Evening Wrap: ASX 200 dips ahead of critical China stimulus meeting tomorrow, gold stocks pop as iron ore stocks drop

The S&P/ASX 200 closed 8.5 points lower, down 0.10%.

It was a day of few major drivers and few major stock-specific moves – at least in those stocks likely to have an impact on the indices. It really felt like the big fund managers didn't want to commit in any great way one way or the other ahead of the China Ministry of Finance meeting tomorrow at which we may or may not hear of further economic stimulus measures.

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 Resources Index (XJR) and Gold in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 8.5 points lower at 8,214.5, smack-bang at the mid-point of the session's narrow 0.38% range. Despite the slip in the benchmark index, in the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 145 to 127.

For the week, the XJO finished up 64.5 points or 0.79% higher, 0.82% from its intraweek low and just 0.34% from its intraweek high.

The Gold (XGD) (+2.0%) sub-index was the best performing sector today, likely in response to nice rise in the gold price overnight and similar strong follow through in Asian trade today.

There was a long way between the XGD’s performance and the next few-best gainers including Energy (XEJ) (+0.36%), Utilities (XUJ) (+0.36%), Health Care (XHJ) (+0.34%), and Information Technology (XIJ) (+0.24%). Much of a muchness between those in what was a largely listless and uninspiring end to the trading week!

Today's best stocks from today's best sectors

Weaker sectors were just as immobile, with none falling more than Materials (XMJ) (-0.42%). Iron ore stocks were notable laggards here, with each of majors lower.

Consumer Discretionary (XDJ) (-0.38%) was next worst, and Real Estate Investment Trusts (XPJ) also lost 0.35% – with rising market yields most likely to blame for both. Local interest rate futures have pushed out the first cut to April 2025 (was as early as February recently) and now we're looking at just three 0.25% cuts within the next 12 months (was four).

It really felt like the big fund managers didn't want to commit in any great way one way or the other ahead of the China Ministry of Finance meeting tomorrow where we may or may not hear of further economic stimulus measures. As always, I have a few of the more interesting moves in the correspondingly named section below.

Today's worst stocks from today's worst sectors

ChartWatch

Resources Sector Index (XJR)

The main issue now is whether long term trend change is occuring

The last time we covered the XJR was in ChartWatch in the Evening Wrap on 24 September.

In that update, we noted a “text-book short term trend reversal” with the following key characteristics:

✅ Return to predominance of demand-side candles

✅ Return to higher peaks and higher troughs

✅ Close above the dynamic supply at the short term trend ribbon

✅ Short term trend ribbon transitions from acting as dynamic supply to acting as dynamic demand

In order to confirm the reversal of the long term trend, however, we ideally want to see only very shallow pullbacks, and then for the long term trend ribbon to transition from acting as dynamic supply to acting as dynamic demand.

What do you think? Do we have checks in those important boxes?

Has the pullback since the 30 Sep peak been “shallow”? Is the long term trend ribbon now acting as a zone of dynamic demand?

Check the long downward pointing shadow on the 4 Oct candle. It is a solid manifestation of latent demand at the long term trend ribbon. But! Next not the 8-9 Oct supply-side candles – they’re hardly inspiring…

Yesterday’s (10 Oct) demand-side candle helps, and also note it almost-nearly touched the short term trend ribbon – showing that ribbon is indeed doing its job of acting as a zone of dynamic demand.

In summary, there are some mixed signs of the demand side’s resolve in making this new rally stick. Also, that the supply side is providing a credible threat via candles. It’s not an emphatic demand-side showing just yet.

I’ll be watching the candles and price action closely from here to determine whether the demand side can retain control of the price. White-bodied candles and or downward pointing shadows, particularly around the trend ribbons, would be a positive – as would the setting of a higher trough above the long term trend ribbon.

Conversely, I’d be most concerned about a lower peak to the 30 Sep peak being set, especially if it occurs on a couple of nasty supply-side candles (i.e., black bodied and or upward pointing shadows).

We’re in a little bit of limbo at the moment, and I always prefer to let the market tell me which way it wants to go before further committing funds.

Gold Futures (Front month, back-adjusted) COMEX

Impeccable

The last time we covered gold was in ChartWatch in the Evening Wrap on 2 October.

In that update, I said I would stick with gold’s “impeccable short and long term trends”. I see no reason to alter course here, particularly as the price action shows demand continues to reside within the short term uptrend ribbon.

That ribbon, and the newly formed 2618.8 trough provide us with clear delineators between short term uptrend and neutrality. 2708.70 caps as a point of likely supply. The pullback from that point to 2618.8 appears modest compared to the last push from 2502.7.

If there is major top in the gold price in the offing – I can’t see it. But don’t take that as any major vote of confidence, because by definition, my brand of technical analysis doesn’t prognosticate. It can only react to candles, price action and interactions with points of demand and supply – and none of those indicate a great deal of supply-side control right now.

Economy

Today

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

Later this week

Friday

• 23:30 USA Core PPI September (+0.2% m/m for 2.5% p.a. forecast vs +0.3% m/m for 2.5% p.a. in August)

Saturday

• 01:00 USA Prelim UoM Consumer Sentiment September (70.5 forecast vs 70.1 August)

Latest News

Interesting Movers

Trading higher

• +11.1% PYC Therapeutics (PYC) - Annual Report to shareholders, rise is consistent with prevailing short and long term uptrends (those trends have made it a regular in ChartWatch Scans Uptrends lists) 🔎📈

• +9.7% Cettire (CTT) - No news, rise is consistent with prevailing short term uptrend, closed above long term trend ribbon 🔎📈

• +9.5% Austal (ASB) - FY2024 ESG Report, rise is consistent with prevailing short and long term uptrends 🔎📈

• +7.8% Vault Minerals (VAU) - No news, generally stronger ASX gold sector today on rising gold price (see today's ChartWatch section above for gold price technical analysis)

• +5.3% Siteminder (SDR) - Upgraded to buy from overweight at Jarden and price target increased to $7.48 from $5.89, rise is consistent with prevailing short and long term uptrends (those trends have made it a regular in ChartWatch Scans Uptrends lists) 🔎📈

• +4.7% Mesoblast (MSB) - Change in substantial holding (increase), rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.4% Ioneer (INR) - No news, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up (which got it a spot for the first time in today's ChartWatch Scans Uptrends list) 🔎📈

• +4.3% Regis Resources (RRL) - Retained at buy at Bell Potter and price target increased to $2.48 from $2.02, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up (also in today's ChartWatch Scans Uptrends list) 🔎📈

• +4.0% Opthea (OPT) - No news, rise is consistent with prevailing short and long term uptrends (those trends have made it a regular in ChartWatch Scans Uptrends lists) 🔎📈

Trading lower

• -4.0% Pantoro (PNR) - No news, conspicuous by its absence from the broader ASX gold sector rally today…🤔

• -3.9% Botanix Pharmaceuticals (BOT) - No news, fall is consistent with lower peaks and lower troughs, short term trend ribbon has turned down

• -2.8% Droneshield (DRO) - No news, fall is consistent with lower peaks and lower troughs, short term trend ribbon appears close to turning down

• -2.7% Zip Co. (ZIP) - No news, has had a tremendous run lately…particularly this week...Friday profit taking? 🤔

• -2.4% Light & Wonder (LNW) - No news, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down, being repelled by both the short and long term trend ribbons 🔎📉

• -2.2% WA1 Resources (WA1) - No news, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down 🔎📉

Broker Notes

• ANZ Group (ANZ)

  • Retained at underperform at Macquarie; Price Target: $26.50

• Eagers Automotive (APE)

  • Retained at add at Morgans; Price Target: $14.00 from $14.10

• Bendigo and Adelaide Bank (BEN)

  • Retained at underperform at Macquarie; Price Target: $9.50

• Boss Energy (BOE)

  • Retained at buy at Bell Potter; Price Target: $5.70

• Bank of Queensland (BOQ)

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

• Commonwealth Bank of Australia (CBA)

  • Retained at underperform at Macquarie; Price Target: $95.00

• Guzman y Gomez (GYG)

  • Retained at sell at Goldman Sachs; Price Target: $33.20

  • Retained at overweight at Morgan Stanley; Price Target: $38.50

  • Retained at hold at Morgans; Price Target: $41.40 from $37.70

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

• Insurance Australia Group (IAG)

  • Retained at outperform at Macquarie; Price Target: $8.00

• IPD Group (IPG)

  • Retained at buy at Bell Potter; Price Target: $6.20 from $6.00

• Judo Capital (JDO)

  • Retained at underperform at Macquarie; Price Target: $1.60

• Lunnon Metals (LM8)

  • Retained at buy at Shaw and Partners; Price Target: $0.60

• Arcadium Lithium (LTM)

  • Downgraded to hold from add at Morgans; Price Target: $8.60 from $5.40

  • Downgraded to hold from buy at Ord Minnett; Price Target: $8.60 from $5.70

• National Australia Bank (NAB)

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

• Netwealth Group (NWL)

  • Retained at hold at Bell Potter; Price Target: $26.00 from $23.90

  • Retained at neutral at Citi; Price Target: $27.00 from $20.45

  • Retained at underperform at Jefferies; Price Target: $21.16 from $18.15

  • Retained at underweight at JP Morgan; Price Target: $18.50 from $15.50

  • Retained at neutral at Macquarie; Price Target: $26.50 from $21.00

  • Retained at overweight at Morgan Stanley; Price Target: $23.50

  • Downgraded to neutral from buy at UBS; Price Target: $28.00 from $24.00

• Peter Warren Automotive (PWR)

  • Retained at hold at Morgans; Price Target: $1.80 from $1.86

• QBE Insurance Group (QBE)

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

• Rio Tinto (RIO)

  • Retained at buy at Jefferies; Price Target: $143.00

  • Retained at buy at Ord Minnett; Price Target: $133.00

• Regal Partners (RPL)

  • Retained at buy at Bell Potter; Price Target: $4.85 from $4.97

• Regis Resources (RRL)

  • Retained at buy at Bell Potter; Price Target: $2.48 from $2.02

• Siteminder (SDR)

  • Upgraded to buy from overweight at Jarden; Price Target: $7.48 from $5.89

• Supply Network (SNL)

  • Initiated at positive at E&P; Price Target: $34.16

• Suncorp Group (SUN)

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

• Westpac Banking Corporation (WBC)

  • Retained at underperform at Macquarie; Price Target: $26.00

• Woodside Energy Group (WDS)

  • Downgraded to neutral from outperform at Macquarie; Price Target: $27.00 from $33.00

Scans