Market Wraps

Evening Wrap: ASX 200 defends June lows, iron ore stocks bounce led by Fortescue

Tue 27 Sep 22, 5:22pm (AEST)

The S&P/ASX 200 closed 27 points higher, up 0.41%.

Crisis averted. But not really. The local sharemarket has narrowly avoided a fresh year-to-date low as Monday's losers turned into Tuesday's winners. Materials and Energy stocks bounced as commodity prices stabilised.

Let's get into it.


ASX close summary
ASX 200, All Ords and All Tech intraday overview

Markets

The ASX 200 managed to defend June lows with a small bounce, closing towards session highs.

  • 5 out of 11 sectors advanced

  • Materials and Energy sectors bounced following a sharp selloff on Monday

  • Tech, Discretionary and Staples were also green

  • Defensive and rate sensitive sectors including Utilities, Telecommunications and REITs underperformed

  • 55% of the Top 200 companies declined

Announcements

  • Talga Group (ASX: TLG) +19.4% signed a non-binding offtake deal with European battery maker Automotive Cells Company SE for 60,000 tonnes of battery anodes over a 5-year term

    • Automotive Cells is co-owned by Mercedes-Benz and Stellantis 

  • Sayona (ASX: SYA) +4.6% awarded a four-year, approximately C$200m contract to Quebec company L. Fournier & Fils for mining operations  

  • Core Lithium (ASX: CXO) -5.6% said preparations are underway for its first shipment of spodumene from its Finniss Project before year end 2022. Ongoing exploration activities have posted some solid hits and expected to result in an increase in mineral resources

  • Synlait Milk (ASX: SM1) -4.4% FY22 revenues rose 21% to $1.66bn driven by higher ingredient prices and volumes. Net profits came in at $38.5m from a -$28.5m loss a year ago

    • Synlait CEO: “We intend to exit FY23 and enter FY24 with a similar level of profitability experienced before FY21.” (Which was $70-80m)

 Quick bites 

  • UK Government bond yields soared and the pound dived after Chancellor Kwasi Kwarteng unveiled tax cuts worth 45 bln pounds a year (Reuters)

  • Chinese regulators told fund managers and brokers to avoid massive equity sales ahead of next month's CCP meeting (Reuters)

  • Only 3% of stocks in the S&P 500 closed above their 50-day moving average overnight, a reading more oversold than 99% of historical data points, according to Charlie Bilello

S&P 500 moving average breadth
Source: Charlie Bilello, StockCharts
  • NAB online spending shows an ongoing downtrend as people return leisure and dining

NAB online and retail spend
Source: NAB

Economy

  • Australian consumer confidence increase 2.1% week-on-week to 87.8 for the week ended 25 September, according to ANZ and Roy Morgan

    • Consumer confidence has reached its highest level since late May

    • Weekly inflation expectations fell sharply by 0.6 percentage points to 5.0%, the lowest since mid-February

    • "The increase in headline confidence was mainly driven by improved sentiment around Australia’s economic conditions. Continued strength despite 225 bps of rate hikes over the past five months may be quelling fears of a sharp downturn," said ANZ Senior Economist, Catherine Birch

    • ANZ said spending data showed that household spending was solid in the first-half of September, including on discretionary goods and services

Commodities 

  • Iron ore futures on China’s Dalian Commodity Exchange rose 1.2%

  • Copper prices rose 1.1% to US$3.33/lb after falling -5.1% in the previous two sessions

  • Brent crude oil rose 1.8% to US$85.4 a barrel after a -7.1% dip in the previous two sessions


Latest news


Scans

Top Gainers

Code Company Last % Chg
MGA Metalsgrove Minin... $0.23 +119.05%
DUN Dundas Minerals Ltd $0.605 +42.35%
CMG Critical Minerals... $0.28 +40.00%
BTR Brightstar Resour... $0.022 +37.50%
RAS Ragusa Minerals Ltd $0.405 +26.56%
View all top gainers

Top Fallers

Code Company Last % Chg
RFR Rafaella Resource... $0.03 -21.05%
CLB Candy Club Holdin... $0.048 -20.00%
WNR Wingara AG Ltd $0.053 -18.46%
DEL Delorean Corporat... $0.063 -18.18%
M24 Mamba Exploration... $0.12 -17.24%
View all top fallers

52 Week Highs

Code Company Last % Chg
MGA Metalsgrove Minin... $0.23 +119.05%
DUN Dundas Minerals Ltd $0.605 +42.35%
CMG Critical Minerals... $0.28 +40.00%
RAS Ragusa Minerals Ltd $0.405 +26.56%
LIN Lindian Resources... $0.325 +8.33%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
CLB Candy Club Holdin... $0.048 -20.00%
DEL Delorean Corporat... $0.063 -18.18%
SKO Serko Ltd $2.60 -14.47%
KRR King River Resour... $0.012 -14.29%
HT8 Harris Technology... $0.019 -13.64%
View all 52 week lows

Near Highs

Code Company Last % Chg
HBRD Betashares Active... $10.15 +0.20%
CGFPC Challenger Ltd $105.65 -0.10%
DUN Dundas Minerals Ltd $0.605 +42.35%
BILL Ishares Core Cash... $100.36 0.00%
IIND Betashares India ... $10.31 +0.59%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
SMLL Betashares Aust S... $3.14 0.00%
INES Intelligent Inves... $2.93 +0.34%
RHC Ramsay Health Car... $57.02 -3.49%
SLR Silver Lake Resou... $1.03 +0.98%
IKO Ishares MSCI Sout... $76.67 -0.33%
View all RSI oversold

Post market charts

Tuesday's Morning Wrap talked about how things were getting very oversold via indicators such as McClellan Oscillator, Relative Strength Index etc. And how it doesn't necessarily mean a bounce is imminent but still, stretched to the downside.

Broad-based selloffs has pushed several global indices and commodities back to June lows, where we begin looking at those price points as areas of support. Or in trader terms: A double bottom.

S&P/ASX 200: Alas, a green candle. Somewhat of a continuation from Monday's bounce. Perhaps the beginning of a relief rally? Its not uncommon to see powerful rallies in the midst of a bear market, where things turn contrarian bullish and shorts are covered. However, we've seen plenty of rallies this year that last for a few days or weeks, only to plummet back to fresh lows. Volatility remains high and caution is warranted.

XJO chart
XJO chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Energy: Bounced off the 200-day moving average after breaching it for the first time since 6 January. Energy stocks have held up relatively well compared to oil prices, which dipped close to year-to-date lows. However, since early June, all the oil price rallies have fizzled. The Energy Index has a lot of work cut out following such a downward fall.

XEJ chart
XJO chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Materials: Mustered up some support around June lows and last November lows. Iron ore prices have remained resilient as other base metals and oil prices tumbled. S&P Global expect China's manufacturing steel demand rebounded in August and expects conditions to improve further in September and October thanks to higher seasonal manufacturing activity.

XMJ chart
XMJ chart (Source: TradingView, Annotations by Market Index)

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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