Evening Wrap: ASX 200 dips as AusGov shells out for small critical minerals stocks, Gina for Lynas, gold shines

Aussie shares dipped into the red by the close but there were some bright spots. Renascor Resources (ASX: RNU) and Alpha HPA (ASX: A4N) both received Australian Government grants to support their respective critical minerals projects.

Elsewhere, WA zillionaire Gina Rinehart continued her buying spree in any stock she feels is in the business of producing critical minerals. This time it was rare earths major Lynas Rare Earths (ASX: LYC).

Gold stocks regained their shine after two days of losses, and the gold sector remains the best performing among the major ASX indices. For details on all of the above and much more...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 6.9 points lower at 7,605.6, 0.41% from its session high and just 0.12% from its low. On the bright side, in the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a 173 to 101.

The Utilities (XUJ) (+2.8%) sector was the best performing sector today, likely in response to AGL Energy's (ASX: AGL) inexplicable 6.4% rise. Origin Energy's (ASX: ORG) 2.5% rise was more explicable, LNG prices are on the rise in Asia due to rising tensions in the Middle East.

Also doing well today was the Gold (XGD) (+2.3%) sub-index. It bounced back after two down days, likely assisted by gradual buy continued rise in the gold price despite the potential blow-off candle discussed in Monday's Evening Wrap. We'll take a look at the technical creds of the XGD in tonight's ChartWatch.

Gold stocks showed their mettle today

Only three of the eleven major ASX sectors failed to register a bounce of any magnitude today. In order of disappointment, Energy (XEJ) (-0.49%), Health Care (XHJ) (-0.48%), and Resources (XJR) (-0.31%).

Nothing major to report here, base metals and crude oil prices were a touch lower overnight, and healthcare has been on the nose for a few weeks now.

ChartWatch

S&P/ASX 200 (XJO)

Q. How high does a dead cat bounce? About that high...

There's an old saying in the markets used to describe a very muted performance after a big drop. It's based upon the theory that if you drop a dead cat from a great height, it doesn't bounce very high.

Horrific as this sounds, it's one of my most trusted tenets of technical analysis. In my experience, when a large drop (such as yesterday's) is followed up by hardly any bounce at all (like today's), it's a strong signal the supply side remains firmly in control of prices.

If supply is in "strong control of prices", well, I'll let you draw your own conclusions for where we might be headed next...

A more specific answer to this question can be defined by historical points of demand and supply. Points of demand (i.e., a trough) are simple enough, there was excess demand there in the past and for likely a very good reason. A technical analyst assumes it might be there again in the future.

Points of supply turning into points of demand are less logical. Think of it this way, for a point of supply (i.e., a peak) to form, there must have been excess supply at that point in the past. When the price moves above the point of supply, many of those who exited regret what they now perceive to be a mistake. Some of them may chose to get back in around the price they exited, therefore potentially causing the old point of supply to act as a future point of demand.

Also, buy the dip investors like to buy at old points of supply to get in ahead of the investors I just mentioned!

I see 7585-7591 as the nearest key point of demand. A close below here would set the XJO up for a probe of the next point of demand at 7489. At that point dynamic demand from the long term uptrend ribbon may also kick in - so it's a super important one!

Let's hope none of the above occurs. Instead, we see some (miraculous) white candles and or downward pointing shadows at 7585-7591 to demonstrate it is indeed a point of demand. Then, we see a return to rising peaks and rising troughs, and finally, we see a challenge of overhead points of supply at 7441, and beyond to 7870-7911.

But let's not get ahead of ourselves here!

S&P/ASX All Ords Gold Sub Index (XGD)

Gold stocks still look, um, as good as...

Just a quick update here. Short term uptrend confirmed today. Long term trend looks like it's accelerating. Price action is still rising peaks and rising troughs, and the candles predominantly still demand-side.

In terms of ASX sector index technicals, there's the Gold sub-index, then there's daylight, then there's Utilities, then there's more daylight, then there's everyone else!

Economy

Today

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

Thursday

• 11:30 AUS Employment Change (+7,200 forecast vs +116,500 previous)

• 11:30 AUS Unemployment rate (3.9% forecast vs 3.7% previous)

Friday

• 00:00 USA Existing Home Sales

Latest News

Interesting Movers

Trading higher

• +26.5% Renascor Resources (RNU) - A$185M Government Loan Approved for Upstream Graphite Mine

• +18.5% Droneshield (DRO) - NATO Framework Agreement Signed, rise is consistent with prevailing short and long term uptrends

• +12.5% Strickland Metals (STK) - Investor Presentation - Rogozna Acquisition, rise is consistent with prevailing short and long term uptrends

• +7.5% Evolution Mining (EVN) - March 2024 Quarterly Report, rise is consistent with prevailing short and long term uptrends

• +6.9% Alpha HPA (A4N) - $400M Australian Government Support for Stage 2 Development, rise is consistent with prevailing short and long term uptrends

• +6.5% Pantoro (PNR) - Investor Presentation, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up

• +6.4% AGL Energy (AGL) - No news, possibly delayed response to Monday's Class Action Dismissed, sector strength on rising LNG prices in Asia

• +6.2% DUG Technology (DUG) - No news, rise is consistent with prevailing short and long term uptrends

• +5.9% Lynas Rare Earths (LYC) - Becoming a substantial holder (Gina Rinehart & Hancock Prospecting)

• +5.8% Stanmore Resources (SMR) - No news, strong rise in coking coal price recently likely helping

• +5.8% Jupiter Mines (JMS) - No news, possibly delayed response to yesterday's Paydirt Battery Minerals Conference Presentation, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up

• +5.4% De Grey Mining (DEG) - No news, broad gold sector strength, bounced off short term uptrend ribbon

• +5.2% Bank of Queensland (BOQ) - 2024 Half Year Results

• +4.8% Spartan Resources (SPR) - Continued positive response to yesterday's New High-Grade Discovery - Pepper Prospect, rise is consistent with prevailing short and long term uptrends

Trading lower

• -3.4% Boss Energy (BOE) - No news, fall is consistent with prevailing short term downtrend as well as with falling peaks and falling troughs

• -2.8% James Hardie Industries (JHX) - No news, fall is consistent with prevailing short term downtrend as well as with falling peaks and falling troughs

• -2.6% Mesoblast (MSB) - Keeps pulling back after massive surge following 26 March FDA Notifies Clinical Data Sufficient for Refiling aGVHD BLA, today's low was close to bouncing off short term uptrend ribbon

• -2.5% Macquarie Technology Group (MAQ) - Completion of $100 million Placement at $72.50

• -2.4% Lotus Resources (LOT) - Work Program to Unlock Letlhakane Value Potential

• -2.3% Arcadium Lithium (LTM) - Weaker lithium prices, US counterpart, fall is consistent with prevailing short and long term downtrends

Broker Notes

• Ampol (ALD): Retained at equal-weight at Morgan Stanley; Price Target: $40.00

• ASX (ASX): Retained at underweight at Morgan Stanley; Price Target: $53.50

• Beach Energy (BPT): Retained at equal-weight at Morgan Stanley; Price Target: $1.71 from $1.79

• Cooper Energy (COE):

  • Retained at neutral at Barrenjoey; Price Target: $0.23 from $0.24

  • Downgraded to hold from buy at Bell Potter; Price Target: $0.21 from $0.18

  • Retained at buy at Euroz Hartleys; Price Target: $0.33

  • Retained at overweight at Jarden; Price Target: $0.23 from $0.24

  • Retained at neutral at JP Morgan; Price Target: $0.20 from $0.17

  • Retained at sector perform at RBC Capital Markets; Price Target: $0.23 from $0.15

• Genusplus Group (GNP): Retained at buy at Bell Potter; Price Target: $2.20 from $1.70

• Hub24 (HUB):

  • Retained at overweight at Morgan Stanley; Price Target: $44.00

  • Retained at neutral at UBS; Price Target: $41.00

• Karoon Energy (KAR): Retained at overweight at Morgan Stanley; Price Target: $2.60 from $2.49

• LGI (LGI): Upgraded to add from hold at Morgans; Price Target: $3.12 from $1.99

• Macquarie Technology Group (MAQ): Retained at buy at Goldman Sachs; Price Target: $93.00

• Matador Mining (MZZ): Retained at buy at Shaw and Partners; Price Target: $0.19

• Netwealth Group (NWL): Retained at overweight at Morgan Stanley; Price Target: $21.25

• Pro Medicus (PME): Initiated at buy at Goldman Sachs; Price Target: $134.00

• Reliance Worldwide Corporation (RWC): Retained at buy at Citi; Price Target: $5.45

• Select Harvests (SHV): Downgraded to hold from buy at Bell Potter; Price Target: $4.70

• Santos (STO): Retained at equal-weight at Morgan Stanley; Price Target: $8.00 from $7.77

• Technology One (TNE): Retained at buy at Goldman Sachs; Price Target: $18.05

• Viva Energy Group (VEA): Retained at equal-weight at Morgan Stanley; Price Target: $3.75 from $3.65

• Woodside Energy Group (WDS): Retained at overweight at Morgan Stanley; Price Target: $35.00 from $34.00

• Wisetech Global (WTC): Retained at buy at Goldman Sachs; Price Target: $85.00

• Xero (XRO): Retained at buy at Goldman Sachs; Price Target: $152.00

• Zip Co (ZIP): Retained at buy at UBS; Price Target: $1.55 from $1.43

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