Evening Wrap: ASX 200 dips on US Govt shutdown, BHP-China iron ore ban. Droneshield soars, lithium stocks slump

The S&P/ASX 200 closed 3.1 points lower, down 0.04%.

The Australian stock market sagged today under the weight of news that the U.S. government has shut down. Congress failed to pass a critical funding bill prior to the commencement of the new fiscal year at midnight in Washington D.C. (i.e., early this morning local time). While markets have often looked through such shutdowns, prolonged gridlock threatens to dent investor confidence and drive cash to the sidelines.

In stock specific news, counter-drone tech company DroneShield (DRO) soared 23.2% as investors continue to pile into defence-related stocks, and BHP Group (BHP) dipped 2.5% as reports emerged that China's state owned CMRG has told major steel makers to stop buying the mining giant’s iron ore. Elsewhere, lithium stocks were dumped on news that China's CATL would likely recommence production at its Jiangxi province mine sooner than expected.

Be sure to 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 economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on 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 3.1 points lower at 8,845.7, 0.42% from its session low and 0.21% from its high. Despite the minor dip in the benchmark, in the broader-based S&P/ASX 300 (XKO) stocks fared better with advancers beat decliners by 148 to 116.

It's called "Politics" stupid! 🤦

Well it's official. After plenty of grandstanding, bickering, juvenile cheap-shots, and acting in the best interests of one's ego and not one's constituents (i.e., "Politics"), the U.S. government has shut down again. Congress failed to pass critical funding bills before the fiscal year kicked off at midnight in Washington, D.C.

The shutdown will likely see an estimated 750,000 federal workers furloughed as non-essential agencies grind to a halt, while key economic data – like Friday’s Nonfarm Payrolls – will be delayed. Essential services will continue.

Apart from not getting what's typically the biggest U.S. monthly economic data point, what does it mean for markets? 🤔

Historically, U.S. stocks have often held up, or even advanced during shutdowns as traders look through the theatre. But the key determinant is how long the impasse drags on – the longer it does, the greater the probability confidence suffers, investors throw in the towel, and cash moves the the sidelines until calmer seas prevail (due to more collaborative politics... God help us! 🤦).

China's lithium supply smackdown 🥊

Remember the euphoria over the closures of Contemporary Amperex Technology (CATL) and other Chinese lithium producers’ lepidolite mines in Jiangxi province? ASX lithium went vertical for several weeks back in June and July. They’ve since pared back, and just as some of them were starting to look good again, news has broken that CATL and at least one other producer has been given the green light by Chinese authorities to recommence production.

In an article titled "China Approves CATL Mine Reserves in Relief for Lithium Outlook" (paywall), Bloomberg broke the story late yesterday afternoon, citing “sources familiar with the matter, who asked not to be named”. CATL’s lepidolite production is a major swing factor in the global lithium supply chain – largely responsible for the marginal-cost supply that can make or break broader lithium minerals pricing. The impact on local lithium producers today was swift and severe:

China vs ASX Mining Stocks Volume II: BHP Iron Ore = 🚫

Apart from blowing up our lithium stocks today, no doubt you've also heard that China doesn't want BHP Group's (BHP) (-2.5%) iron ore anymore. Well, again, that's what "sources familiar with the matter, who asked not to be named" are saying! RBC Capital had this to say about the growing spat between BHP and China's state owned China Mineral Resources Group (CMRG) – established in 2022 to act as the central purchaser of imported iron ore for China's steel industry.

"While headlines read negative, we view this as a neutral event. We view this 'ban' as more of a negotiating tactic, most likely an effort to secure lower long-term prices... The ban would likely increase pricing power of other competitors (Vale, Rio Tinto, Fortescue), as they know steel mills are desperate for feed... but China cannot realistically walk away from BHP supply altogether... 11% of China's steel output would be at risk... Hence, we view BHP's iron ore supply as structurally irreplaceable."

Today's best blue chip gainers

Today's worst blue chip losers

ChartWatch

Nasdaq Composite Index

Nasdaq Composite chart (click here for full size image)

We covered the Nasdaq Composite in today’s ChartWatch *LIVE* Webinar, so no need for a dedicated write up on it today. Needless to say, FRP mode is well and truly intact after Tuesday’s demand-side candle. (Full Risk Position = My personal allowable capital allocation limit for my investments in US stocks is 100%)

S&P/ASX 200 (XJO)

S&P/ASX 200 chart (click here for full size image)

I can be similarly brief here. Very little has changed* since our last update – because today’s candle indicates very little in terms of demand-supply interaction – let alone any net-net change to who is in control of the demand-supply environment.

But that’s kinda the gist of equilibrium ⚖️: If the market is indecisive – then as trend followers, how can we be decisive? 🤷

There is one change due to yesterday’s candle’s high of 8892.4 tickling the previous top of the recent trading range of 8888. I always round up to the nearest point for points of supply – so the new point of supply capping the upside of the trading range is now 8893.

No change to my risk settings here: 2/3RP (Risk Position = My personal allowable capital allocation limit for my investments in Australian stocks is 67%).

Key levels: 8893 is the closest point of supply, an emphatic close above here and it is likely the demand-side has reclaimed control of the XJO’s price. 8731 is the closest point of demand, the price should not close below here if the demand-side has any control of the XJO's price; a close below 8731 confirms short term supply-side control of the XJO's price and commences a new short term downtrend = ⚠️

Economy

Today

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

Later this week

Thursday

• 00:00 USA September ISM Manufacturing PMI (49.0 forecast vs 48.7 in August)

• ALL DAY CHN Bank Holiday

Friday

• ALL DAY CHN Bank Holiday

• 22:30 USA September Non-farm Payrolls

  • Non-Farm Employment Change: +52,000 forecast vs +22,000 in August

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

  • Unemployment Rate: +4.3% forecast vs +4.3% in August

Saturday

• 00:00 USA September ISM Services PMI (51.8 forecast vs 52.0 in August)

Latest News

Interesting Movers

Trading higher

• +31.8% Nova Minerals (NVA) – DoW Awards US$43.4M to Nova for Antimony Production, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +29.0% Elsight (ELS) – No news, general strength across the broader Defence sector today.

• +23.2% Droneshield (DRO) – No news, general strength across the broader Defence sector today, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +22.2% Tamboran Resources Corporation (TBN) – Tamboran to acquire Falcon Oil & Gas.

• +20.7% Podium Minerals (POD) – Game-changing concentrator - metallurgical milestone, rise is consistent with prevailing short and long term uptrends 🔎📈

• +18.2% Bravura Solutions (BVS) – Guidance Update, rise is consistent with prevailing short and long term uptrends 🔎📈

• +15.9% G50 Corp (G50) – Golconda, Arizona Project Purchase Complete, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +15.1% Lindian Resources (LIN) – No news since 30-Sep Adopts Owner-Operator Mining At Kangankunde, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +14.5% Titomic (TTT) – Non-Deal Roadshow Investor Presentation, rise is consistent with prevailing short and long term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +14.1% 4DMEDICAL (4DX) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +13.6% Focus Minerals (FML) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +13.4% LTR Pharma (LTP) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +13.3% Amplia Therapeutics (ATX) – No news since 30-Sep Patent Allowance for Key Narmafotinib Patent in US.

• +12.5% Yandal Resources (YRL) – $13.5m Placement to Expand and Accelerate Exploration, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +12.0% Orbital Corporation (OEC) – No news 🤔.

• +10.7% Westgold Resources (WGX) – 3-Year Outlook Webinar PresentationN, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +10.6% Acusensus (ACE) – No news, rise is consistent with prevailing short and long term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +10.4% American Rare Earths (ARR) – No news 🤔.

• +10.3% GBM Resources (GBZ) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

Trading lower

• -12.5% Peel Mining (PEX) – Ceasing to be a substantial holder from SBM.

• -12.0% St George Mining (SGQ) – No news, pulled back in the wake of recent sharp rally.

• -10.7% Liontown Resources (LTR) – No news, general weakness across the broader Lithium sector today.

• -10.6% Lotus Resources (LOT) – No news, general weakness across the broader Uranium sector today.

• -10.1% Elevate Uranium (EL8) – No news, general weakness across the broader Uranium sector today.

• -10.0% Galan Lithium (GLN) – Annual Report 30 June 2025, general weakness across the broader Lithium sector today.

• -9.8% Dreadnought Resources (DRE) – No news, pulled back in the wake of recent sharp rally.

• -9.7% Environmental Clean Technologies (ECT) – No news, pulled back in the wake of recent sharp rally.

• -9.4% Alligator Energy (AGE) – No news, general weakness across the broader Uranium sector today.

• -9.1% Talga Group (TLG) – Full Year Statutory Accounts, fall is consistent with prevailing short and long term downtrends 🔎📉

• -8.7% Pointsbet (PBH) – Ceasing to be a substantial holder.

• -8.3% Peninsula Energy (PEN) – No news, general weakness across the broader Uranium sector today.

• -7.4% Aura Energy (AEE) – No news, general weakness across the broader Uranium sector today.

• -7.2% Vulcan Energy Resources (VUL) – No news, general weakness across the broader Lithium sector today.

Broker Moves

The a2 Milk Company (A2M)

• Upgraded to outperform from hold at CLSA; Price Target: $10.20 from $7.30

Aussie Broadband (ABB)

• Retained at overweight at Morgan Stanley; Price Target: $6.00

AGL Energy (AGL)

• Retained at buy at Ord Minnett; Price Target: $12.00 from $11.00

Ampol (ALD)

• Upgraded to outperform from sector perform at RBC Capital Markets; Price Target: $35.00

ANZ Group Holdings (ANZ)

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

• Retained at equal-weight at Morgan Stanley; Price Target: $30.50

• Retained at sell at UBS; Price Target: $26.50

Bendigo and Adelaide Bank (BEN)

• Retained at underperform at Macquarie; Price Target: $11.00

BHP Group (BHP)

• Retained at sector perform at RBC Capital Markets; Price Target: $44.00

Ballard Mining (BM1)

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

Bank of Queensland (BOQ)

• Retained at underperform at Macquarie; Price Target: $6.00

Bravura Solutions (BVS)

• Retained at positive at E&P; Price Target: $2.95

Bhagwan Marine (BWN)

• Retained at buy at Shaw and Partners; Price Target: $0.80

CAR Group (CAR)

• Retained at accumulate at Morgans; Price Target: $40.80

Commonwealth Bank of Australia (CBA)

• Retained at underperform at Macquarie; Price Target: $106.00

Cuscal (CCL)

• Retained at buy at Ord Minnett; Price Target: $4.78

Coles Group (COL)

• Retained at buy at Citi; Price Target: $25.40

CSL (CSL)

• Retained at buy at Citi; Price Target: $265.00

• Retained at sector perform at RBC Capital Markets; Price Target: $280.00

Digico Infrastructure REIT (DGT)

• Retained at outperform at Macquarie; Price Target: $3.90

GQG Partners Inc. (GQG)

• Downgraded to neutral from overweight at Jarden; Price Target: $2.30 from $2.50

Judo Capital Holdings (JDO)

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

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

Lotus Resources (LOT)

• Retained at speculative buy at Ord Minnett; Price Target: $0.35

Megaport (MP1)

• Retained at buy at Citi; Price Target: $16.30

National Australia Bank (NAB)

• Retained at neutral at Macquarie; Price Target: $37.50

• Retained at neutral at UBS; Price Target: $37.50

NEXTDC (NXT)

• Retained at buy at Citi; Price Target: $18.35

• Retained at outperform at Macquarie; Price Target: $20.90

Paradigm Biopharmaceuticals (PAR)

• Retained at speculative buy at Bell Potter; Price Target: $0.65 from $0.73

REA Group (REA)

• Retained at hold at Morgans; Price Target: $257.00

ResMed Inc. (RMD)

• Retained at buy at Citi; Price Target: $51.00

SEEK (SEK)

• Retained at accumulate at Morgans; Price Target: $30.80 from $30.00

Supply Network (SNL)

• Upgraded to buy from accumulate at Ord Minnett; Price Target: $41.50

Super Retail Group (SUL)

• Upgraded to buy from hold at Carter Bar Securities; Price Target: $20.17 from $18.57

Seven West Media (SWM)

• Retained at underweight at Morgan Stanley; Price Target: $0.15

Southern Cross Media Group (SXL)

• Retained at underweight at Morgan Stanley; Price Target: $0.65

Toubani Resources Inc (TRE)

• Retained at speculative buy at Canaccord Genuity; Price Target: $1.50

Veem (VEE)

• Downgraded to hold from buy at Ord Minnett; Price Target: $1.75 from $1.90

Viridis Mining and Minerals (VMM)

• Retained at speculative buy at Ord Minnett; Price Target: $3.34 from $1.60

Westpac Banking Corporation (WBC)

• Retained at underperform at Macquarie; Price Target: $31.00

• Retained at neutral at UBS; Price Target: $38.00

Wagners Holding Company (WGN)

• Downgraded to hold from accumulate at Morgans; Price Target: $2.90 from $2.75

Woolworths Group (WOW)

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

Wisetech Global (WTC)

• Retained at buy at Citi; Price Target: $121.35

Scans