Evening Wrap: ASX 200 dips despite Woodside beat and resurgent iron ore price firing up energy and resources stocks

A small loss for the S&P/ASX 200, perfectly manageable considering its resounding recovery since the now distant memory of the "August Carry Trade Correction". Or whatever they will call it.

Still, there was plenty bubbling under the surface as earnings bombs (Johns Lyng Group (JLG) (-27%), Lovisa (LOV) (-13%), Helloworld Travel (HLO) (-9.6%), Droneshield (DRO) (-8.2%), and Zip Co. (ZIP) (-7.9%)) plus beats (Nanosonics (NAN) (+22.6%), Chrysos Corporation (C79) (+7.1%), and Woodside Energy Group (WDS) (+3.9%)) kept investors on their toes.

Energy was good, on the back of that Woodside result, as was Resources on a resurgent iron ore price. I've got all of the key moves for your in both sectors, as well as detailed technical analysis on iron ore and uranium.

Add in detailed reports on what the major brokers have to say about all of the major earnings results this week - and you have quite simply the best Evening Wrap you'll find anywhere!

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 13.3 points lower at 8,071.2, 0.45% from its session high and just 0.11% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 100 to 168.

Energy (XEJ) (+2.3%) was the best performing sector today, likely in response to a solid 3.9% gain in major constituent Woodside Energy (WDS). It got some love on the back of declaring a bigger than expected dividend (US$0.69) as management defied analysts’ expectations and maintained the company’s 80% payout ratio. Check here for further analysis and opinion on WDS’s result (as well as the Santos (STO) result from last week).

Fellow long-time energy sector underperformer Strike Energy (STX) (+21.2%) also gets a special mention today after the latest update on its Erregulla Deep project north of Perth was well received by investors.

Refreshingly, also doing well today, was the Resources (XJR) (+1.2%) sector. Like Energy, it pushed its gains into a second session – this time on the back of solid gains in base metals, gold, and iron ore stocks.

Stocks concerned with the latter had a particularly good day as the front month iron ore futures contract in Singapore reclaimed the key US$100/t level. I’ve got detailed technical analysis on iron ore (and uranium) in this evening’s ChartWatch, below.

Today’s best Energy and Resources sector performers

That was pretty much it in terms of gainers of any real note. Doing it tough today was the Information Technology (XIJ) (-1.3%) sector, mainly on the back of major constituents Xero (XJO) (-2.2%), Life360 (360) (-1.8%), and Technology One (TNE) (-1.4%).

Financials (XFJ) (-0.86%) weren’t great either. Earnings are again to blame, with Zip Co (ZIP) dropping nearly 8% after its FY24 results missed the mark, and Bendigo Bank (BEN) lost 4.2% as brokers panned its FY24 results from yesterday (see Broker Notes section for more details)

Today’s worst IT and Financials sector performers

ChartWatch

Iron Ore 62% (Front month, back-adjusted) SGX

An unexpected development

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 15 August.

In that update (refer to the lowest black candle in the last run), I noted that iron looked cactus.

That’s the technical term for something whose chart shows near-perfect supply-side control – and where the probability therefore is overwhelmingly skewed towards continued declines.

Fast forward to today’s developing demand-side candle – one of now several that have appeared since that fateful call – and I have to admit I could not have called it any more wrong.

But that’s technical analysis. Well, good technical analysis that is. Calling it on the evidence at hand, on what that evidence suggests about the probability of particular outcomes (in this case: a continued fall versus a complete about-face of the prevailing short and long term trends).

The goal is to get it right more often than not, and to manage your risk meticulously when you inevitably get it wrong.

I can’t predict the future just like last time, but the trends, price action, and technicals point to one more probable outcome than others: This iron ore rally has some legs. The evidence I present to you is a return to risking peaks and rising troughs, a predominance of some very decent demand-side candles since 91.45, and clearing the point of supply at 98.10. Together these factors indicate that the demand-side has grappled short term control.

This could well facilitate a continued rally towards well defined points of supply like 105.75, and if the iron ore price can close above that, 110.15.

Just as clear to me is the fact that iron ore is far from completely out of the woods. The long term downtrend ribbon is likely to act as a major zone of dynamic supply, kicking in around 109.20-111.80. The iron ore price must close above this barrier before we start to contemplate long term trend change.

Until then, as always, I recommend you watch the candles closely. The rally can perpetuate as long as candles remain white-bodied and or with downward pointing shadows. If on the other hand, you see black-bodied candles and or those with upward pointing shadows – particularly at the key supply areas defined above – it is likely a sign the long term supply that got us here from 143.50 is very much becoming active again.

Uranium Futures (Front month, back-adjusted) COMEX

An expected development

The last time we covered uranium was in ChartWatch in the Evening Wrap on 21 August.

In that update, I said, “There is nothing in the current technicals to indicate any demand-side control” and therefore “one is best off assuming the status quo to remain”.

So far, that call is correct! Strike one for the trend follower! 💪

And that’s despite some very major fundamental news to the contrary in the from of the Kazatomprom production guidance cut. That cut is responsible for Friday’s blip up to 82.40 (note the price values have changed since our last update because of a contract roll).

Monday’s trade saw the short and long term downtrends reassert themselves. This means that as far as the spot uranium market is concerned – the Kazatomprom news has been digested and it hasn’t changed much at all. Burp! Prices remain in a downtrend.

Where to now?

77.60 is shaping up as the key level, as in, it could be make or break there. It would not surprise me at all to see a bounce from 77.60, or at the very least, a prolonged period of consolidation bumping along it (for potentially many weeks or even months).

The third scenario – is the one where uranium slices straight through 77.60. I suggest this scenario is the one likely to keep U-bulls up at night.

The uranium beast moves slowly – that is its nature. But for now, let me reiterate: “There is nothing in the current technicals to indicate any demand-side control, and therefore one is best off assuming the status quo to remain”.

Economy

Today

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

Later this week

Wednesday

• 00:00 USA CB Consumer Confidence (100.2 forecast vs +100.3 previous)

• 11:30 AUS Consumer Price Index (CPI) monthly series (+3.4% p.a. vs +3.8% p.a. previous)

Thursday

• 22:30 USA Prelim GDP June Qtr y/y (+2.8% p.a. forecast vs +2.8% p.a. previous)

Friday

• 00:00 USA Pending Home Sales m/m (+0.2% forecast vs +4.8% previous)

• 09:30 JPN Tokyo Core CPI y/y (+2.2% p.a. forecast vs +2.2% p.a. previous)

• 11:30 AUS Retail Sales m/m (+0.3% forecast vs +0.5% previous)

• 19:00 EUR CPI Flash Estimate y/y (+2.2% p.a. forecast vs +2.6% p.a. previous)

• 22:30 USA Core PCE Price Index m/m (+0.2% m/m forecast vs +0.2% m/m previous)

Latest News

Interesting Movers

Trading higher

• +22.6% Nanosonics (NAN) - 2024 Annual Report and 2024 Full Year Results Investor Presentation

• +21.2% Strike Energy (STX) - Erregulla Deep-1 Update

• +14.5% Playside Studios (PLY) - No news since 23 Aug FY24 Results Investor Presentation

• +7.1% Chrysos Corporation (C79) - Annual Report and Full Year Results FY24

• +6.8% Regis Healthcare (REG) - Continued positive response to yesterday's Regis Healthcare Investor Presentation FY24, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.5% Supply Network (SNL) - Appendix 4E and Annual Accounts June 2024, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.6% Renascor Resources (RNU) - Registration of Indigenous Land Use Agreement

• +5.5% IDP Education (IEL) - No news, but note that it is the second most shorted stock on the ASX, could be some repositioning in light of several beaten down stocks popping last/this week on earnings, and ahead of the company's FY24 results due Thursday 29 Aug

• +4.9% Jupiter Mines (JMS) - No news, tin rally continues

• +4.8% Readytech (RDY) - Appendix 4E and 2024 Annual Report and FY24 Full Year Investor Presentation

• +4.8% Mayne Pharma Group (MYX) - Continued positive response to Friday's 2024 Full Year Results Investor Presentation, exactly one of those case studies alluded to above where stocks in strong downtrends have beaten earnings estimates

• +4.5% NIB (NHF) - Bounce after yesterday's FY24 Full Year Results Investor Presentation related wipe-out, several broker updates today (see Broker Notes section below)

• +4.3% Firefly Metals (FFM) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.9% Woodside Energy Group (WDS) - Half-Year 2024 Report

• +3.9% Kelsian Group (KLS) - Bounce after yesterday's KLS FY24 Indicative Results and Update related wipe-out, several broker updates today (see Broker Notes section below)

• +3.8% Humm Group (HUM) - Continued positive response to 21 Aug FY24 Investor Presentation, rise is consistent with prevailing short and long term uptrends 🔎📈

• +2.9% Objective Corporation (OCL) - No news since 22 Aug FY2024 Investor Presentation, upgraded to buy from neutral at UBS and price target increased to $15.00 from $14.00

Trading lower

• -27.1% Johns Lyng Group (JLG) - FY2024 Appendix 4E and Annual Report and FY2024 Results Presentation, fall is consistent with prevailing short and long term downtrends 🔎📉

• -13.0% Lovisa (LOV) - FY24 Appendix 4E Preliminary Final Report and FY24 Full Year Results Presentation

• -10.6% Austin Engineering (ANG) - 2024 Annual Report and FY24 Results Presentation

• -10.3% Electro Optic Systems (EOS) - Appendix 4D and Half-year Financial Report and Investor Presentation

• -9.6% Helloworld Travel (HLO) - HLO FY24 Annual Report to shareholders and HLO FY24 Investor Presentation, fall is consistent with prevailing short and long term downtrends 🔎📉

• -8.2% Droneshield (DRO) - Half Yearly Report and Accounts and 2024 Half Year Results - Investor Presentation

• -8.2% SG Fleet Group (SGF) - 2024 Annual Report and Appendix 4E and FY24 Investor Presentation

• -7.9% Zip Co. (ZIP) - Appendix 4E and FY24 Financial Report and FY24 Investor Presentation

• -7.9% Smartgroup Corporation (SIQ) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -6.9% Galan Lithium (GLN) - Offtake Prepayment MOU

• -6.4% Australian Clinical Labs (ACL) - Ceasing to be a substantial holder

• -6.4% Close The Loop (CLG) - Continued negative response to yesterday's FY24 Investor Presentation, fall is consistent with prevailing short and long term downtrends 🔎📉

• -5.9% Tyro Payments (TYR) - Pullback after yesterday's Tyro FY24 Full Year Results Investor Presentation related pop, several broker updates today (see Broker Notes section below)

• -5.9% Deterra Royalties (DRR) - No news, ex-dividend 14.4 cps, fully franked

• -5.6% Brainchip (BRN) - Appendix 4D and 1H24 Financial Report, fall is consistent with prevailing short and long term downtrends 🔎📉

• -5.4% IPH (IPH) - No news, ex-dividend 19 cps, fully franked

Broker Notes

• ARN Media (A1N)

  • Retained at underweight at Morgan Stanley; Price Target: $0.50 from $0.78

• Aussie Broadband (ABB)

  • Retained at positive at E&P; Price Target: $4.20 from $4.00

  • Retained at hold at Jefferies; Price Target: $3.85 from $3.10

  • Retained at neutral at JP Morgan; Price Target: $3.30

  • Retained at overweight at Morgan Stanley; Price Target: $4.20

  • Retained at buy at Ord Minnett; Price Target: $4.16 from $3.81

• Adore Beauty Group (ABY)

  • Retained at buy at Citi; Price Target: $1.50

  • Retained at equal-weight at Morgan Stanley; Price Target: $1.32

  • Retained at neutral at UBS; Price Target: $1.30 from $1.05

• Alkane Resources (ALK)

  • Retained at buy at Bell Potter; Price Target: $1.10

• Atturra (ATA)

  • Retained at add at Morgans; Price Target: $1.05

• Australian Vintage (AVG)

  • Retained at hold at Bell Potter; Price Target: $0.19 from $0.21

• Accent Group (AX1)

  • Retained at buy at Bell Potter; Price Target: $2.50

• Bendigo and Adelaide Bank (BEN)

  • Retained at sell at Citi; Price Target: $9.75 from $9.50

  • Retained at buy at Goldman Sachs; Price Target: $11.67 from $11.41

  • Retained at neutral at JP Morgan; Price Target: $11.30 from $10.80

  • Retained at underperform at Macquarie; Price Target: $9.50 from $9.25

  • Downgraded to overweight from equal-weight at Morgan Stanley; Price Target: $11.90 from $12.20

  • Retained at lighten at Ord Minnett; Price Target: $11.00 from $10.00

  • Retained at sell at UBS; Price Target: $10.00

• Biome Australia (BIO)

  • Retained at buy at Bell Potter; Price Target: $0.85 from $0.80

• Bank of Queensland (BOQ)

  • Retained at sell at Goldman Sachs; Price Target: $5.54

• Brazilian Rare Earths (BRE)

  • Retained at buy at Ord Minnett; Price Target: $6.10

• Collins Foods (CKF)

  • Retained at neutral at Citi; Price Target: $7.88 from $10.00

  • Retained at overweight at Morgan Stanley; Price Target: $11.00 from $13.00

• Close The Loop (CLG)

  • Retained at buy at Shaw and Partners; Price Target: $0.70

• Chorus (CNU)

  • Retained at outperform at Macquarie; Price Target: NZ$8.67 from NZ$8.32

  • Retained at neutral at UBS; Price Target: NZ$8.50 from NZ$8.00

• Coles Group (COL)

  • Retained at buy at UBS; Price Target: $19.50

• Corporate Travel Management (CTD)

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

• Dalrymple Bay Infrastructure/Notes (DBI)

  • Retained at buy at Citi; Price Target: $3.40 from $3.00

  • Retained at add at Morgans; Price Target: $3.28 from $3.05

• Endeavour Group (EDV)

  • Retained at neutral at Citi; Price Target: $5.18 from $5.78

  • Retained at buy at Goldman Sachs; Price Target: $6.20

  • Retained at overweight at Jarden; Price Target: $6.00 from $6.30

  • Retained at neutral at Macquarie; Price Target: $5.40 from $5.75

  • Retained at overweight at Morgan Stanley; Price Target: $6.20 from $6.40

  • Retained at hold at Morgans; Price Target: $5.20

  • Downgraded to hold from accumulate at Ord Minnett; Price Target: $5.10 from $5.40

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

• EVT (EVT)

  • Retained at buy at Ord Minnett; Price Target: $14.05 from $15.65

• GDI Property Group (GDI)

  • Retained at buy at Bell Potter; Price Target: $0.80 from $0.75

• Genusplus Group (GNP)

  • Retained at buy at Bell Potter; Price Target: $2.70 from $2.40

• Gold Road Resources (GOR)

  • Retained at buy at Bell Potter; Price Target: $2.10

  • Retained at buy at Goldman Sachs; Price Target: $2.05

  • Retained at outperform at Macquarie; Price Target: $1.90

  • Retained at buy at Ord Minnett; Price Target: $1.85 from $1.90

  • Retained at buy at UBS; Price Target: $2.20 from $2.15

• Infomedia (IFM)

  • Retained at buy at Bell Potter; Price Target: $2.00 from $1.90

  • Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $2.00 from $1.90

  • Retained at buy at Shaw and Partners; Price Target: $2.20 from $2.00

  • Retained at buy at UBS; Price Target: $2.05

• IVE Group (IGL)

  • Retained at buy at Bell Potter; Price Target: $2.70 from $2.65

  • Retained at buy at UBS; Price Target: $2.50 from $2.60

• IGO (IGO)

  • Retained at neutral at UBS; Price Target: $5.40 from $5.70

• Inghams Group (ING)

  • Retained at neutral at UBS; Price Target: $3.35 from $4.10

• IPH (IPH)

  • Retained at add at Morgan Stanley; Price Target: $7.55 from $8.05

• Johns Lyng Group (JLG)

  • Retained at buy at Citi; Price Target: $6.50 from $7.85

• Kogan.Com (KGN)

  • Retained at sell at Citi; Price Target: $4.20 from $4.15

  • Retained at underweight at Jarden; Price Target: $4.70 from $4.30

  • Upgraded to outperform from sector perform at RBC Capital Markets; Price Target: $6.00

  • Retained at neutral at UBS; Price Target: $5.80 from $6.00

• Kelsian Group (KLS)

  • Retained at buy at UBS; Price Target: $7.70

• Liberty Financial Group (LFG)

  • Retained at buy at Citi; Price Target: $4.15 from $4.25

  • Upgraded to outperform from neutral at Macquarie; Price Target: $4.10

• LGI (LGI)

  • Retained at add at Morgans; Price Target: $3.15 from $3.12

• Lovisa (LOV)

  • Retained at outperform at Macquarie; Price Target: $33.70

  • Retained at neutral at UBS; Price Target: $32.50

• Liontown Resources (LTR)

  • Retained at neutral at UBS; Price Target: $0.85 from $1.00

• Mineral Resources (MIN)

  • Retained at sell at UBS; Price Target: $43.00 from $54.00

• McMillan Shakespeare (MMS)

  • Retained at buy at Citi; Price Target: $22.50

• NIB (NHF)

  • Downgraded to neutral from buy at Citi; Price Target: $6.55 from $8.60

  • Retained at buy at Goldman Sachs; Price Target: $6.60 from $8.10

  • Retained at neutral at Jarden; Price Target: $6.25 from $8.00

  • Upgraded to buy from hold at Jefferies; Price Target: $7.50 from $7.65

  • Retained at overweight at JP Morgan; Price Target: $7.30 from $8.60

  • Retained at neutral at Macquarie; Price Target: $6.30 from $7.50

• Objective Corporation (OCL)

  • Upgraded to buy from neutral at UBS; Price Target: $15.00 from $14.00

• Pacific Current Group (PAC)

  • Retained at buy at Ord Minnett; Price Target: $13.00 from $12.50

• Pilbara Minerals (PLS)

  • Retained at hold at Bell Potter; Price Target: $3.15

  • Retained at neutral at Citi; Price Target: $2.90

  • Retained at underweight at Morgan Stanley; Price Target: $2.70

  • Retained at add at Morgans; Price Target: $3.30 from $3.40

  • Retained at sell at UBS; Price Target: $2.20 from $2.30

• Patriot Battery Metals (PMT)

  • Retained at buy at UBS; Price Target: $1.00

• Polynovo (PNV)

  • Upgraded to buy from hold at Bell Potter; Price Target: $3.00 from $2.52

• Praemium (PPS)

  • Retained at hold at Ord Minnett; Price Target: $0.55 from $0.50

• Regis Healthcare (REG)

  • Retained at outperform at Macquarie; Price Target: $5.50

  • Retained at buy at Ord Minnett; Price Target: $4.90 from $4.65

• Ramelius Resources (RMS)

  • Downgraded to neutral from outperform at Macquarie; Price Target: $2.20 from $2.10

  • Retained at buy at Shaw and Partners; Price Target: $2.73

• Regal Partners (RPL)

  • Retained at buy at Bell Potter; Price Target: $4.97 from $4.75

  • Retained at add at Morgans; Price Target: $4.30 from $4.70

• Siteminder (SDR)

  • Retained at buy at Citi; Price Target: $6.60

  • Retained at buy at UBS; Price Target: $6.65

• Stanmore Resources (SMR)

  • Retained at buy at Citi; Price Target: $3.55 from $3.85

  • Retained at add at Morgans; Price Target: $4.10 from $4.20

  • Retained at buy at Ord Minnett; Price Target: $4.80 from $4.60

• Smart Parking (SPZ)

  • Retained at buy at Shaw and Partners; Price Target: $0.70

• Shaver Shop Group (SSG)

  • Retained at hold at Ord Minnett; Price Target: $1.30 from $1.20

• Summit Minerals (SUM)

  • Retained at buy at Bell Potter; Price Target: $14.30 from $14.10

• Tasmea (TEA)

  • Retained at add at Morgans; Price Target: $2.25 from $2.10

  • Retained at buy at Shaw and Partners; Price Target: $2.50 from $2.15

• Tyro Payments (TYR)

  • Retained at buy at Jefferies; Price Target: $1.60

  • Retained at overweight at JP Morgan; Price Target: $1.45 from $1.60

  • Retained at outperform at Macquarie; Price Target: $1.40 from $1.45

  • Retained at equal-weight at Morgan Stanley; Price Target: $1.30

  • Retained at add at Morgans; Price Target: $1.63 from $1.46

  • Retained at buy at UBS; Price Target: $1.50 from $1.55

  • Downgraded to marketweight from overweight at Wilsons; Price Target: $1.18 from $1.30

• Universal Store (UNI)

  • Retained at buy at Citi; Price Target: $7.90 from $6.47

• Viva Energy Group (VEA)

  • Retained at positive at E&P; Price Target: $3.60

  • Upgraded to buy from neutral at Goldman Sachs; Price Target: $3.60 from $3.75

  • Retained at overweight at JP Morgan; Price Target: $3.70 from $3.80

  • Retained at outperform at Macquarie; Price Target: $4.10 from $4.25

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.64

  • Retained at outperform at RBC Capital Markets; Price Target: $3.70

  • Retained at buy at UBS; Price Target: $3.60 from $3.55

• Woodside Energy Group (WDS)

  • Retained at neutral at Citi; Price Target: $25.00

  • Retained at neutral at UBS; Price Target: $31.00

• Worley (WOR)

  • Retained at buy at Citi; Price Target: $19.00

• Zip Co. (ZIP)

  • Retained at buy at Citi; Price Target: $1.90

  • Retained at buy at UBS; Price Target: $1.90

Scans