Evening Wrap: ASX 200 claws back from early-morning abyss as resources, energy stem broader market selling

It was a down day, probably your portfolio took a bit of a beating, but it could have been much, much worse.

So, let's look at the bright side of life as we exit the second losing week in a row on the Aussie stock market. We were just making record highs...weren't we? 🤔

It wasn't all doom and gloom today. Energy and Resources stocks actually did very well for the most part. Elsewhere, gold stocks pulled back (nothing goes up in a straight line) and Health Care continued to be dogged by a slumping CSL price.

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 Australian Bonds in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 41.2 points lower at 8,118.8, 0.69% from its session low and 0.51% from its high. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 86 to 192.

For the week, the XJO finished down 92.5 points or 1.13% lower, 1.89% from its intraweek high and 0.69% from its intraweek low.

It hasn’t been often in 2024 I’ve been able to say that Energy (XEJ) (+1.1%) and Resources (XJR) (+0.53%) stocks were the strongest performers during a trading session. Not only is this the case today, but it occurred in a session where every other major ASX sector was down.

A rally in crude oil prices helped Energy, while generally stronger iron ore stocks drove Resources. Iron ore prices are down in Singapore today, but I note some very good data out today on the Chinese manufacturing sector likely provided assistance here (see Economy section for more details).

Today’s best performing Energy and Resources stocks

Doing it tough today were interest rate sensitives like Financials (XFJ) (-0.92%), Consumer Discretionary (XDJ) (-0.73%), and Information Technology (XIJ) (-0.43%), but I note Health Care (XHJ) (-1.1%) also continues to disappoint.

If you’ve been keeping an eye on my ChartWatch Daily Scans Downtrends lists, you’ll now that the XHJ’s biggest stock CSL (ASX: CSL) (-1.9%) has been struggling of late. The fifth biggest stock, Cochlear (ASX: COH) (+0.65%) has also been a regular in those Downtrends lists since August, and seventh biggest Ramsay Health Care (ASX: RHC) (-2.2%) has basically been a permanent feature (run as a Feature Chart 23 times since Daily Scans started at the end of May!📉📉📉).

Ramsay Health Care (RHC) price chart – sometimes the trend isn’t your friend (well, if you choose to ignore it, that is!) (click here for full size image)

If we add in sub-sectors, then technically, the Gold (XGD) (-1.7%) sub-index was the worst performer today. Part probably an overdue pullback here, but mostly a dip in the gold price overnight. Nothing goes up in a straight line - but a decent supply-side showing in that 31 Oct candle nonetheless. Some recoupment in Asian trade though...

Gold Futures (Front month, back-adjusted) COMEX

Today’s worst performing stocks from the worst performing

ChartWatch

S&P/ASX 200 (XJO)

Not great but could have been much, much worse today (click here for full size image)

The last time we covered XJO was in ChartWatch in the Evening Wrap on 23 October.

That was the day after we logged 22 October’s long black candle, which I described in that update as “a credible threat to the prevailing demand-side environment”.

I also noted that the 23 October candle’s muted response signalled somewhat of a changing of the demand-supply dynamics: “I get the feeling the bulls are taking a back seat here. I think they know they’ve got some time, and probably also that the supply side is a little more motivated this time than the last few times.”

I remarked it was essential that we quickly regained at least 50% of the 22 October supply event to maintain upward momentum. Unfortunately, that did not occur.

The 8183 point of demand fell in Wednesday’s supply-side showing, and today, the critical 8107 point of demand was tested – but not lost! We just held on, and the downward pointing shadows is going to be critical in determining what’s going to happen next for stocks (Hint: you’ll need to read the next section for an explanation of what’s going on with respect to today’s bounce from the 8063 low).

Downward pointing shadows indicated latent excess demand. They are consistent with buy the dip, they are consistent with a bull market. It’s a smally win in what is otherwise a growing set of supply-side-oriented technicals.

The dynamic demand usually afforded by short term trend ribbon has also been eclipsed, and the ribbon itself has neutralised (orange). That short term ribbon now transitions to supply, and 8273-8385 is shaping as a well-fortified zone of excess supply.

We should remember the long term uptrend is very much intact here. There is no question at all about that. 8107-8149 appears to be holding – just – and just for now. If it goes (confirmed by a close below today’s low of 8063), then a test of the dynamic demand we naturally expect within the long term uptrend ribbon is the most likely scenario.

The top of the long term uptrend ribbon is currently 7956 (and rising gradually). I also note the static points of demand 7918-7951 kick in not far below, making 7918-56 a crucial line in the sand between bull and bear.

The present technicals on the XJO are consistent with short term neutrality, but justifiable long term bullishness. Investors may wish to adjust their risk accordingly.

Australian 10-year Government Bond

Risk-free ramifications... (click here for full size image)

The last time we covered bond yields was in ChartWatch in the Evening Wrap on 28 October.

In that update, we lamented the steady and sizeable increase in both local and overseas risk-free yields. It’s one of the simplest, and probably the oldest equations in financial markets: When risk-free yields go up, the price of risky assets usually go down.

To be fair, on that day, I also covered the NASDAQ Composite index which had just tickled a new all time high. I discussed some of the reasons why US stocks had managed to dodge the bullet so far (higher yields reflected a reassessment of economic conditions (better), and therefore likely indicated better earnings for stocks).

But I did make a point to warn you that higher market yields “must at some point begin to have a substantial negative impact on the ability of share prices to continue to rise.” It looks like we just reached that point.

The chart above shows that at one point today, the yield on the Australian 10-year Government Bond tipped 4.61% - their highest level in two weeks short of a year. Aussie 2’s look even more aggressive (chart below)

Australian 2-year Government Bond (click here for full size image)

Stocks simply cannot withstand the kind of barrage in relative risk-free return you’re seeing in this most recent ascent. Something had to give.

There is a glimmer of hope in that today’s candle shows a reasonably long upward pointing shadow. Some demand for bonds kicked in (remember bond prices and bond yields have an inverse relationship). It’s also likely no coincidence that the upward pointing shadow here correlates perfectly with the downward pointing shadow on the XJO.

To put it as simply as I can: If you want your stocks to go back up, you’ll need to will this chart down!

(I will leave you to your weekend with this final point: Yes, clearly what’s happening in the bond market is causing some wobbles in the stock market, but one must consider the massive rally in risk-free yields really has only put a tiny dent in the overall stock bull market. My tip is that as yields stabilise, stocks will find their footing again (they don’t need to come down for stocks to recover – they only need to stop going up!). As always, I’ve given you some great technical levels to watch out for to determine if things are going from bad to good again – or if they’re going from bad to worse!).

Economy

Today

• CHN Caixin Manufacturing PMI October

  • 50.3 vs 49.7 forecast and 49.3 in September

  • Readings above 50.0 indicate growth, so this result showed growth in the Chinese manufacturing sector in October - only the second month of growth so far in 2024. The reading was also better than economists were expecting.

Later this week

Friday

• 00:30 USA Non Farm Payrolls September

  • Employment change: 111,000 forecast vs 254,000 in August

  • Average hourly earnings: +0.3% m/m forecast vs +0.4% m/m in August

  • Unemployment rate: 4.1% forecast, no change vs August

Saturday

• 01:00 USA ISM Manufacturing PMI September (47.5 forecast vs 47.2 in August)

Latest News

Interesting Movers

Trading higher

• +8.9% Pointsbet (PBH) - Continued positive response to 31 Oct Q1 FY25 Appendix 4C and Activities Investor Presentation, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch Daily Scans Uptrends lists 🔎📈

• +5.2% Talga Group (TLG) - Talga to relocate Group CFO role to Europe, but also 31 Oct Quarterly Activities/Appendix 5B Cash Flow Report and Supreme Court dismisses mine environmental appeals

• +4.8% Champion Iron (CIA) - Half-Year Report, Investor Presentation Q2 FY2025, and Quarterly Activities Report , 2 x retained BUY and 1 x upgrade to BUY - See Broker Moves section below for more details.

• +4.2% Catapult Group International (CAT) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch Daily Scans Uptrends lists 🔎📈

• +3.1% SRG Global (SRG) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch Daily Scans Uptrends lists 🔎📈

• +3.1% Mineral Resources (MIN) - Quarterly Activities/Appendix 5B Cash Flow Report, several price target increases from the brokers, and 1 x upgrade to OUTPERFORM - See Broker Moves section below for more details.

• +3.0% Iperionx (IPX) - U.S. Annual Report, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch Daily Scans Uptrends lists 🔎📈

• +3.0% Capricorn Metals (CMM) - Capricorn Raises $200m to Underpin Growth, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch Daily Scans Uptrends lists 🔎📈

Trading lower

• -6.5% Cettire (CTT) - No news, fall is consistent with prevailing short and long term downtrends, back in ChartWatch Daily Scans Downtrends list this week 🔎📈

• -6.3% The Star Entertainment Group (SGR) - No news, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch Daily Scans Downtrends lists 🔎📈

• -4.8% Corporate Travel Management (CTD) - Investors still reacting to 31 Oct Managing Director AGM Presentation and Market Update, several price target cuts from the brokers today and 1 x rating downgrade to HOLD - See Broker Moves section below for more details.

• -4.5% Austal (ASB) - CEO Presentation 2024 AGM

• -4.5% Genesis Minerals (GMD) - No news, generally weaker ASX gold sector today on pullback in gold price overnight

• -4.5% Integral Diagnostics (IDX) - AGM - CEO Address and Presentation and Ceasing to be a substantial shareholder

• -4.3% Amcor (AMC) - Q1 2025 Results

• -3.9% Audinate Group (AD8) - No news, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch Daily Scans Downtrends lists 🔎📈

• -3.8% Spartan Resources (SPR) - Ditto generally weaker ASX gold sector today

• -3.7% Westgold Resources (WGX) - Westgold Files New Technical Reports, but also 31 Oct September 2024 Quarterly Results, and ditto generally weaker ASX gold sector today

• -3.6% Macquarie Group (MQG) - Macquarie Group 1H25 Presentation and Macquarie Group 1H25 Management Discussion and Analysis

Broker Notes

• AGL Energy (AGL)

  • Retained at overweight at Morgan Stanley; Price Target: $12.88

  • Downgraded to accumulate from buy at Ord Minnett; Price Target: $11.20

• Aeris Resources (AIS)

  • Retained at outperform at Macquarie; Price Target: $0.25 from $0.24

• Amcor (AMC)

  • Retained at neutral at Citi; Price Target: $17.00

  • Retained at outperform at Macquarie; Price Target: $16.50

  • Retained at neutral at UBS; Price Target: $16.65

• ARB Corporation (ARB)

  • Retained at buy at Citi; Price Target: $50.00

• Airtasker (ART)

  • Retained at add at Morgans; Price Target: $0.52

• AUB Group (AUB)

  • Retained at outperform at Macquarie; Price Target: $34.20

• Australian Vanadium (AVL)

  • Retained at buy at Shaw and Partners; Price Target: $0.08

• BHP Group (BHP)

  • Retained at overweight at Morgan Stanley; Price Target: $46.85

• Boss Energy (BOE)

  • Retained at outperform at Macquarie; Price Target: $4.60

• Bubs Australia (BUB)

  • Retained at buy at Bell Potter; Price Target: $0.15 from $0.15

• Charter Hall Group (CHC)

  • Retained at outperform at Macquarie; Price Target: $15.43

• Champion Iron (CIA)

  • Retained at buy at Bell Potter; Price Target: $7.10 from $7.15

  • Upgraded to buy from hold at Canaccord Genuity; Price Target: $6.25 from $6.00

  • Retained at buy at Citi; Price Target: $6.80 from $7.20

• Chorus (CNU)

  • Retained at outperform at Macquarie; Price Target: NZ$9.38 from NZ$8.67

• Cochlear (COH)

  • Upgraded to neutral from underperform at Macquarie; Price Target: $289.00 from $283.00

• Coles Group (COL)

  • Retained at buy at Bell Potter; Price Target: $20.50 from $21.55

  • Retained at buy at Citi; Price Target: $21.00

  • Retained at hold at CLSA; Price Target: $17.90 from $17.60

  • Retained at neutral at Goldman Sachs; Price Target: $18.50 from $19.10

  • Retained at neutral at Jarden; Price Target: $16.90 from $17.10

  • Retained at hold at Jefferies; Price Target: $18.00 from $18.50

  • Retained at outperform at Macquarie; Price Target: $19.50 from $20.20

  • Retained at equal-weight at Morgan Stanley; Price Target: $18.00

  • Retained at hold at Morgans; Price Target: $17.95 from $19.20

  • Upgraded to accumulate from hold at Ord Minnett; Price Target: $19.50 from $19.00

  • Retained at buy at UBS; Price Target: $20.00

• Computershare (CPU)

  • Retained at outperform at Macquarie; Price Target: $28.00

• Corporate Travel Management (CTD)

  • Retained at buy at Citi; Price Target: $13.90 from $13.50

  • Retained at neutral at Macquarie; Price Target: $13.36 from $13.31

  • Retained at overweight at Morgan Stanley; Price Target: $17.00

  • Downgraded to hold from add at Morgans; Price Target: $13.50 from $15.95

  • Retained at buy at Shaw and Partners; Price Target: $15.90

• Cedar Woods Properties (CWP)

  • Retained at buy at Bell Potter; Price Target: $7.20 from $7.15

  • Retained at add at Morgans; Price Target: $6.70 from $6.50

• Calix (CXL)

  • Retained at buy at Shaw and Partners; Price Target: $2.00 from $3.00

• Dalrymple Bay Infrastructure/Notes (DBI)

  • Retained at add at Morgans; Price Target: $3.50 from $3.28

• Domino's Pizza Enterprises (DMP)

  • Retained at neutral at Macquarie; Price Target: $35.00

• Downer EDI (DOW)

  • Retained at neutral at Macquarie; Price Target: $5.77

• DUG Technology (DUG)

  • Retained at buy at Shaw and Partners; Price Target: $3.50

• Emerald Resources (EMR)

  • Retained at buy at Canaccord Genuity; Price Target: $5.00

• Electro Optic Systems (EOS)

  • Retained at buy at Bell Potter; Price Target: $2.20 from $0.13

  • Retained at buy at Ord Minnett; Price Target: $2.80

• Frontier Digital Ventures (FDV)

  • Retained at buy at Bell Potter; Price Target: $0.70

• Firefly Metals (FFM)

  • Retained at buy at Shaw and Partners; Price Target: $1.90

• Fluence Corporation (FLC)

  • Retained at hold at Bell Potter; Price Target: $0.10 from $0.13

• Flight Centre Travel Group (FLT)

  • Retained at outperform at Macquarie; Price Target: $23.34

• Goodman Group (GMG)

  • Retained at overweight at Morgan Stanley; Price Target: $42.40

• Genetic Signatures (GSS)

  • Retained at buy at Bell Potter; Price Target: $1.10

• Helia Group (HLI)

  • Retained at neutral at Macquarie; Price Target: $3.80

• Harvey Norman (HVN)

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

• JB HI-FI (JBH)

  • Retained at buy at Citi; Price Target: $85.00

  • Retained at neutral at E&P; Price Target: $74.93 from $69.89

  • Retained at sell at Goldman Sachs; Price Target: $54.40 from $52.90

  • Upgraded to hold from underperform at Jefferies; Price Target: $70.00 from $61.00

  • Retained at neutral at JP Morgan; Price Target: $78.00 from $74.00

  • Downgraded to lighten from hold at Ord Minnett; Price Target: $71.00 from $68.00

  • Retained at sell at UBS; Price Target: $72.00 from $64.00

• Jumbo Interactive (JIN)

  • Retained at neutral at Macquarie; Price Target: $14.75

• Jupiter Mines (JMS)

  • Retained at outperform at Macquarie; Price Target: $0.22

• Microba Life Sciences (MAP)

  • Retained at buy at Bell Potter; Price Target: $0.35 from $0.77

• Macquarie Technology Group (MAQ)

  • Retained at overweight at Morgan Stanley; Price Target: $100.00

  • Upgraded to outperform from sector perform at RBC Capital Markets; Price Target: $110.00 from $100.00

• Mineral Resources (MIN)

  • Retained at buy at Bell Potter; Price Target: $61.50 from $62.00

  • Retained at neutral at Citi; Price Target: $50.00

  • Upgraded to outperform from hold at CLSA; Price Target: $49.00 from $54.00

  • Retained at positive at E&P; Price Target: $67.00 from $67.00

  • Retained at overweight at Morgan Stanley; Price Target: $58.00 from $56.00

  • Retained at hold at Morgans; Price Target: $39.00

  • Retained at outperform at RBC Capital Markets; Price Target: $64.00 from $63.00

  • Retained at sell at UBS; Price Target: $37.00 from $35.00

• Metro Mining (MMI)

  • Retained at buy at Shaw and Partners; Price Target: $0.14

• Monadelphous Group (MND)

  • Retained at outperform at Macquarie; Price Target: $14.50

• MAD Paws (MPI)

  • Retained at outperform at Macquarie; Price Target: $10.70

• Macquarie Group (MQG)

  • Retained at neutral at UBS; Price Target: $200.00

• Northern Minerals (NTU)

  • Retained at buy at Ord Minnett; Price Target: $0.03 from $0.04

• Nuix (NXL)

  • Retained at buy at Shaw and Partners; Price Target: $7.20 from $5.20

• Nextdc (NXT)

  • Retained at outperform at Macquarie; Price Target: $21.20

  • Retained at overweight at Morgan Stanley; Price Target: $20.50

• Origin Energy (ORG)

  • Retained at buy at Citi; Price Target: $11.00

  • Retained at buy at Goldman Sachs; Price Target: $10.30 from $10.45

  • Retained at neutral at Jarden; Price Target: $9.90

  • Retained at neutral at JP Morgan; Price Target: $10.20 from $10.40

  • Retained at outperform at Macquarie; Price Target: $10.35 from $10.50

  • Retained at buy at Ord Minnett; Price Target: $11.00 from $11.20

  • Retained at buy at UBS; Price Target: $11.75

• Pointsbet (PBH)

  • Retained at hold at Bell Potter; Price Target: $0.80

• Peninsula Energy (PEN)

  • Retained at buy at Canaccord Genuity; Price Target: $0.20

  • Retained at buy at Shaw and Partners; Price Target: $0.26

• Propel Funeral Partners (PFP)

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

• Premier Investments (PMV)

  • Retained at hold at Bell Potter; Price Target: $38.00 from $34.00

• Rio Tinto (RIO)

  • Retained at overweight at Morgan Stanley; Price Target: $135.00

• RMA Global (RMY)

  • Retained at buy at Bell Potter; Price Target: $0.12 from $0.11

• The Star Entertainment Group (SGR)

  • Retained at neutral at Macquarie; Price Target: $0.24

• Strike Energy (STX)

  • Retained at neutral at Macquarie; Price Target: $0.21 from $0.22

• Syrah Resources (SYR)

  • Retained at buy at Shaw and Partners; Price Target: $0.80

• Talga Group (TLG)

  • Retained at buy at Barrenjoey; Price Target: $1.90 from $2.35

• Universal Store (UNI)

  • Retained at buy at Bell Potter; Price Target: $8.85 from $7.80

  • Downgraded to accumulate from buy at Ord Minnett; Price Target: $8.20 from $7.50

  • Retained at buy at UBS; Price Target: $9.00 from $8.00

• Wesfarmers (WES)

  • Retained at sell at Citi; Price Target: $61.00

  • Upgraded to lighten from sell at Ord Minnett; Price Target: $59.00 from $60.00

• Westgold Resources (WGX)

  • Retained at buy at Canaccord Genuity; Price Target: $4.40 from $4.30

  • Retained at outperform at Macquarie; Price Target: $3.50

  • Upgraded to buy from accumulate at Ord Minnett; Price Target: $3.85

• Wisetech Global (WTC)

  • Retained at neutral at Macquarie; Price Target: $100.00

Scans