Evening Wrap: ASX 200 dips on resources and energy stocks, Telstra gain helps limit losses

The S&P/ASX 200 closed 12.9 points lower, down 0.17%.

It was another one of "those" quiet sessions on the ASX. The one's that occur after we've had a very good day (like yesterday) where investors are trying to figure out if they really want to take that next step and have a crack at a new all time high.

Not today, it seems.

Maybe tomorrow. 🤞

There were a bunch of interesting moves, mainly at the small end if you're looking for gains. At the bigger end of town, it was all about Telstra and the brokers' response to yesterday's pricing update.

Resources and Energy stocks slumped again. It's death by a thousand cuts there...

As usual, for all of these moves and plenty more...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 12.9 points lower at 7,816.8, 0.45% from its session low and just 0.17% from its high. In the broader-based S&P/ASX 300 (XKO), advancers narrowly lagged decliners by 120 to 144.

The Communication Services (XTJ) (+1.4%) sector was the best performing sector today, likely in response to another strong gain in major constituent Telstra Group (ASX: TLS) (+2.4%). It's Mobile Pricing Update announcement yesterday received a generally warm reception from the major brokers (see Broker Moves for full details).

That was pretty much it! Apart from the TLS driven XTJ, those sectors that were up today only eked out their gains. Similarly, though, for the most part it was a similar story with losing sectors – generally only modest declines with a few ignominious performances.

No surprise to anyone reading this, Resources (XJR) (+1.19%) and Energy (XEJ) (-0.65%) were among those ignominious performances! They were split by Utilities (XUJ) (-1.18%) which has a decent number of Energy-like stocks anyways. Base metals and key crude oil contracts were generally lower overnight. Lithium minerals saw renewed falls today.

Commodity price moves last 24 hours

Looking at the list below, it was an uninspiring day in Resources and Energy stocks to say the least. Adding to Energy's woes, coal stocks came off the boil, each logging a modest pullback from its recent strong rally.

It was an uninspiring day in Resources and Energy stocks

ChartWatch

Spodumene Concentrate Index (SMM), Platts Spodumene 6% (S&P Global)

Lithium minerals are bumping along the bottom...

The last time we covered lithium minerals was in ChartWatch in the Evening Wrap on 27 June.

Another day, and another loss for the SMM Spodumene Concentrate Index. Today's 0.8% decline marked the 45th trading session without an uptick. The other main pricing touchpoint for spodumene, Platts Spodumene 6%, is also showing a steady short term downtrend, dipping yesterday to US$930/t.

Note, the Platts update typically comes in around 8pm Sydney time, and I routinely update prices and charts for it and each of the other main lithium contracts in my X/Twitter feed each evening.

You've heard me talk about the importance of a V-shaped rally when it comes to punctuating the end of a protracted long term downtrend. Certainly, lithium minerals check the "protracted long term downtrend" box, but as you can also see, there has been no V-shaped rally (focus on the SMM Spodumene Concentrate Index chart as I have far greater data).

Instead, its a case of "bump along the bottom", and those can last for 18 months to a few years in my experience. This is why I always prefer to go by the charts and trends, rather than what may appear to the eager eye as a compelling narrative!

Iron Ore 62% CFR China Futures (SGX)

Another super interesting chart

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 3 July.

In that update were monitoring a fledgling but strong rally from 101.95 to the 114 point of supply. I described the chart as “Not as bad as it looked last time!”.

Points of supply should never be taken lightly in any well-established long term downtrend, of the likes presently experienced in iron ore. But, as with any point of supply always remember: They are only suspected points of supply – awaiting confirmation by price action.

In short, I prefer not to anticipate that a point may be supply, but rather, I wait to see which candles appear there.

Does supply eventually manifest itself at the predicted point of supply – therefore validating it? In this case, supply-side candles are those with black bodies and or upward pointing shadows

Alternatively, do we see demand-side candles at the predicted point of supply – therefore nullifying the point of supply? Demand-side candles are those with white bodies and or upward pointing shadows.

Looking the chart above, as promising as that rally from 101.95 was, it was stopped dead at the 114 point of supply with a clear supply-side candle. The next candle’s (8 July) upper shadow shows how the demand-side tried to respond early in that session, fighting back for a small rally – but also that supply flooded into settle the matter decisively by the session’s close.

I’d suggest the price action will continue to compress in the range between 101.95 (demand) and 114 (supply) here, with a general downward trend as defined by the long term downtrend ribbon.

Economy

Today

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

Later this week

Thursday

• 00:00 USA Federal Reserve Chairman Jerome Powell testimony Day 2

• 10:30 USA Core CPI June (forecast +0.2% m/m and +3.5% p.a. vs +0.2% m/m and +3.5% in May)

Friday

• 10:30 USA Core PPI June (forecast +0.1% m/m and +2.0% p.a. vs +0.0% m/m and +1.8% in May)

Saturday

• 00:00 USA Preliminary University of Michigan Consumer Sentiment July (67.0 forecast vs 68.2 in June)

Latest News

Interesting Movers

Trading higher

• +23.1% Catalyst Metals (CYL) - Catalyst achieves full year production of 110koz (regular feature chart in ChartWatch ASX Scans uptrends list) 🔎📈

• +8.4% DUG Technology (DUG) - No news, rise is consistent with prevailing long term uptrend, closed back above short term trend ribbon, bouncing off long term uptrend ribbon 🔎📈

• +7.7% Meteoric Resources (MEI) - No news, small rally following sharp selling on the back of Monday's Caldeira's Scoping Study Confirms Exceptional Financials

• +7.4% Catapult Group International (CAT) - No news, rise is consistent with prevailing short and long term uptrends (regular feature chart in ChartWatch ASX Scans uptrends list) 🔎📈

• +5.9% Imugene (IMU) - First patient dosed in Phase 1 bile tract cancer trial

• +5.3% Qoria (QOR) - No news, rise is consistent with prevailing long term uptrend, closed back above short term trend ribbon, bouncing off long term uptrend ribbon 🔎📈

• +4.8% Aurelia Metals (AMI) - No news, rise is consistent with prevailing short and long term uptrends (regular feature chart in ChartWatch ASX Scans uptrends list) 🔎📈

• +4.3% Core Lithium (CXO) - No news, has been volatile since Monday's Production and Financial Position Update

• +3.7% Spartan Resources (SPR) - Never Never and Pepper deliver exceptional assays (yesterday), rise is consistent with prevailing short and long term uptrends (regular feature chart in ChartWatch ASX Scans uptrends list) 🔎📈

• +3.1% The Star Entertainment Group (SGR) - No news 🤔

• +3.0% Ingenia Communities Group (INA) - No news 🤔

• +2.4% Telstra Group (TLS) - Several broker moves following yesterday's Telstra Announces Mobile Pricing Update (See Broker Moves section)

• +2.0% Megaport (MP1) - No news, initiated at outperform at CLSA with a price target of $15.10 (See Broker Moves section)

Trading lower

• -9.3% Electro Optic Systems (EOS) - No news 🤔

• -8.8% Latin Resources (LRS) - No news, fall is consistent with prevailing short and long term downtrends (regular feature chart in ChartWatch ASX Scans downtrends list) 🔎📉

• -7.2% Insignia Financial (IFL) - Response to ASX Price Query

• -4.5% Orora (ORA) - No news, fall is consistent with prevailing short and long term downtrends (regular feature chart in ChartWatch ASX Scans downtrends list) 🔎📉

• -4.4% Regal Partners (RPL) - Completion of Acquisition of Merricks Capital

• -4.4% Botanix Pharmaceuticals (BOT) - No news 🤔

• -4.2% Chalice Mining (CHN) - No news, fall is consistent with prevailing short and long term downtrends (regular feature chart in ChartWatch ASX Scans downtrends list) 🔎📉

• -3.9% Yancoal Australia (YAL) - No news, pullback after recent strong rally

Broker Notes

Ampol (ALD)

• Retained at outperform at Macquarie; Price Target: $37.00

Aristocrat Leisure (ALL)

• Retained at outperform at Macquarie; Price Target: $55.00

APA Group (APA)

• Retained at outperform at Macquarie; Price Target: $9.40

AUB Group (AUB)

• Retained at outperform at Macquarie; Price Target: $33.84

Charter Hall Group (CHC)

• Retained at outperform at Macquarie; Price Target: $15.54

Chorus (CNU)

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

Coles Group (COL)

• Retained at outperform at Macquarie; Price Target: $17.50

Capstone Copper Corp. (CSC)

• Retained at outperform at Macquarie; Price Target: $12.80

CSL (CSL)

• Retained at outperform at Macquarie; Price Target: $330.00

Curvebeam AI (CVB)

• Retained at buy at Bell Potter; Price Target: $0.35 from $0.33

Goodman Group (GMG)

• Retained at outperform at Macquarie; Price Target: $36.37

Graincorp (GNC)

• Retained at outperform at Macquarie; Price Target: $9.60

Genusplus Group (GNP)

• Retained at buy at Bell Potter; Price Target: $2.40 from $2.20

Hastings Technology Metals (HAS)

• Retained at hold at Ord Minnett; Price Target: $0.36 from $0.28

Mirvac Group (MGR)

• Retained at outperform at Macquarie; Price Target: $2.26

Megaport (MP1)

• Initiated at outperform at CLSA; Price Target: $15.10

Macquarie Group (MQG)

• Retained at underweight at Morgan Stanley; Price Target: $215.00

Nick Scali (NCK)

• Retained at outperform at Macquarie; Price Target: $16.10

Orora (ORA)

• Retained at outperform at Macquarie; Price Target: $2.45 from $2.62

Resimac Group (RMC)

• Retained at buy at Bell Potter; Price Target: $1.30

Resmed Inc (RMD)

• Retained at outperform at Macquarie; Price Target: $34.85

Regis Resources (RRL)

• Upgraded to buy from hold at Argonaut Securities; Price Target: $2.40 from $2.00

• Retained at outperform at RBC Capital Markets; Price Target: $3.10

South32 (S32)

• Retained at outperform at Macquarie; Price Target: $4.50

Steadfast Group (SDF)

• Retained at outperform at Macquarie; Price Target: $6.70

Seek (SEK)

• Retained at buy at Ord Minnett; Price Target: $29.50

Sandfire Resources (SFR)

• Retained at outperform at Macquarie; Price Target: $11.20

Santos (STO)

• Retained at outperform at Macquarie; Price Target: $9.00

Telstra Group (TLS)

• Retained at buy at Goldman Sachs; Price Target: $4.30 from $4.25

• Retained at hold at Jefferies; Price Target: $4.00

• Retained at overweight at JP Morgan; Price Target: $4.65

• Upgraded to outperform from neutral at Macquarie; Price Target: $4.40 from $3.70

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

• Retained at buy at UBS; Price Target: $4.40

TPG Telecom (TPG)

• Retained at neutral at UBS; Price Target: $4.80

West African Resources (WAF)

• Retained at accumulate at Ord Minnett; Price Target: $1.60

Wesfarmers (WES)

• Retained at overweight at Morgan Stanley; Price Target: $56.20

Whitehaven Coal (WHC)

• Retained at outperform at Macquarie; Price Target: $9.00

Woolworths Group (WOW)

• Retained at outperform at Macquarie; Price Target: $35.00

Xero (XRO)

• Retained at outperform at Macquarie; Price Target: $184.40

Scans