Evening Wrap: ASX 200 can't do any wrong, first Trump, now falling yields and China stimulus hopes help stocks close in on record

What a day and what a week! It just got better and better, and Aussie stocks are back within a whisker of a record high.

The Trump Trade, hopes of more China stimulus, rate cuts from the US Federal Reserve. Can it possibly get any better? I guess we'll find out next week.

But for everything you need to know about today's ASX trade...

Click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all of the key upcoming economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on the S&P/ASX 200 and Bond Yields in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 68.8 points higher at 8,295.1, 0.84% from its session low and just 0.29% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 211 to 73. For the week, the XJO finished up 176.3 points or 2.2% higher, 2.2% from its intraweek low and just 0.29% from its intraweek high.

Looking down the list of best performing sectors today, it looks more than anything like a response to the sharp reversal in market yields overnight. Australian 10-year Government Bond yields have traded back to 4.58% from their Thursday peak (an absolutely frightful and eye-watering 4.70%). Basically, the market just cut rates by half of one typical RBA rate move.

You really must see the Aussie 10-year bond yield chart…the ascent from 3.76% in just mid-September would boggle any economist’s mind (near on 100 basis points without a whisper from the RBA – all external market influences). The good news is, you can see the chart, just scroll down a tad to ChartWatch below.

Given the pare-back in market yields, it was no surprise to see sectors like the Gold (XGD) (+2.2%) sub-index (gold doesn't have a yield, so there is an opportunity cost to holding it meaning gold loves/hates lower/higher market yields), Information Technology (XIJ) (+1.8%) (high P/E sectors are typically what we call “long duration”, so they are hyper sensitive to moves in market yields…yields down usually means up here), Consumer Discretionary (XDJ) (+1.3%) (an easy one, lower market yields usually correlates to lower mortgage rates which correlates to less pressure on consumers), and Real Estate Investment Trusts (XPJ) (+1.1%) (giant balls of debt, so again, lower market yields helps with funding…they're also seen as bond proxies – so there's a bit less competition now from higher yielding risk-free bonds).

That’s probably enough Economics 101 for a Friday evening, especially after what has been one of the most fascinating, and can I even say exciting weeks in markets I’ve seen in over 30 years of watching them – thus leaving me totally exhausted!

Let’s put the rest of the moves down to hopes of further Chinese economic stimulus measures that will be announced at this weekend’s National People’s Congress (NPC) Standing Committee meeting. At least, that’s what all the other evening wraps are saying!

Today’s strongest ASX stocks

The only sector you could say did it tough today was Energy (XEJ) (-0.48%). Nothing specific here, energy commodities were roughly flat overnight – if anything, the chart of Brent Crude below appears to be challenging the key $76.19 point of demand.

Brent Crude Oil Futures (Front month, back-adjusted) ICE

I do note two things with respect to this sector. It hosts some of the worst short and long term trend combinations of any group of ASX listed stocks. This is why they’ve been all over the ChartWatch Daily Scans Downtrends lists for the last 6 months.

Secondly, there was a silver lining in Energy today – uranium stocks were generally nicely higher. They’re seen as Trump Trade winners also (interestingly the uranium futures price was down again last night!).

Energy sector stocks’ performance today

ChartWatch

S&P/ASX 200 (XJO)

Lucky country

The last time we covered the XJO was in Wednesday’s ChartWatch so this is just a quick follow up to round out the week.

In that update, we noted that day’s gain (as early news of Trump’s likely win started to filter through Asian markets) likely moved the dial from supply-side to neutrality. Thursday’s and today’s candles just nudge the switch back to demand-side control.

Today’s close above 8273 is important, as is what is now a very decent string of demand-side candles (i.e., white-bodied and or downward pointing shadows) since the 8063 point of demand. 8107 for all intents and purposes appears to have been held.

The short term trend ribbon remains at a neutral setting, but I suspect is one more demand-side candle away from resuming a short term uptrend. The long term uptrend, as it has been throughout the retracement from 8385, has remained impeccable.

What could go right from here? Continued demand-side candles, the logging of a higher trough at or above the short term trend ribbon (short term trend ribbon resumes uptrend), a close above 8385.

What could go wrong from here? Supply side candles creep in, particularly large showings below 8385, a close below the short term trend ribbon, (likely down the track now) a close below 8063.

On balance, I’d say you’re more likely to see the “go right” stuff before you see any “go wrong” stuff.

What a week huh!? 🤔

US 10 Year T-Bond Yield & Australian 10 Year Government Bond Yield

Has Goldilocks arrived?

The last time we covered bond yields was in ChartWatch in the Evening Wrap on 1 November.

In that update, and in the prior update on bonds on 28 October, we were tracking the steep rise in yields and noting the negative impact that was having on stock prices (explains the bit in the XJO chart between 8385 and 8063!!!📉).

How much has changed in just a few trading sessions! Yields actually went higher – in line with surging stocks – because of the Trump trade (likely inflationary and good for stock earnings), and then last night they dipped following the Federal Reserve's interest rate cut – again in line with surging stocks!

It might feel like stocks have got the rub of both greens there…and to be fair they kind of did…because, sure there’s a good chance a Trump + Red Sweep is going to juice stock earnings over the next twelve months, but also it seems the the Fed is comfortable enough to continue to remove some of the “restrictiveness” it says is still built in to the official cash rate.

Any time you’ve got a stronger economy, stronger company earnings, and the prospect of falling interest rates…well, goldilocks just ate the not-too-hot-not-too-cold porridge and is about to take a nap in the comfy bed…👧🥣

What would be a good result for stocks in the US 10-year T-Bond yield chart above as well as the Aussie 10-year Government Bond yield chart below? Well there are two potential "good result" outcomes: Sideways or down. I can’t decide which is better, maybe very gradually down!

Australian 10-year Government Bond yield

We don’t want to see yields drop off a cliff here, as that would mean something is very wrong with the Trump trade / US economy…and we certainly don’t want to see yields go any higher here...as another leg up will NOT be perceived as good for stocks – no matter what President Trump is expected to do!

Economy

Today

• There weren't any major data releases in our time zone today

Later this week

Saturday

• 02:00 USA University of Michigan Consumer Sentiment Index (70.6 forecast vs 70.5 previous)

• 12:30 CHN Consumer Price Index (CPI) October y/y (+0.3% p.a. vs +0.4% p.a. in September)

• 12:30 CHN Producer Price Index (PPI) October y/y (-2.5% p.a. vs -2.8% p.a. in September)

Latest News

Interesting Movers

Trading higher

• +15.1% Mayne Pharma Group (MYX) - Mayne Pharma responds to media speculation

• +15.1% Neuren Pharmaceuticals (NEU) - No news today, but as we noted here yesterday: Continued positive response to 7 Oct Q3 2024 update and 6 Oct PRV sold for US$150m - Neuren to receive one third

• +14.6% Appen (APX) - Successful Completion of Share Purchase Plan, but stronger tech more generally, particularly in AI stocks (see NVIDIA last few sessions)

• +13.7% Brainchip (BRN) - No news, but ditto tech / AI rally post Trump-Red Sweep, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +12.2% Iperionx (IPX) - No news, possibly some China stimulus juice here, but regardless…it's just another prevailing short and long term uptrend, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +10.3% Wildcat Resources (WC8) - No news, consistent with recent volatility, missed the lithium rally yesterday so perhaps some catch up, spodument prices are up today in China

• +9.7% Clearview Wealth (CVW) - 2024 AGM Addresses to Shareholders and proceedings and Response to ASX Price Query, small bounce compared to yesterday's carnage!

• +7.2% Weebit Nano (WBT) - No news, ditto tech stocks and Trump rally

• +6.4% Metals X (MLX) - No news, generally stronger ASX resources stocks today on hopes further China economy stimulus measures will be announced this weekend, but again…it's just another prevailing short and long term uptrend, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +6.0% Spartan Resources (SPR) - No news, gold sector bounced today after yesterday's torching, this one was particularly charcoal…

• +6.0% Pointsbet (PBH) - No news, rise is consistent with prevailing short and long term uptrends, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +5.8% Silex Systems (SLX) - No news, rise is consistent with prevailing short and long term uptrends, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +4.9% Vulcan Energy Resources (VUL) - First lithium hydroxide production at downstream plant, rise is consistent with prevailing short and long term uptrends, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +4.9% Capricorn Metals (CMM) - No news, ditto gold rebound

• +4.8% Pantoro (PNR) - No news, ditto gold rebound

• +4.7% Genesis Minerals (GMD) - No news, ditto gold rebound

• +4.5% Sigma Healthcare (SIG) - No news, continued positive response to yesterday's N, rise is consistent with prevailing short and long term uptrends, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +4.5% Zip Co. (ZIP) - No news, Trump trade beneficiary (US earnings), rise is consistent with prevailing short and long term uptrends, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +4.4% Life360 (360) - No news, Trump trade beneficiary (US earnings), rise is consistent with prevailing short and long term uptrends, also a regular in ChartWatch Daily Scans Uptrends list 🔎📈

• +4.3% Ora Banda Mining (OBM) - No news, ditto gold rebound

• +4.2% Silver Mines (SVL) - No news, ditto gold rebound

Trading lower

• -6.1% Block (SQ2) - Quarterly Report for the quarterly period ended Sept 30,2024

• -4.2% Worley (WOR) - No news, fall is consistent with prevailing short and long term downtrends, also a regular in ChartWatch Daily Scans Downtrends list 🔎📉

• -4.1% Avita Medical (AVH) - Financial Results for Quarter Ending 30 September 2024 and AVITA Medical Q3 2024 Earnings Slides

• -3.5% Jumbo Interactive (JIN) - Jumbo 2024 AGM Addresses and Trading Update and 2024 AGM Presentation, fall is consistent with prevailing short and long term downtrends, also a regular in ChartWatch Daily Scans Downtrends list 🔎📉

• -3.2% Domain Australia (DHG) - No news since 6 Oct AGM Addresses and Presentation, a few negative broker reports have followed, fall is consistent with prevailing short and long term downtrends, also a regular in ChartWatch Daily Scans Downtrends list 🔎📉

• -2.3% Kelsian Group (KLS) - No news, fall is consistent with prevailing short and long term downtrends, also a regular in ChartWatch Daily Scans Downtrends list 🔎📉

• -2.1% Karoon Energy (KAR) - No news, fall is consistent with prevailing short and long term downtrends, also a regular in ChartWatch Daily Scans Downtrends list 🔎📉

Broker Notes

• ANZ Group (ANZ)

  • Retained at sell at Citi; Price Target: $25.00

  • Retained at buy at UBS; Price Target: $32.00

• BHP Group (BHP)

  • Retained at neutral at UBS; Price Target: $43.00 from $42.00

• Breville Group (BRG)

  • Retained at neutral at Citi; Price Target: $36.51

  • Retained at overweight at Morgan Stanley; Price Target: $35.00

  • Retained at accumulate at Ord Minnett; Price Target: $33.00

• Domino's Pizza Enterprises (DMP)

  • Retained at buy at Citi; Price Target: $37.50

• Goodman Group (GMG)

  • Upgraded to neutral from sell at UBS; Price Target: $38.45 from $35.21

• James Hardie Industries (JHX)

  • Retained at buy at UBS; Price Target: $56.50 from $57.50

• Lotus Resources (LOT)

  • Retained at buy at Canaccord Genuity; Price Target: $0.42 from $0.54

• National Australia Bank (NAB)

  • Retained at hold at CLSA; Price Target: $34.20 from $34.90

  • Retained at overweight at Jarden; Price Target: $37.00

  • Retained at overweight at JP Morgan; Price Target: $35.50 from $35.00

  • Retained at underperform at Macquarie; Price Target: $32.50

  • Retained at overweight at Morgan Stanley; Price Target: $38.40 from $38.00

  • Retained at reduce at Morgans; Price Target: $29.45 from $31.48

  • Retained at lighten at Ord Minnett; Price Target: $33.00

• Nine Entertainment (NEC)

  • Retained at buy at UBS; Price Target: $1.65 from $1.80

• NIB (NHF)

  • Retained at neutral at Citi; Price Target: $6.55

• News Corporation (NWS)

  • Retained at neutral at UBS; Price Target: $47.30 from $47.10

• Orora (ORA)

  • Retained at neutral at Citi; Price Target: $2.80

• Propel Funeral Partners (PFP)

  • Retained at outperform at Macquarie; Price Target: $7.00 from $6.98

  • Retained at overweight at Morgan Stanley; Price Target: $6.40

  • Retained at accumulate at Ord Minnett; Price Target: $6.30

• QBE Insurance Group (QBE)

  • Retained at neutral at Macquarie; Price Target: $17.10

• REA Group (REA)

  • Retained at buy at UBS; Price Target: $263.00

• Scentre Group (SCG)

  • Retained at overweight at Morgan Stanley; Price Target: $4.35

• Steadfast Group (SDF)

  • Retained at equal-weight at Morgan Stanley; Price Target: $6.64

• Sigma Healthcare (SIG)

  • Retained at neutral at Citi; Price Target: $2.50 from $1.40

  • Retained at hold at Morgan Stanley; Price Target: $2.21 from $1.23

  • Retained at accumulate at Ord Minnett; Price Target: $2.15 from $1.40

• Smartgroup Corporation (SIQ)

  • Retained at buy at Bell Potter; Price Target: $10.00 from $9.75

• Serko (SKO)

  • Retained at buy at Citi; Price Target: $4.25 from $3.40

• Spartan Resources (SPR)

  • Retained at buy at Canaccord Genuity; Price Target: $1.70

• Suncorp Group (SUN)

  • Retained at buy at UBS; Price Target: $20.20 from $19.00

• Seven West Media (SWM)

  • Retained at sell at UBS; Price Target: $0.14 from $0.16

• Xero (XRO)

  • Retained at outperform at Macquarie; Price Target: $188.50 from $184.40

Scans