Evening Wrap: ASX 200 dips slightly, bides time near record high as Telstra, Discretionary stocks drag

It was another quiet day on the surface with only a tiny loss by the close.

Resources stocks generally took a breather as so too did key base metals copper and nickel on the London Metals Exchange.

Still, there's usually something in this sector simmering up, and this time it was Alumina (AWC) which surged nearly 5% on a 3% gain in the Aluminium price, as well as a couple of prospering and uptrending lithium stocks in Vulcan Energy (VUL) and Latin Resources (LRS).

There was also plenty of news-specific toing and froing, with Webject (WEB) on the right side of investor favour while Telstra (TLS) and AP Eagers (APE) fell substantially foul of it.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 3.6 points lower at 7,848.1, smack-bang on its session low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 114 to 155.

The Utilities (XUJ) (+0.90%) sector was the best performing sector today. Nothing major going here, just a 1.5% gain in its biggest constituent by market cap, Origin Energy (ASX:ORG). No news for ORG, but I do note natural gas prices have been marching higher over the last week or two.

Also doing well today was the Industrials (XNJ) (+0.49%) sector. Again, nothing really news specific here, just some solid broad-based gains among key sector constituents.

The best industrial stocks today

Doing it tough today was the Communication Services (XTJ) (-2.5%) sector which struggled under the weight of another 4% decline in Telstra Group (ASX: TLS). If yesterday's Telstra move was about disappointment over its Organisational Update and FY24-FY25 Guidance, today was all about the broker response to it.

Check the Broker Notes section below for full details, but three rating downgrades and several price target cuts were always going to have a negative impact on TLS's share price.

Elsewhere, sharp falls in Eagers Automotive (ASX: APE) (-14.3%) (AGM and trading update), Tabcorp Holdings (ASX: TAH) (-3.8%), and Collins Foods (ASX: CKF) (-3.5%) each dragged on the Consumer Discretionary (XDJ) (-%) sector.

ChartWatch

Iron Ore 62% SGX

It took some work, but the new long term uptrend appears to be progressing

I last covered iron ore in ChartWatch in the Evening Wrap of 6 May. In that update I noted that a close above the long term trend ribbon would initiate a new long term uptrend.

It has taken a little time, and a great deal of work from the demand-side to dispense with the dynamic supply of the long term trend ribbon, but I suggest that with the close above the 120.15 point of supply a new long term uptrend is now confirmed.

The short term trend remains intact and appears to be strengthening. The price action could be better (I am reading rising peaks and falling troughs), but the candles since 113.15 have been decisively demand-side in nature.

120.15 moves to demand and 126.80 is supply.

The short term trend remains intact as long as iron ore continues to close above 113.15.

High Grade Copper futures COMEX

Clearly a strong trend, but hunch setting up for at least a consolidation here

The last time we looked at High Grade Copper was in Friday’s Evening Wrap’s ChartWatch. In that update I noted that the upward pointing shadows evident in the last couple of sessions might indicate the start of a topping process if we saw them joined be one or two more in the 5.033-5.212 supply zone. I also pointed out that 5.212 was a key point of supply.

Monday’s long white candle, therefore, was a good one to see – as it closed above the psychological $5 major round number and demonstrated continued demand-side control.

Tuesday and Wednesday’s upward pointing shadows indicate supply remains committed between 5.033-5.212, however.

These contradicting signals suggest it’s a little touch and go. Certainly, I would not be surprised to see a brief (1-2 week) period of equilibrium develop around here that would translate into a well-earned breather from the copper price.

I suggest that some consolidation would be healthy as it allows points of demand to form at higher (closer) levels, and for the dynamic demand of the short term uptrend ribbon to ‘catch up’. Each would provide traders with valuable points beneath which they could set tight stops in the event of the next breakout.

I don’t want to get too far ahead, so I’ll just say (as I always do) watch the candles from here. Downside volatility has been extremely low since the run began all the way back in March. This means that if you start to see it – that is long black bodied candles – it will tell you supply has arrived and demand sees the value in backing off and waiting for any retracement to play out.

Also, watch out for long upward pointing shadows into 5.212. These would be equally damning as they imply a wall of opportunistic overhead supply.

Even though I doubt it’s the most likely scenario, I must mention that a long white bodied candle that closes above 5.212 sets copper up for the next leg of its journey higher. I doubt it, but I’d love to see it!

(Today’s candle, i.e., the last candle, looks bearish – but it’s a live candle – so discount it!)

Economy

Today

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

Later this week

Thursday

• 04:00 USA FOMC Meeting Minutes

• 09:00 AUS Flash Manufacturing PMI (49.6 previous) & Flash Services PMI (53.6 previous)

• 17:15 (from) EU Various countries Flash Manufacturing and Services PMIs

• 23:45 USA Flash Manufacturing PMI (50.1 forecast vs 50.0 previous) & Flash Services PMI (51.5 forecast vs 51.3 previous)

Friday

• 22:30 USA Core Durable Goods Orders April (+0.1% forecast vs +0.0% March)

Latest News

Interesting Movers

Trading higher

• +14.2% Omni Bridgeway (OBL) - No news 🤔

• +7.8% Vulcan Energy Resources (VUL) - Continued positive response to yesterday's Corporate Presentation - May 2024, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +7.7% Webjet (WEB) - FY24 Results and Annual Report, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.7% Southern Cross Electrical Engineering (SXE) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.6% Technology One (TNE) - Continued positive response to yesterday's Half Year Accounts, positive broker response - see Broker Notes section, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.3% GQG Partners (GQG) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.9% Resolute Mining (RSG) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.7% Latin Resources (LRS) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.9% Alumina (AWC) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.8% Dicker Data (DDR) - No news, Citi retained BUY rating (see Broker Notes section below) bounce after massive plunge due to Friday's disappointing Q1 FY24 Market Update

Trading lower

• -15.0% Eagers Automotive (APE) - AGM Material including Market Guidance, fall is consistent with prevailing short and long term downtrends 🔎📉

• -6.6% Wildcat Resources (WC8) - Luke Discovery Returns High Grade Results, fall is consistent with prevailing short term downtrend, long term trend under severe pressure 🔎📉

• -6.3% 29METALS (29M) - Possibly negative reaction to yesterday's NEWS, small pullback in copper prices overnight, fall is consistent with prevailing long term downtrend 🔎📉

• -5.8% Inghams Group (ING) - Biosecurity update

• -5.7% Ridley Corporation (RIC) - Market Update - Wilsons and Agfood Conferences, fall is consistent with prevailing short term downtrend, falling peaks and falling troughs, long term trend is transitioning from up to down 🔎📉

• -5.2% Australian Clinical Labs (ACL) - Change in substantial shareholding from AEF and FY24 Trading Update, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.4% Life360 (360) - Ceasing to be a substantial holder

• -4.2% Telstra Group (TLS) - Continued negative response to yesterday's Org changes, action on cost & early FY25 guidance and resultant broker downgrades and price target cuts - see Broker Notes section below, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.9% Nine Entertainment Co. Holdings (NEC) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

Broker Notes

• Auckland International Airport (AIA) upgraded to overweight from neutral at Jarden; Price Target: NZ$8.58 from NZ$8.44

• ALS (ALQ)

  • Upgraded to overweight from buy at Jarden; Price Target: $14.90 from $13.70

  • Retained at outperform at Macquarie; Price Target: $15.20 from $13.90

  • Retained at neutral at UBS; Price Target: $14.55 from $13.30

• ANZ Group (ANZ) retained at neutral at Jarden; Price Target: $29.00

• Aroa Biosurgery (ARX) retained at buy at Bell Potter; Price Target: $0.90

• Botanix Pharmaceuticals (BOT) initiated at buy at E&P; Price Target: $0.55

• Breville Group (BRG) upgraded to outperform from neutral at Macquarie; Price Target: $28.60 from $26.30

• Commonwealth Bank of Australia (CBA) retained at underweight at Jarden; Price Target: $102.00

• Dicker Data (DDR) retained at buy at Citi; Price Target: $11.70 from $13.60

• DGL Group (DGL) downgraded to hold from add at Morgans; Price Target: $0.65 from $0.77

• Domino's Pizza Enterprises (DMP) retained at overweight at Jarden; Price Target: $48.00

• Elders (ELD)

  • Retained at buy at Citi; Price Target: $9.65 from $8.50

  • Upgraded to buy from hold at PAC Partners; Price Target: $9.15 from $7.53

  • Retained at neutral at UBS; Price Target: $9.00

• IDP Education (IEL) retained at overweight at Morgan Stanley; Price Target: $22.50 from $24.00

• Infratil (IFT) retained at neutral at Macquarie; Price Target: NZ$10.42

• James Hardie Industries (JHX)

  • Retained at buy at Citi; Price Target: $63.00

  • Upgraded to buy from overweight at Jarden; Price Target: $54.00 from $57.00

  • Downgraded to neutral from overweight at JP Morgan; Price Target: $50.00 from $63.00

  • Upgraded to outperform from neutral at Macquarie; Price Target: $55.00 from $62.40

  • Retained at overweight at Morgan Stanley; Price Target: $58.00 from $65.00

  • Retained at sector perform at RBC Capital Markets; Price Target: $49.00 from $54.00

  • Retained at buy at UBS; Price Target: $60.00 from $66.50

• Lifestyle Communities (LIC) retained at buy at Citi; Price Target: $17.20 from $17.90

• Mineral Resources (MIN) retained at overweight at Morgan Stanley; Price Target: $83.00

• National Australia Bank (NAB) retained at overweight at Jarden; Price Target: $34.00

• Pinnacle Investment Management Group (PNI) retained at outperform at Macquarie; Price Target: $14.52 from $10.64

• Qantas Airways (QAN) retained at buy at UBS; Price Target: $7.50

• Rio Tinto (RIO) retained at overweight at Morgan Stanley; Price Target: $139.00

• South32 (S32)

  • Retained at outperform at Macquarie; Price Target: $4.20 from $3.90

  • Retained at overweight at Morgan Stanley; Price Target: $3.35

• Sonic Healthcare (SHL)

  • Retained at neutral at Citi; Price Target: $25.00 from $31.00

  • Retained at outperform at CLSA; Price Target: $26.10 from $31.00

  • Upgraded to positive from neutral at E&P; Price Target: $28.00

  • Retained at neutral at Jarden; Price Target: $26.19 from $28.88

  • Retained at neutral at Macquarie; Price Target: $26.35 from $27.85

  • Retained at overweight at Morgan Stanley; Price Target: $31.65

  • Retained at add at Morgans; Price Target: $31.19 from $34.94

  • Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $27.00 from $34.00

  • Retained at buy at UBS; Price Target: $29.70 from $32.80

• Smartgroup Corporation (SIQ) upgraded to outperform from neutral at Macquarie; Price Target: $9.51

• Telstra Group (TLS)

  • Retained at underperform at CLSA; Price Target: $3.70 from $4.10

  • Retained at buy at HSBC; Price Target: $4.50 from $4.90

  • Retained at buy at Jarden; Price Target: $4.00 from $4.40

  • Downgraded to hold from buy at Jefferies; Price Target: $4.00 from $4.41

  • Downgraded to neutral from outperform at Macquarie; Price Target: $3.70 from $4.38

  • Retained at overweight at Morgan Stanley; Price Target: $4.20 from $4.50

  • Downgraded to reduce from hold at Morgans; Price Target: $3.00 from $4.00

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

• Technology One (TNE)

  • Retained at buy at Bell Potter; Price Target: $19.00 from $18.50

  • Upgraded to outperform from neutral at Macquarie; Price Target: $18.30 from $16.20

  • Retained at equal-weight at Morgan Stanley; Price Target: $14.50

  • Retained at neutral at UBS; Price Target: $17.20 from $16.40

• Viva Leisure (VVA) retained at buy at Citi; Price Target: $2.50 from $2.42

• Westpac Banking Corporation (WBC) retained at overweight at Jarden; Price Target: $26.20

• Webjet (WEB)

  • Retained at buy at Jarden; Price Target: $9.55

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

Scans