Evening Wrap: ASX 200 creeps higher despite retail sales plunge, lithium pops, gold stops

In the absence of anything really bad happening in the last 24 hours, stocks drifted higher. I'm not complaining, I love the peace and quiet of a modest gain, but I note there were more stocks that fell than rose today and that's hardly a sign of a healthy market.

Talking about healthy, interest rate sensitive stocks like real estate and consumer discretionary were the best today (despite some terrible retail sales data for the latter), likely a result of market rates continuing to come off the boil.

Lithium stocks were also a bright spot as investors responded to yesterday's big jump in lithium carbonate futures in China (but ignored its decline today!).

The charts of both gold and silver are pulling back to respective key support points. Will they hold or will they break? Clearly, investors didn't want to wait around to find out, as they pared back holdings of gold stocks today.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished points higher at 7,664.1, 0.55% from its session low and smack-bang on its session high. Despite the convincing close in the benchmark, it's concerning to note that in the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by 125 to 153.

The Real Estate Investment Trusts (XPJ) (+0.85%) sector was the best performing sector today, likely in response to a continued decline in bond yields, which are a key determinant of the market interest rates the sector so heavily relies on for its funding.

Also highly sensitive to market interest rates is the the Consumer Discretionary (XDJ) (+0.79%) sector, it was the second best performing sector today.

Doing it tough today was the Gold (XGD) (-0.80%) sub-index, likely on the back of weakening precious metals prices. We're approaching a significant pressure point on both the gold and silver futures chart, and perhaps a few investors in gold stocks chose to square away some risk. You can read more about the gold and silver futures charts in today's ChartWatch below.

The rally in GFEX lithium carbonate fizzled today...

Perhaps the most interesting moves today were in the lithium sector, which as reported yesterday, likely got a boost from a large jump in lithium carbonate prices on GFEX. That rally fizzled today, but it didn't stop several ASX lithium stocks from logging solid gains.

I'll have a comprehensive lithium sector review for you in a dedicated ChartWatch tomorrow.

Lithium carbonate futures might have fizzled, but many lithium stocks still got a boost.

ChartWatch

Gold Futures COMEX

Gold futures daily chart

I warned you as early as 15 April about a potential blowoff top forming in the gold chart. On 23 April, I noted that a topping pattern was still playing out.

After a valiant attempt to hold the dynamic support expected at the short term uptrend ribbon, the current candle (still live) suggests gold's grip on key points of demand may be slipping.

But, it's foolish to make big calls on live candles, so I won't! I'm just giving you the heads-up that things could turn sour for gold if the current black candle grows to close below the 23 April low of 2304.6.

A close above 2362.4 is required to right the ship, but I suspect there's going to be plenty of latent supply nagging away at prices between 2363.4 and all the way up to the top of the 12 April shadow high of 2448.8.

Silver Futures COMEX

Silver futures daily chart

Like gold, silver appears to be exhibiting signs of a blow off top, but I suggest the rollover here is far more pronounced. Certainly the 30.19 peak candle of 12 April with its long upward pointing shadow, plus the long black confirmation candle on 22 April, are far more severe demonstrations of supply-side control entering the market.

26.85 is now a key point of demand. A hold here, which also coincides roughly with the dynamic support expected at the short term uptrend ribbon, could settle proceedings and set silver up for another tilt at the recent highs. In this scenario, white candles and or downward pointing shadows into 26.26-26.85 would be telltale signals of incoming demand.

Alternatively, a close below 26.85 sets 26.26 up as a last chance point of demand, as I expect below this point, a far deeper retracement to the dynamic support of the long term trend ribbon is possible.

Economy

Today

• AUS Retail Sales March (actual -0.4% vs +0.2% forecast & +0.3% February)

  • Well below expectations and second dip in four months

  • Up 0.8% year on year is anemic and points to much slower than trend GDP

  • Consumer credit data today was also slightly worse than expected

• CHN Manufacturing PMI April (actual 50.4 vs 50.3 forecast & 50.8 March) & Non-Manufacturing PMI April (actual 51.2 vs 52.2 forecast & 53.0 March)

  • Both PMIs >50 which indicates growth in each sector

  • Manufacturing slightly stronger than expected, second month of gains after contractions from September to January

  • Non-manufacturing (i.e., services) down and worse than expected which is concerning given much of recent Chinese GDP growth is from this sector

Later this week

Tuesday

• 22:30 USA Employment Cost Index March quarter (+1.0% forecast vs +0.9% December)

Wednesday

• 00:00 USA CB Consumer Confidence March (104 forecast vs 104.7 February)

Thursday

• 00:00 USA JOLTS Job Openings March (8.68 million forecast vs 8.76 million February)

• 04:00 USA Federal Reserve official cash rate, statement, and press conference (no change at 5.25-5.50%)

Friday

• 22:30 USA Non-Farm Employment Change April (+243,000 forecast vs +303,000 March); Unemployment rate April (3.8% forecast, no change); Average Hourly Earnings April (+0.3% forecast, no change)

Saturday

• 00:00 USA ISM Services PMI April (52.0 forecast vs 51.4 March)

Latest News

Interesting Movers

Trading higher

• +9.4% Clarity Pharmaceuticals (CU6) - Quarterly Activities/Appendix 4C Cash Flow Report plus Complete response with Cu-67 SAR-bisPSMA, rise is consistent with prevailing long term uptrend, closed back above short term uptrend ribbon 🔎📈

• +8.4% Arcadium Lithium (LTM) - No news, tracked a similar move in its NYSE listing, generally stronger lithium sector today following yesterday's rally in lithium futures as reported in yesterday's Evening Wrap

• +8.3% Ioneer (INR) - US$25M Placement to move Project through to FID plus March 2024 - Quarterly Activities Report, generally stronger lithium sector today following yesterday's rally in lithium futures as reported in yesterday's Evening Wrap

• +7.3% IGO (IGO) - March 2024 Quarter Results Presentation, generally stronger lithium sector today following yesterday's rally in lithium futures as reported in yesterday's Evening Wrap

• +6.1% Imugene (IMU) - Quarterly Activities/Appendix 4C Cash Flow Report

• +5.8% Nexgen Energy (NXG) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.3% Aurelia Metals (AMI) - No news, stronger copper price on LME Monday, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.3% Arafura Rare Earths (ARU) - Quarterly Activities Report and Appendix 5B

• +5.1% Wildcat Resources (WC8) - No news, generally stronger lithium sector today following yesterday's rally in lithium futures as reported in yesterday's Evening Wrap

Trading lower

• -8.8% Mesoblast (MSB) - Quarterly Activities/Appendix 4C Cash Flow Report

• -7.5% Worley (WOR) - Sidara (formerly Dar Group) share sale in Worley

• -6.3% Jupiter Mines (JMS) - March 2024 Quarterly Activities Report

• -5.7% Silver Mines (SVL) - Quarterly Activities/Appendix 5B Cash Flow Report

• -4.3% Megaport (MP1) - Continued negative response to yesterday's FY24 EBITDA Guidance Upgrade, closed below short term trend ribbon 🔎📉

• -3.6% Kingsgate Consolidated (KCN) - Quarterly Activities/Appendix 5B Cash Flow Report

• -3.4% Firefly Metals (FFM) - Quarterly Activities/Appendix 5B Cash Flow Report

Broker Notes

Articore Group (ATG)

• Retained at neutral at UBS; Price Target: $0.53 from $0.65

Burgundy Diamond Mines (BDM)

• Retained at buy at Bell Potter; Price Target: $0.35 from $0.40

Computershare (CPU)

• Upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $29.70 from $24.50

Core Lithium (CXO)

• Upgraded to neutral from underweight at Macquarie; Price Target: $0.15

Coventry Group (CYG)

• Retained at buy at Bell Potter; Price Target: $1.90 from $1.80

Fortescue (FMG)

• Retained at sell at Bell Potter; Price Target: $20.63 from $21.94

Johns Lyng Group (JLG)

• Retained at hold at Bell Potter; Price Target: $6.20 from $6.30

Microba Life Sciences (MAP)

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

Nickel Industries (NIC)

• Initiated at buy at UBS; Price Target: $1.10

Monash IVF Group (MVF)

• Upgraded to overweight from marketweight at Wilsons; Price Target: $1.58 from $1.45

Smartgroup Corporation (SIQ)

• Initiated at buy at Barrenjoey; Price Target: $11.00

Technology One (TNE)

• Retained at neutral at UBS; Price Target: $16.40

TPG Telecom (TPG)

• Upgraded to outperform from underperform at CLSA; Price Target: $5.00 from $4.90

• Upgraded to overweight from neutral at JP Morgan; Price Target: $5.10

Vicinity Centres (VCX)

• Upgraded to overweight from neutral at Barrenjoey; Price Target: $2.20 from $2.15

WA Resources (WA1)

• Upgraded to buy from hold at Argonaut Securities; Price Target: $22.88 from $10.23

Scans