Evening Wrap: ASX 200 down as BHP, energy stocks sag – tech bounces as Life360, Megaport rally

The ASX 200 edged higher as benchmark US bond yields continued their modest retreat, providing relief for gold and technology stocks. Energy and materials gave ground — the former heavily influenced by ex-dividends, the latter by BHP extending its losing streak — bucking positive base metals and iron ore leads.

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 Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch.

Let’s dive in!

The S&P/ASX 200 (XJO) finished 14.2 points lower at 9,005.9, 0.7% from its session high and just 0.1% from its low. Despite the dour close at benchmark level, in the broader-based S&P/ASX 300 (XKO) advancers breezed past decliners by a margin of 100 (187 to 87). For the week, the XJO finished down 86.4 points or 0.95% lower, 1.3% from its intraweek high and 0.8% from its intraweek low.

The Gold Sub-Index (XGD) (+1.1%) was the best sector for a second consecutive day as COMEX gold futures rallied 2.8% overnight (but fell 0.6% to US$4,514/oz in Asian trade). The catalyst was a second day of easing in US benchmark bond yields, reducing the opportunity cost of holding non-yielding gold. Ora Banda Mining (OBM) (+5.6%), Bellevue Gold (BGL) (+3.3%), Pantoro Gold (PNR) (+3.2%), and Emerald Resources (EMR) (+3.0%) all advanced.

Gold Futures (Front month, back-adjusted) COMEX

Information Technology (XIJ) (+1.0%) and Communication Services (XTJ) (+1.0%) shared precisely the same lower-yield tailwind, as these sectors' long-duration earnings structures benefit from the lower discount rates that flow from lower risk-free yields. Nuix (NXL) (+5.3%), Life360 (360) (+4.1%), Megaport (MP1) (+4.1%), and WiseTech Global (WTC) (+2.5%) all advanced within technology. The classifieds names led Communication Services — Seek (SEK) (+2.4%), REA Group (REA) (+2.3%), and CAR Group (CAR) (+2.3%).

Financials (XFJ) (+0.1%) and Health Care (XHJ) (-0.1%) were both essentially flat — the major banks and large-cap healthcare names holding ground as capital that had flowed to them on Wednesday's risk-off move rotated back toward technology and cyclicals.

Within Financials, the four major banks were fractionally mixed: Westpac (WBC) (+0.1%) barely gained while ANZ (ANZ) (-0.2%) and CBA (-0.1%) barely lost — a sector in equilibrium rather than in motion. Within Healthcare, Cochlear (COH) (+1.3%), Sonic Healthcare (SHL) (+1.2%), and Pro Medicus (PME) (+0.7%) advanced while CSL (CSL) (-0.6%) gave back a portion of its recent recovery.

Energy (XEJ) (-1.2%) was the session's worst sector, but the headline decline is substantially explained by ex-dividends rather than any fundamental deterioration. Ampol (ALD) (-6.0%) and Viva Energy (VEA) (-3.7%) both went ex-dividend today — accounting for the lion's share of the sector-level damage.

ICE Brent crude futures added 0.4% to US$95.91/bbl in Asian trade, approaching what would be their highest close since 19 May, so the underlying oil price environment remains supportive. Still, Woodside Energy (WDS) (-1.2%) and Santos (STO) (-0.8%) eased — likely reflecting some profit-taking before the weekend.

Materials (XMJ) (-0.8%) was the other weak sector, with a familiar paradox at its core — COMEX copper futures gained 1.1% overnight before easing just 0.1% to US$6.655/lb in Asian trade, and SGX iron ore futures added 0.5% to US$99.40/t, yet the sector fell.

The explanation is largely BHP (BHP) (-2.4%) — the mining giant extended a losing streak (it went ex-dividend yesterday FYI), suggesting possible repositioning within the sector, or perhaps even, valuation concerns. Rio Tinto (RIO) (-0.7%) also fell.

Offsetting the BHP and RIO drag, copper specialists found buyers in line with the overnight LME gains: Firefly Metals (FFM) (+4.8%), Aurelia Metals (AMI) (+4.5%), and Aeris Resources (AIS) (+2.0%) all surged. Elsewhere, Fortescue (FMG) (+1.6%) was the standout among iron ore plays.

Lithium Carbonate Futures (Benchmark month, back-adjusted) GFEX

In other commodities moves, lithium stocks fell again as GFEX lithium carbonate futures plunged 5.3% to CNY 141,940/t — breaking through a key technical support level at CNY 148,320/t that had provided a floor for the past several sessions. With that level now breached, the next significant technical support sits at CNY 136,260/t — roughly 4% below where the contract closed. Wildcat Resources (WC8) (-3.8%), Pilbara Minerals (PLS) (-2.1%), Core Lithium (CXO) (-1.4%), Mineral Resources (MIN) (-1.4%), and IGO (IGO) (-1.3%) were all lower.

Uranium stocks extended Thursday's rally for a second day — this time with confirmation from the US market, where the Sprott Uranium Miners ETF jumped 4.1% in New York overnight. COMEX uranium futures held flat at US$89.45/lb, but the rally in the ETF move provided all the momentum the local names needed. Paladin Energy (PDN) (+3.9%), Boss Energy (BOE) (+3.8%), NexGen Energy (NXG) (+2.7%), and Bannerman Energy (BMN) (+1.2%) all advanced.

Analysis

Super strong performance by the Comp on Thursday. Gap… run… high close… good stuff. 👍

And consider: about average candle (i.e., strong, but not extraordinary with respect to the regular price action)… and below average volume (i.e., only modest demand side engagement in a supply side vacuum).

Conclusion: It looks like the demand side came creeping back in (the bond yield bogeyman didn’t get much better, but at least it didn’t get much worse — and the natural state of the Comp is to rise! 🫒)

It also looks like the supply side took a rain check — probably waiting for a better price inside 26701-2719.

When I look at a candle like Thursday’s, within the broader technical framework, my brain naturally says: I’d expect another strong demand side candle next.

But we saw a very similar candle 5 candles ago, and it was followed by an upward pointing shadow stopping precisely at the supply zone.

It will be super interesting to see if that supply remains active in the system, or if it's found to be conspicuous by its absence! 🤔

Can I go so far as to say: Thursday’s candle sets the Comp up for one of its most important sessions in months… If we see another strong demand side candle, that closes deep inside the 26701-27191 supply zone, then it almost certainly must trigger a wave of FOMO and HOFU throughout the demand-supply environment.

Volume will be interesting as well. It’s September now. Markets should be emerging from August’s typical malaise. Let’s see some engagement so we can make more confident decisions here.

As for risk… You know that I hate being less than FRP on the Comp! It’s a beast. It can make you look very, very conservative (read as stupid! 😉) very quickly.

Still, I’d much rather have a strong bull phase than the herd of zebras / chop-chop-chop price action we’re stuck in right now... So come on Comp — do your worst (best!)

View

1/2RP. (RP = Risk Position — it reflects my personal allowable capital allocation limit for my investments in US stocks. So 1/2RP is 50%, 2/3RP is 67% and FRP is 100%).

Key Levels

26863 is the closest key point of supply vs 25910-25995 as the closest key point of demand, and then the long term trend ribbon (presently 24187-25079).

Analysis

And then we get to the OTP... 🤦

I wouldn’t exactly say: The ASX 200 is a beast… I hate being less than FRP! Nope, it appears we have all the time in the world over here! 🤣

And there I was, after I logged in this morning and looked at that strong candle on the Comp, actually worried that today I was going to regret my decision to cut my portfolio risk.

With yet another long upward pointing shadow — failing to breach the now-dynamic supply at the short term trend ribbons — it feels like 1/2RP is a pretty sensible place to be.

I expect we're going to see further chop between 8940 and 9123 — or at least until we see a decisive close back above the short term trend ribbon. A long white candle, high close, and preferably on some volume — to signal the demand side has what it takes to overcome what is clearly a very credible supply side that remains in the system.

So, let's just play it cool until we see such a signal. Today was a great opportunity for one to occur... but it just wasn't meant to be! Have a fantastic weekend everyone 👋

View

I am in the process of moving to 1/2RP on Australian shares (i.e., the goal target over the next few days = 50% of my capital allocated to ASX shares invested vs 50% cash).

Key Levels

9123-9297 is the key zone of supply to contend with, while 8940 is the next key point of demand.

(Glossary of acronyms! Old Tin Pot (OTP): S&P/ASX 200 | MOTN: More Often Than Not | FOMO: Fear Of Missing Out | HOFU: Holding On For Upside | BTD: Buy The Dip | NUTE: No Urgency To Enter | FOHO: Fear Of Holding On | STR: Sell The Rally | RP: Risk Position | FFS: Fund Flow Shenanigans!)

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TODAY

• No major economic data releases were scheduled for today...

LATER THIS WEEK

FRIDAY

• 00:00 USA August ISM Services PMI (54.1 forecast vs 54.1 in July)

• 22:30 USA August Non-Farm Payroll

  • Non-Farm Employment Change: +58,000 forecast vs -23,000 in July

  • Unemployment Rate: 4.1% forecast vs 4.1% in July

  • Average Hourly Earnings: +0.3% m/m forecast vs +0.1% m/m in July