Evening Wrap: ASX 200 dips on rates concerns, Middle East tensions, but silver lining for metals and energy stocks

A third day of losses for the S&P/ASX 200, which at less than half of one percent, possibly feels like a get out of jail card considering losses around three times that magnitude on US stock indices on Friday.

Whilst modest, the losses were pervasive, though. For every stock up, there were roughly four down. We're also threatening to close below a key technical level of support.

On the bright side, fortunately for us our market is blessed with more than its fair share of mining and energy stocks. Base metals and energy prices tend to rise during times of geopolitical tensions, and this was the case on Friday. To see which Aussie stocks took advantage today...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 35.6 points lower at 7,752.5, 0.47% from its session high and just 0.22% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a whopping 59 to 227. Yuk!

As you can see there weren't many stocks which did well today, but if they did, there's a good chance they were constituents of either the Resources (XJR) (+0.52%) or Energy (XEJ) (+0.38%) sectors.

Base metals prices rose sharply (with the exception of Nickel) on Friday on the London Metals Exchange, and crude oil prices, whilst subdued after latest Middle East action, are still trending nicely higher.

The best of the Resources and Energy sectors

Doing it tough today was the Information Technology (XIJ) (-1.8%) sector, which tracked its US tech counterpart the Nasdaq lower, but not far behind was the Gold (XGD) (-1.6%) sub-index which is possibly suffering from a perceived blowoff top in the gold price on Friday (see ChartWatch). It's also possibly suffering from a touch of profit taking after last week's broad-based strength.

Gold stocks lost some of their recent shine today

ChartWatch

S&P/ASX 200 (XJO)

Close to cracking the short term uptrend

Just an incremental update here. In addition to the prevailing short and long term uptrends (i.e., light and dark green trend ribbons), I note that a lower peak at 7870 has formed. We're also at growing risk of closing below the dynamic support of the short term uptrend ribbon as well as the 7741 trough.

Should we close below the 7741 trough, the price action will officially be falling peaks and falling troughs, a sure sign of a sell the rally mentality among market participants.

7870-7911 is now likely a major point of supply. I wouldn't think about a return to bull market party time until we're trading above that level (or at least we see some juicy big white candles in advance).

A close below 7741 could set us up for a probe of lower support zones, most immediately at 7585-7591.

Gold Futures COMEX

The second last candle on gold could indicate a blowoff top...

Friday's candle is the second from last on the chart. It's the one with the long upward pointing shadow. If you regularly read my technical analysis, you'll know I refer to such candles as "supply-side" candles.

This is because the supply side flooded the market at some stage during the session and beat down what was up until that point overwhelming demand. It caught a bunch of weak hands long, basically the smart money used the elevated liquidity on offer to unload their profitably long positions.

Candles such as these are notorious blow off top candles, that is, they often punctuate a major market high. The probability of a candle like Friday's actually being an enduring blow off top is usually heightened by it also having a long daily range (going to go check on that one), and if it's also accompanied by significantly above average volume (going to check that box as well).

I'm loathed call the top of the Gold bull market on one candle, rather, further confirmation is required. This will potentially come in the form of a long black bodied candle, or another long upper shadow. Accompanying heightened volume would also be damning.

Negating Friday's bearish move would be a white bodied candle which closes more than half way back up Friday's candle's range, or an equally strong downward pointing shadow on elevated volume (to signal the weak hands are out and the strong hands have moved back in).

We shall see!

Economy

Today

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

Later this week

Tonight

• 22:30 USA Core Retail Sales (+0.5% forecast vs 0.3% previous)

Tuesday

• 11:30 CHINA "Data Dump"

  • New Home Prices monthly change (-0.36% previous)

  • Industrial Production (+6% forecast vs +7% previous)

  • GDP (+4.8% p.a. forecast vs +5.2% p.a. previous)

  • Retail Sales (+5.1% forecast vs +5.5% previous)

  • Fixed Asset Investment (+4% forecast vs +4.2% previous)

  • Unemployment Rate (+5.2% forecast vs +5.3% previous)

• 10:30 USA Building Permits & Housing Starts

• 11:00 USA Industrial Production

Wednesday

• 03:15 USA Federal Reserve Chairman Jerome Powell speaks

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

• +39.0% Piedmont Lithium Inc (PLL) - Carolina Lithium State Mining Permit

• +17.9% Ioneer (INR) - Ioneer's Rhyolite Ridge Project Moves Toward Construction, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up 🔎📈

• +11.1% Droneshield (DRO) - Quarterly Activities/Appendix 4C Cash Flow Report, but also events in the Middle East, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.0% Alumina (AWC) - No news, sharp rise in Aluminium price on Friday, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.6% South32 (S32) - No news, sharp rise in base metals prices on Friday, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up 🔎📈

Trading lower

• -12.0% Predictive Discovery (PDI) - Bankan Pre-Feasibility Study Presentation

• -9.4% Chalice Mining (CHN) - No news, consistent with recent extreme volatility! Has had a good run lately, today, a pullback!

• -7.1% Novonix (NVX) - No news, consistent with recent extreme volatility! Has had a good run lately, today, a pullback!

• -6.6% Gold Road Resources (GOR) - Response to Media Speculation

• -6.3% Avita Medical Inc (AVH) - Continued negative response to yesterday's AVITA Medical Updates Expected First Quarter 2024 Revenue, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down 🔎📉

Broker Notes

• ARN Media (A1N) - Retained at underweight at Morgan Stanley; Price Target: $0.78

• Alpha HPA (A4N) - Retained at buy at Bell Potter; Price Target: $1.60

• Adriatic Metals (ADT) - Initiated at add at Morgans; Price Target: $5.80

• ANZ Group (ANZ) - Retained at neutral at Citi; Price Target: $26.00

• Arafura Rare Earths (ARU) - Retained at hold at Bell Potter; Price Target: $0.19

• AUB Group (AUB) - Retained at outperform at Macquarie; Price Target: $33.34

• Avita Medical Inc (AVH) - Downgraded to hold from buy at Bell Potter; Price Target: $3.50 from $6.85

• Azure Minerals (AZS) - Retained at hold at Bell Potter; Price Target: $4.85

• BWP Trust (BWP) - Upgraded to buy from sell at UBS; Price Target: $3.80 from $3.61

• Commonwealth Bank of Australia (CBA) - Retained at sell at Citi; Price Target: $82.00

• Champion Iron (CIA) - Retained at neutral at Macquarie; Price Target: $7.30 from $7.50

• Collins Foods (CKF) - Retained at neutral at Macquarie; Price Target: $12.50

• Delta Lithium (DLI) - Retained at buy at Bell Potter; Price Target: $0.75

• Domino's Pizza Enterprises (DMP)

  • Retained at neutral at Citi; Price Target: $44.50

  • Retained at neutral at Goldman Sachs; Price Target: $39.70

  • Retained at neutral at Macquarie; Price Target: $41.00 from $42.00

• Dreadnought Resources (DRE) - Retained at buy at Bell Potter; Price Target: $0.15

• Develop Global (DVP) - Retained at buy at Bell Potter; Price Target: $3.30

• Dexus Convenience Retail REIT (DXC) - Retained at buy at Bell Potter; Price Target: $3.00

• Endeavour Group (EDV) - Upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $6.40 from $5.80

• Eureka Group (EGH) - Downgraded to outperform from buy at CLSA; Price Target: $0.60 from $0.58

• GDI Property Group (GDI) - Retained at buy at Bell Potter; Price Target: $0.75

• Green Technology Metals (GT1) - Retained at buy at Bell Potter; Price Target: $0.39

• Healthco Healthcare and Wellness REIT (HCW) - Retained at buy at Bell Potter; Price Target: $1.70

• Insurance Australia Group (IAG) - Retained at outperform at Macquarie; Price Target: $6.40

• IDP Education (IEL) - Retained at buy at Goldman Sachs; Price Target: $25.30 from $26.60

• IGO (IGO) - Retained at hold at Bell Potter; Price Target: $7.50

• Lake Resources (LKE) - Retained at hold at Bell Potter; Price Target: $0.12

• Latin Resources (LRS) - Retained at buy at Bell Potter; Price Target: $0.43

• Arcadium Lithium (LTM) - Retained at buy at Bell Potter; Price Target: $10.40

• Liontown Resources (LTR) - Retained at buy at Bell Potter; Price Target: $1.90

• Mineral Resources (MIN) - Retained at buy at Bell Potter; Price Target: $75.00

• National Australia Bank (NAB) - Retained at sell at Citi; Price Target: $25.75

• Nickel Industries (NIC) - Retained at buy at Bell Potter; Price Target: $1.50

• Origin Energy (ORG)

  • Retained at outperform at Macquarie; Price Target: $9.97 from $9.29

  • Retained at equal-weight at Morgan Stanley; Price Target: $8.88

• Pilbara Minerals (PLS) - Retained at hold at Bell Potter; Price Target: $3.55

• Perseus Mining (PRU) - Retained at outperform at Macquarie; Price Target: $2.70

• PSC Insurance Group (PSI) - Retained at outperform at Macquarie; Price Target: $5.40

• Steadfast Group (SDF) - Retained at outperform at Macquarie; Price Target: $6.40

• The Star Entertainment Group (SGR)

  • Downgraded to neutral from overweight at JP Morgan; Price Target: $0.50 from $0.65

  • Retained at neutral at UBS; Price Target: $0.52 from $0.57

• Suncorp Group (SUN) - Retained at outperform at Macquarie; Price Target: $17.00

• Talga Group (TLG) - Retained at buy at Bell Potter; Price Target: $2.50

• Westpac Banking Corporation (WBC) - Retained at neutral at Citi; Price Target: $22.25

Scans