Evening Wrap: ASX 200 dips as resources and energy stocks hit on Trump policy fears, lithium stocks crunched hardest

The S&P/ASX 200 closed 51.1 points lower, down 0.61%.

Doing it tough today was the Trump policy uncertainty crew. Those sectors that are likely to see earnings hits should President Trump follow through with a 10% tariff on China, the removal of restrictions on oil and gas exploration in the US, and the roll-back of various EV subsidies and incentives.

Major Resources, Energy stocks sagged under the weight of these potential threats, with major iron ore, base metals, and lithium stocks leading the market lower.

There were few places to hide, mainly those sectors still basking in the warm afterglow of last week's sharp pullback in long term risk-free market yields.

Click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all the key upcoming economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on the NASDAQ Composite and the S&P/ASX 200 in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 51.1 points lower at 8,378.7, 0.61% from its session high and just 0.15% from its low. Despite the seemingly only modest pullback in the benchmark index, it was disturbing to see that in the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by a decisive 81 to 199.

The tailwind from last week’s sharp reversal in long term risk-free market yields appears to be fading out, and markets appear to be focussing more on the near-and-long term impacts of President Trump’s policy agenda.

There was still a sliver of lower rates afterglow however, given bond proxy Utilities (XUJ) (+0.43%), high-PE Information Technology (XIJ) (+0.30%) were the two best performing sectors today – and the only two to show gains. Down, but not down that much were other interest rate sensitives Financials (XFJ) (-0.05%) (bond proxy), Communication Services (XTJ) (-0.13%) (high-PE), and Health Care (XHJ) (-0.14%) (high-PE).

It also doesn’t hurt for tech and US-focussed stocks that US equities were up strongly again last night. I have more analysis on this item in ChartWatch, below.

Today’s best performing stocks from the best performing sectors

Doing it tough today was the Trump policy uncertainty crew. Those sectors that are likely to see earnings hits should President Trump follow through with a 10% tariff on China, the removal of restrictions on oil and gas exploration in the US, and the roll-back of various EV subsidies and incentives.

As a result, iron ore, base metals, and energy commodity prices were generally modestly lower Wednesday, and those that trade in Asia followed suit. This drove falls in Resources (XJR) (-1.5%) and Energy (XEJ) (-0.6%) stocks.

My guess is that Trump Effect 2.0 (1.0 being the comprehensive November election win) was also at least partly to blame for the broad demise of lithium and other battery metals stocks today. The roll-back of various EV subsidies and incentives to US consumers will likely have a negative impact on demand for battery minerals.

GFEX lithium carbonate futures were up very slightly today, but have pulled back post-inauguration so probably a nil-impact from this item today at least.

Also lagging today, but for reasons which escape me (hey I don’t have all the answers all the time!!!) were consumer-focussed sectors Consumer Discretionary (XDJ) (-1.6%) and Consumer Staples (XSJ) (-1.3%).

Today’s worst performing stocks from the worst performing sectors

ChartWatch

NASDAQ Composite Index

Nothing really has changed in the COMP chart...apart from about 1,000 points!

The last time we covered the COMP was in ChartWatch in the Evening Wrap on 14 January.

In that update – literally post the low candle marked 18831 on the chart above, we were tracking a very different set of technicals. At least short term technicals.

The long term technicals between that candle and last night’s – although about 1,000 points apart in a northerly direction – remain exactly the same.

This is why I track both short and long term trends. They are equally important in determining my course of action.

Nothing particularly interesting, spectacular, or unusual occurred in those 1,000 points – it is just a case of the short term trend realigning with the long term trend.

Happens all the time.

And here we are, probing supply between the historical points of supply 20007-20205. The top of that range is the big one – the all time high – and I expect it won’t go off without a fight.

But there appears to be plenty of fight in the demand-side based on that move from 18831, straight up with generally demand side candles (the two supply-side candles in there were dispensed with decisively next-candle each time).

18598-18831 is a critical point of demand now. I suspect the long term trend ribbon is going to catch up to that zone by the time we could get the next test of it – so it will be even more important.

The short term trend ribbon, neutral, may also act as a zone of dynamic demand in the interim.

A couple of updates ago, as the correction was beginning, I said something along the lines of “take a bit of risk off the table”. I don’t think we’re going back to full risk just yet. The “bit off the table" setting still feels about right.

And most importantly so too does my “stay the course” mantra with respect to the long term trend here.

The mantra requires trusting and following the trend – but the trend can bend – and it can also end! I’ve given you the tools to ascertain each – so watch out for supply side candles (i.e., black bodies and or upward pointing shadows) and price action reverts to falling peaks and falling troughs.

S&P/ASX 200 (XJO)

Baulking at the old high

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 16 January.

In that update, not-so-coincidentally, my mantra was also stay the course…I said:

In the meantime, I see no reason to stay the course vis à vis the long term uptrend – albeit with a continued cautious approach.

Surprise, surprise!

I understand that my brand of analysis isn’t everyone’s cup of tea, but if you choose just one thing to adopt from my approach, I hope it’s this:

Consistency is the key to successful investing

Consistency, consistency, consistency. Being consistent with your approach, being disciplined and unemotional in your application of it.

Regardless of whether you do technical analysis trend following like me, or whether you analyse balance sheets and P&L statements to determine a company’s fair value...

It’s the old garbage in-garbage out philosophy. If you are random in your approach – you will achieve random results.

If you are consistent, even if you are consistently wrong – then you have a basis for improvement (perhaps start by not doing the thing that is giving you a consistently wrong result!).

Anyways, you know what I am going to say about the XJO again today: Long term uptrend – stay the course. Short term volatility, adjust risk levels / exposure accordingly, as in, potentially “a bit of risk off the table” here also. Keeping some powder dry for when the long term trend reasserts itself in a meaningful way.

I propose the signal for this is a close above 8515, preferably with an emphatic demand-side candle (i.e., white body and or downward pointing shadow) with a close at the high of its range.

Until then, price action and candles since 8051 look definitively demand-side in nature. Even after today’s minor blip, I still believe the demand-side is in control of the XJO price in the short and long term.

The short term trend ribbon should act as dynamic demand around 8300-8310. The long term trend remains intact until a close below 8051.

Economy

Today

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

Later this week

Friday

• 09:00 AUS Flash Manufacturing PMI & Flash Services PMI January (47.8 and 50.8 respectively in December)

• TBA JPY Bank of Japan Policy Rate (increase to less than 0.50% versus previous less than 0.25%)

• 20:00 EUR Flash Manufacturing PMI & Services PMI for January (45.6 and 51.4 forecast respectively vs 45.1 and 51.6 respectively in December)

Saturday

• 01:45 USA Flash Manufacturing PMI & Services PMI for January (49.4 and 56.8 respectively in December)

Latest News

Interesting Movers

Trading higher

• +11.8% Praemium (PPS) - Q2 FY2025 Update and Q2 FY2025 Update Presentation, rise is consistent with prevailing short and long-term uptrends, a regular feature in ChartWatch ASX Scans Uptrends list 🔎📈

• +11.8% Cyclopharm (CYC) - CYC Signs US National Agreement with HCA for Technegas, rise is consistent with prevailing short-term uptrend, long-term uptrend is transitioning from down to up 🔎📈

• +6.1% Myer (MYR) - EGM - Executive Chair's Address and Voting Update

• +5.4% Silex Systems (SLX) - No news, extension of yesterday's big uranium sector rally; either way, rise is consistent with prevailing short and long-term uptrends, a regular feature in ChartWatch ASX Scans Uptrends list 🔎📈

• +3.9% Regis Resources (RRL) - Quarterly Activities Report, rise is consistent with prevailing short and long-term uptrends, a regular feature in ChartWatch ASX Scans Uptrends list 🔎📈

• +3.9% Opthea (OPT) - Opthea's Corporate Presentation - Jan 2025, rise is consistent with prevailing short and long-term uptrends, a regular feature in ChartWatch ASX Scans Uptrends list 🔎📈

• +3.9% Neuren Pharmaceuticals (NEU) - No news, continued positive response to 16-Jan Neuren JP Morgan Healthcare Conference 2025 presentation

• +3.8% Australian Clinical Labs (ACL) - No news, rise is consistent with prevailing long-term uptrend 🔎📈

• +3.6% Peninsula Energy (PEN) - No news, ditto extension of yesterday's big uranium sector rally

• +3.4% Megaport (MP1) - No news, has caught a bid recently on tech sector recovery/strong US tech sector leads

• +3.3% Bannerman Energy (BMN) - No news, ditto extension of yesterday's big uranium sector rally

Trading lower

• -7.0% Core Lithium (CXO) - Quarterly Report Presentation and Quarterly Activities and Cashflow Report, ditto generally weaker lithium sector today, fall is consistent with prevailing long-term downtrend, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

• -6.5% Vulcan Energy Resources (VUL) - Close of Share Purchase Plan, ditto generally weaker lithium sector today, fall is consistent with prevailing long-term downtrend 🔎📉

• -6.5% Iluka Resources (ILU) - Continued negative response to yesterday's Quarterly Review to 31 December 2024, plus today's Change in substantial holding from PPT (decrease from Perpetual), plus the most obvious item: fall is consistent with prevailing short and long-term downtrends, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

• -6.4% Liontown Resources (LTR) - No news, ditto generally weaker lithium sector today, fall is consistent with prevailing long-term downtrend, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

• -5.9% Develop Global (DVP) - No news, copper and zinc prices down Wednesday, generally weaker Resources sector today on Trump tariff concerns/China impact

• -5.5% OOH!Media (OML) - No news, fall is consistent with prevailing short and long-term downtrends, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

• -4.1% Capstone Copper Corp. (CSC) - No news, ditto generally weaker Resources sector, ditto falling copper price, fall is consistent with prevailing short and long-term downtrends, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

• -4.1% WA1 Resources (WA1) - No news, ditto generally weaker Resources sector, fall is consistent with prevailing short and long-term downtrends, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

• -3.9% Evolution Mining (EVN) - Generally negative broker response to yesterday's December 2024 Quarterly Report, 3× rating downgrades—check Broker Moves section below for details

• -3.7% Pilbara Minerals (PLS) - No news, ditto generally weaker lithium sector today, fall is consistent with prevailing long-term downtrend, a regular feature in ChartWatch ASX Scans Downtrends list 🔎📉

Broker Moves

• 29METALS (29M)

  • Upgraded to outperform from neutral at Macquarie; Price Target: $0.30 from $0.46

• Amplitude Energy (AEL)

  • Retained at hold at Bell Potter; Price Target: $0.22 from $0.23

• Ansell (ANN)

  • Retained at hold at Ord Minnett; Price Target: $31.60 from $28.50

• Australian Vanadium (AVL)

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

• BHP Group (BHP)

  • Retained at add at Morgans; Price Target: $49.10 from $47.90

• Beach Energy (BPT)

  • Retained at buy at Bell Potter; Price Target: $1.65 from $1.50

  • Retained at sell at Citi; Price Target: $1.30

  • Retained at positive at E&P; Price Target: $1.90

  • Retained at sell at Goldman Sachs; Price Target: $1.35 from $1.33

  • Retained at neutral at Jarden; Price Target: $1.42 from $1.40

  • Retained at overweight at JP Morgan; Price Target: $1.60 from $1.55

  • Retained at underweight at Morgan Stanley; Price Target: $1.46

  • Retained at buy at UBS; Price Target: $1.60 from $1.55

• Chrysos Corporation (C79)

  • Retained at hold at Bell Potter; Price Target: $5.70 from $5.50

  • Retained at accumulate at Ord Minnett; Price Target: $6.40 from $6.09

  • Retained at buy at Shaw and Partners; Price Target: $7.00 from $7.20

• Capstone Copper Corp. (CSC)

  • Retained at outperform at Macquarie; Price Target: $11.50 from $12.00

• Carnarvon Energy (CVN)

  • Downgraded to hold from buy at Ord Minnett; Price Target: $0.14 from $0.21

• Calix (CXL)

  • Downgraded to hold from buy at Bell Potter; Price Target: $0.80 from $1.55

• Deep Yellow (DYL)

  • Retained at buy at Canaccord Genuity; Price Target: $1.90

• Emerald Resources (EMR)

  • Initiated at buy at Argonaut Securities; Price Target: $4.80

• Evolution Mining (EVN)

  • Downgraded to hold from buy at Argonaut Securities; Price Target: $6.00

  • Retained at buy at Canaccord Genuity; Price Target: $6.15 from $5.75

  • Downgraded to neutral from buy at Citi; Price Target: $5.80 from $5.50

  • Retained at hold at Jefferies; Price Target: $5.50 from $5.00

  • Downgraded to underweight from neutral at Macquarie; Price Target: $5.50 from $5.20

  • Retained at hold at Ord Minnett; Price Target: $5.35 from $5.10

  • Retained at underperform at RBC Capital Markets; Price Target: $4.30 from $4.30

  • Retained at neutral at UBS; Price Target: $5.40

• Generation Development Group (GDG)

  • Retained at overweight at Morgan Stanley; Price Target: $4.75

  • Upgraded to add from hold at Morgans; Price Target: $4.75 from $4.01

  • Retained at buy at Ord Minnett; Price Target: $4.50 from $3.90

• Goodman Group (GMG)

  • Retained to reduce from buy at Citi; Price Target: $40.00

• Graincorp (GNC)

  • Retained at outperform at Macquarie; Price Target: $9.85

• Iluka Resources (ILU)

  • Retained at hold at Canaccord Genuity; Price Target: $5.40 from $6.30

  • Downgraded to neutral from buy at Citi; Price Target: $5.60 from $6.10

  • Retained at buy at Goldman Sachs; Price Target: $7.40 from $7.80

  • Retained at neutral at JP Morgan; Price Target: $5.50 from $6.00

  • Retained at outperform at Macquarie; Price Target: $6.80 from $7.10

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.80

  • Retained at buy at Ord Minnett; Price Target: $5.75 from $6.00

• Integrated Research (IRI)

  • Retained at buy at Bell Potter; Price Target: $0.75

• Lovisa (LOV)

  • Retained at outperform at Macquarie; Price Target: $34.10

• Liontown Resources (LTR)

  • Retained at underperform at Macquarie; Price Target: $0.60

  • Retained at hold at Ord Minnett; Price Target: $0.68 from $0.62

• Northern Star Resources (NST)

  • Retained at add at Morgans; Price Target: $20.04 from $20.18

• Netwealth Group (NWL)

  • Upgraded to neutral from sell at Citi; Price Target: $30.70 from $28.90

• Nextdc (NXT)

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

• Paladin Energy (PDN)

  • Retained at buy at Bell Potter; Price Target: $10.70 from $10.50

  • Retained at buy at Canaccord Genuity; Price Target: $15.20

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

  • Retained at overweight at Morgan Stanley; Price Target: $10.25

  • Retained at buy at Shaw and Partners; Price Target: $15.80

  • Downgraded to neutral from buy at UBS; Price Target: $10.00 from $9.90

• Pantoro (PNR)

  • Retained at buy at Canaccord Genuity; Price Target: $0.19

  • Retained at buy at Ord Minnett; Price Target: $0.15 from $0.16

• Turaco Gold (TCG)

  • Retained at buy at Canaccord Genuity; Price Target: $0.75

• The Lottery Corporation (TLC)

  • Upgraded to overweight from neutral at Jarden; Price Target: $5.05 from $5.00

• Viridis Mining and Minerals (VMM)

  • Upgraded to buy from hold at Ord Minnett; Price Target: $1.00

• West African Resources (WAF)

  • Retained at buy at Argonaut Securities; Price Target: $4.10 from $3.90

  • Retained at buy at Canaccord Genuity; Price Target: $3.95

  • Retained at buy at Euroz Hartleys; Price Target: $3.10

  • Retained at outperform at Macquarie; Price Target: $2.20

• Woodside Energy Group (WDS)

  • Retained at sell at Citi; Price Target: $23.00 from $23.50

  • Retained at neutral at Goldman Sachs; Price Target: $25.00 from $25.90

  • Retained at overweight at Jarden; Price Target: $26.90 from $27.00

  • Retained at overweight at JP Morgan; Price Target: $31.00

  • Retained at equal-weight at Morgan Stanley; Price Target: $27.00

  • Retained at hold at Ord Minnett; Price Target: $26.00 from $26.50

  • Retained at neutral at UBS; Price Target: $27.40

Scans