off the 200-day moving average and technical bounce from oversold levels (ASX 200 was down -3.1% in the previous four sessions).

• Yield sensitive sectors like Utilities and Real Estate led to the upside

• Energy and Materials followed closely behind thanks to a weaker US dollar and firmer commodity prices

• Tech was another strong performer, with names like WiseTech, Computershare, Xero and Block all up at least 2.0%

• Defensive sectors like Staples, Telcos and Healthcare underperformed benchmarks

• 166 of the top 200 advanced (83%)

Economy

The six-month annualised growth rate in Westpac’s Leading Index fell to -0.92% in November from -0.84% in October.

• The index indicates the likely pace of economic activity relative to trend three to nine months into the future

• November was the fourth consecutive month of negative growth

• Westpac forecasts 1.0% GDP growth over the next year, with zero growth in the second half of 2023

• Westpac expects the RBA to opt for another 25 bp hike in February, March and May

Westpac’s ACCI actual composite index moderated to 49.0 in the December quarter from 64.6 in the previous quarter.

• The AACI provides insights into manufacturing and economy-wide trends

• The reading indicates that “conditions are approaching a stalling speed … flat new orders, a decline in employment and overtime, and a sharp deceleration in output.”

• “A net 7% of firms expect new orders to rise in the next three months, down from 30% three months ago.”

• “A net 14% of manufacturers expect output to rise over the next quarter, down from a net 46% and 23% in Q2 and Q3 respectively.” 

Commodities 

• Iron ore futures +1.1% to US$110.45/t

• Aluminum +0.8 to US$2,383/t

• Copper -0.2% to US$3.79/lb

• Gold -0.2% to US$1,813/oz

Latest news

Post market brief

A little secret: We're testing out Evening Wrap emails at the moment. You can actually subscribe to the email via updating your email preferences. I should also note that tomorrow will the last Evening Wrap for the year, and they will resume on 20 January.

The ASX 200 rallied but it's difficult to distinguish whether or not this is genuine move or something that's very technical (200-day and oversold) and further exacerbated by illiquid Christmas volumes.

XJO chart (Source: TradingView)

Resources was the place to be thanks to the BoJ surprise knocking over the US dollar. A little bit of a review, chart dump and closer look at gold names.

Woodside is trying to recover from the sharp fall in oil prices. In the past few months, oil stocks have remained relatively resilient compared to oil prices.

Woodside (Source: TradingView)

Coal miners were generally higher, many of which are up 5-15% in the past few days. A heavyweight name like Whitehaven Coal is now within 3% from all-time highs.

Whitehaven Coal (Source: TradingView)

Lithium stocks were weak, and they struggled to bounce even though Materials was one of the best performing sectors. On days like this, you can see how badly damaged the sector has become, compounded by news like: Goldman Sachs reports, Pilbara Minerals' auction results flagging peak prices, Tesla production cut rumors, China's EV subsidy coming to an end etc.

Allkem (Source: TradingView)

Gold spot prices made a big move overnight. Most mid-to-large cap names gapped up and pushed higher as the way went on.

Evolution Mining (Source: TradingView)

Newcrest Mining (Source: TradingView)

Perseus Mining (Source: TradingView)

Major announcements

Share prices might be a little off today.

Mid-to-small caps

• European Lithium (EUR) +16.5%: Signed a binding offtake agreement with BMW for 100% of the lithium hydroxide produced from the company’s Wolfsberg Project in Austria 

• Arizona Lithium (AZL) +11.3%: Signed a definitive agreement to purchase Prairie Lithium, one of Canada’s ‘most advanced lithium brine companies’ 

• Medadvisor (MDR) +11.1%: The medtech company expects 1H23 revenue to be $58-61m, up 50-60% on 1H22  

• 5E Advanced Materials (5EA) +9.0%: Confirmed a target to hit boron and lithium production status by the end of 2Q23 and currently exploring options for its large-scale boron and lithium complex 

• Comet Ridge (COI) +6.5%: Extended its negotiating period for the Gas Sales Agreement between CleanCo Queensland to 31 March 2023  

Trading halts

• Iris Metals (IR1): Shares resume trade on Friday, 23 December pending the announcement of a material capital raising 

• Earlypay (EPY): Shares resume trade on Friday, 23 December in relation to an update regarding FY23 outlook and guidance 

Broker updates

Scans