Evening Wrap: ASX 200 dips on Mid-East concerns, but energy, uranium, and resources stocks enjoy big gains

A small pullback today to add to yesterday's modest decline. Call it a breather. Certainly, given events in the Middle East it could have been much worse today.

The fact it wasn't can be put down to a resurgent Energy sector (on a rising crude oil price) and continued strength in Resources stocks (still basking in the warm afterglow of Chinese stimulus measures and further promises thereof!).

There were losers today, though, as previously strong sectors like Consumer Discretionary and Technology bore the burnt of what selling there was.

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 Crude Oil, Gold, and Silver in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 10.7 points lower at 8,198.2, just about in the middle of its 0.46% trading range for the day. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 122 to 161.

We’ve been getting a few of these “rotational days” lately – that is where the May-September pariahs of Energy (XEJ) (+2.5%) and Resources (XJR) (+1.0%) log substantially positive days at the expense of those sectors which were that periods champions (see today's ChartWatch for analysis of Brent Crude Oil and why Energy stocks were in such high demand today).

To be fair, Utilities (XUJ) (+0.97%) and the Gold (XGD) (+0.08%) sub-index were the only two other sectors to rise/outperform the benchmark XJO today, but these are merely extensions of the XEJ and XJR respectively.

Every other sector underperformed, most notably the previously high-flying Consumer Discretionary (XDJ) (-1.7%) and Information Technology (XIJ) (-1.6%) sectors. The other two big winners during Energy and Resources winter of discontent were Real Estate Investment Trusts (XPJ) (-0.57%) and Financials (XFJ) (-0.02%) – both also lower today.

The big rotation of 2024 has begun…or is it a re-rotation given we had to see Energy and Resources dumped to get to this point in the first place. Either way, my question is: Why can’t the fund managers just buy all the sectors at once? Wouldn’t that be nice!? 🤔

Today’s best performing stocks from the Energy, Resources, Utilities, and Gold sectors – The “Rotators”

I note uranium and lithium stocks featuring heavily in the above table – particularly interesting given neither commodity price logged gains of any note on Tuesday (in fact, lithium pricing in China is null and void this week due to a national holiday there).

There are some big improvements in several technical pictures in both sectors that might even cause a few to make it into my ChartWatch Scans Uptrends lists soon...🧐

Today’s worst performing stocks from all the rest sectors – The “Rotatees”

ChartWatch

Brent Crude Oil Futures (Front month, back-adjusted) ICE

Centre of attention for all the wrong reasons... (click here for full size image)

With everything that’s occurred in the Middle East over the last 24 hours, it is prudent to check out the chart of Brent Crude (Brent typically is more responsive to events in the Middle East than West Texas Intermediate).

The 1 October candle (i.e., the second last-most on the chart) tells the story of substantial volatility in the wake of Iran’s missile attack on Israel. However, I suggest it was far from a decisive demand-side showing given the long upward pointing shadow. Demand did rush in and supply did back off – but only up until a point. Excess supply was indeed found at the 75.12 point of supply, and to a lesser extent, at the short term downtrend ribbon.

Today’s live candle appears to be edging back towards 75.12, and for now, it's above the short term downtrend ribbon. That's important, because if it can stay there, and of course if the Brent price can close above 75.12 – I suggest we are indeed setting up for a decisive short term trend change here.

This is because 70.25 is nicely higher than 67.99, the price action has returned to rising peaks and rising troughs, and candles are back to predominantly demand-side since that 67.99 low. One more emphatic demand-side candle would likely cap it off (i.e., long white-bodied and or long downward pointing shadow sporting a close at or near the high of the session)…

Before all you energy bulls get too excited, it’s worth noting that the dynamic supply anticipated at the long term trend ribbon (about to switch to a downtrend) isn’t far away – I suggest it kicks in around 77-77.10 – and then static supply at 79.84-80.84 isn't far away either.

We have competing short term and long term trends here – so in the absence of the aforementioned emphatic demand-side showing, perhaps the best call here is “neutral”. It's a shame sometimes what makes this chart tick to the upside…and hopefully things don’t get any worse in that regard…sorry energy bulls!

Gold Futures (Front month, back-adjusted) COMEX

Steady, but one feels given current geopolitical uncertainties - should be better (click here for full size image)

The last time we covered gold was in ChartWatch in the Evening Wrap on 19 September.

In theory it should also be a beneficiary of present events in the Middle East. We did see a solid demand-side showing in the 1-Oct candle, but much of that appears to be coming undone in Asian trade. It’s a live candle – so we really should discount it…

I will stick with the impeccable short and long term trends here, the clear demonstration of dynamic demand at my trend ribbons, as well as similarly excellent price action and candles.

There’s nothing in this chart to suggest any indication of supply-side control – and therefore as a trend follower I must stay the course.

2646 is demand, and below it, 2570-4-2572.5. The dynamic demand of the short term trend ribbon is sandwiched in between. The short term trend remains up as long as gold continues to close above all of these points of demand.

Silver Futures (Front month, back-adjusted) COMEX

The zone of supply continues to reign supreme! (click here for full size image)

The last time we covered silver was in ChartWatch in the Evening Wrap on Evening Wrap on 19 September.

This one is far less a beneficiary of events in the Middle East than gold, and if it does go up as a result – it will likely be because of its typical correlation with the gold price.

The last time we checked out silver it was showing some very promising signs of a building rally that had set the dynamic demand of the long term uptrend ribbon at its base. In that update we noted however, the substantial latent supply that would likely be encountered between 32.425-33.505.

Indeed, silver did get more than a little stuck there, printing firstly a tell-tale of excess supply upward pointing shadow (26-Sep candle), and then a few follow up supply-side candles from there.

30.035-30.65 is static demand, but the short term uptrend ribbon is dynamic demand before then. The short term trend remains intact as long as the silver price continues to close above these points of demand.

Watch for the resumption of emphatic demand-side candles here to kick off the next attack on the major supply zone. It might take a few bashes up against that zone before this one can get through…

Economy

Today

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

Later this week

Wednesday

• All Day CHN National Day Public Holiday

• 00:00 USA ISM Manufacturing PMI September (47.6 forecast vs 47.2 in August)

• 00:00 USA JOLTS Job Openings (7.64 million forecast vs 7.67 million in August)

• 01:00 - 08:15 USA 4 x Federal Reserve Speakers (Bostic, Cook, Barkin, Collins)

Thursday

• All Day CHN National Day Public Holiday

Friday

• All Day CHN National Day Public Holiday

• 22:30 USA Non-Farm Payrolls September

  • Employment change 144,000 forecast vs 142,000 previous in August

  • Unemployment rate 4.2% forecast vs 4.2% in August

  • Average Hourly Earnings +0.3% m/m forecast vs +0.4% m/m in August

Latest News

Interesting Movers

Trading higher

• +8.5% Chalice Mining (CHN) - Becoming a substantial holder, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +8.5% Brainchip (BRN) - No news, pick up in candles and volume last 5 trading sessions, short term trend is back to up but long term trend remains down.

• +7.9% Sigma Healthcare (SIG) - Continued positive response to 1 Oct ACCC Public Consultation regarding Proposed Undertakings, rise is consistent with prevailing short and long term uptrends 🔎📈

• +7.5% Karoon Energy (KAR) - Becoming a substantial holder, generally stronger ASX energy sector on rise in crude oil price following escalation in conflict in Middle East (see ChartWatch for technical analysis), closed back above short term downtrend ribbon but long term trend remains down.

• +7.1% Strike Energy (STX) - Ditto stronger energy sector today.

• +5.9% Superloop (SLC) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈.

• +5.3% Bannerman Energy (BMN) - No news, also generally stronger ASX uranium sector today as September rally resumes post a small pullback, short term trend is back to up here and the long term uptrend ribbon is again acting as a zone of dynamic demand 🔎📈.

• +5.2% Iperionx (IPX) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈.

• +4.6% Beach Energy (BPT) - Ditto stronger energy sector today.

• +3.9% Silex Systems (SLX) - Ditto stronger uranium sector today.

• +3.1% Deep Yellow (DYL) - Ditto stronger uranium sector today.

• +3.1% Woodside Energy Group (WDS) - Ditto stronger energy sector today.

Trading lower

• -4.5% Vault Minerals (VAU) - No news (apart from name change from Red 5 (ASX: RED), fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.3% Pantoro (PNR) - No news.

• -3.4% Accent Group (AX1) - Lacoste and Dickies Distribution Agreement, generally weaker ASX Consumer Discretionary sector today on sector rotation.

• -3.3% Nick Scali (NCK) - No news, ditto Consumer Discretionary sector weakness.

• -3.3% Amotiv (AOV) - No news, fall is consistent with prevailing long term downtrend 🔎📉

• -3.3% Megaport (MP1) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

Broker Notes

• Auckland International Airport (AIA)

  • Retained at outperform at Macquarie; Price Target: NZ$9.30 from NZ$9.13

• Biome Australia (BIO)

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

• Computershare (CPU)

  • Retained at outperform at Macquarie; Price Target: $28.00 from $29.00

• Graincorp (GNC)

  • Retained at outperform at Macquarie; Price Target: $10.07 from $9.65

• Growthpoint Properties Australia (GOZ)

  • Retained at buy at Citi; Price Target: $2.60

• IPH (IPH)

  • Retained at outperform at Macquarie; Price Target: $7.31

• James Hardie Industries (JHX)

  • Retained at neutral at Citi; Price Target: $50.90

  • Retained at outperform at Macquarie; Price Target: $64.20 from $64.00

• Lunnon Metals (LM8)

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

• Nobleoak Life (NOL)

  • Retained at buy at Shaw and Partners; Price Target: $2.85

• QBE Insurance Group (QBE)

  • Retained at neutral at Macquarie; Price Target: $17.10 from $16.90

• REA Group (REA)

  • Retained at buy at Citi; Price Target: $230.00

  • Retained at hold at Ord Minnett; Price Target: $225.00 from $200.00

• Resmed Inc (RMD)

  • Retained at neutral at Citi; Price Target: $34.00

• The Star Entertainment Group (SGR)

  • Retained at neutral at Macquarie; Price Target: $0.24 from $0.45

• Southern Cross Gold (SXG)

  • Retained at buy at Shaw and Partners; Price Target: $3.26

• Wisetech Global (WTC)

  • Retained at hold at Bell Potter; Price Target: $132.50 from $115.00

Scans