Evening Wrap: ASX 200 edges higher as AGL, Cochlear & News Corp pop on results

Aussie stocks closed modestly higher today, and not far away from record territory again. Better than expected first half FY24 results for AGL Energy (AGL) , Cochlear (COH), and News Corporation (NWS) spurred large gains in their stock prices. Energy stocks were again weaker due another slide in Santos (STO) as the realities of it becoming a "former takeover target" continue to sink in.

Let’s dive in!

Markets

ASX 200 Session Chart

Stuck in the middle middle again! 🫤

The S&P/ASX200 (XJO) finished 23.4 points higher at 7,639.2, smack-bang at the mid-point of the session's range. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 170 to 104.

There was little in terms of performance to split the best three performing sectors: Utilities (XUJ) (+1.0%), Financials (XFJ) (+0.9%), and Real Estate Investment Trusts (XPJ) (+0.7%). Much of the gains in the first and last sectors were due to better than expected first half results, AGL Energy (AGL) (+10.3%) in Utilities, and Mirvac Group (MGR) (+4.7%) and Charter Hall Long Wale REIT (CLW) (+3.2%) in the Real Estate.

Doing it tough today was the Energy (XEJ) sector (-0.8%), largely on the back of another fall in Santos (STO) (-0.9%), which is still adjusting to its new post-takeover target life, well at least for now!

ChartWatch

AGL Energy (AGL)

The end of one trend could be the beginning of another

Gaps are super important technical indicators. They indicate a sudden (and the bigger the gap) significant change in market sentiment towards the future earnings potential for a stock.

Gaps, and more specifically, gap-ups were a bit of a theme today among companies reporting first half results, of which AGL was one. This gap couldn't come at a better time, as the short and long term downtrends were gaining momentum in a showing of complete supply side control.

Today's large gap, suggests the market has moved substantially towards equilibrium. The low close on the session implies AGL shareholders are likely not out of the woods yet, however. Still, as long as the price stays out of that gap, there's scope for AGL to at the very least, move sideways.

Cochlear (COH)

Just in the nick of time

Another gap up, and just as timely for Cochlear which was starting to show signs the prevailing state of excess demand was shifting at least to equilibrium. To be fair, based upon Tuesday's gap-down and strong supply-side candle, it was probably moving more towards a supply-side market.

That move is likely arrested for now, but I note today's close hardly indicates demand was fearless into the close. With the short term trend at least back to neutral, and with long term trend still looking very strong, there's reason to assume investors have decided to stick with Cochlear for now. A close below Tuesday's low of $286.68 would indicate this thesis is likely null and void.

News Corporation (NWS)

From strength to strength

This is the strongest showing of excess demand of the three stocks covered in ChartWatch today, before and after results. Charts which show faultless trends, impeccable price action (i.e., higher peaks and higher troughs and good separation between them), and a predominance of white candles, are a giveaway for a market which can't get enough stock...at any price.

Today's big gap up merely confirms this in my mind, The close could have been better, but within the context of today's total move, is more than acceptable. It might take a little time (i.e., a little consolidation of today's gains) for News Corp to get going again, but the combined technicals suggest this is the most likely course of events.

Economy

• China CPI y/y to January

  • Actual -0.8% vs consensus forecast -0.5% p.a. vs -0.3% p.a. in November

  • Significantly worse than expected (yes, this is deflation, which is the thing central bankers fear the most!)

• China PPI y/y to January

  • Actual -2.5% vs consensus forecast-2.6% p.a. vs November -2.7% p.a.

  • Slightly better than expected, but still stuck in a deflationary environment

  • Overall the data is terrible in that it indicates very weak consumption and pricing power among business, but possibly good for the rest of the world if China can export some of its deflation (we'd love a bit of it over here!)

Friday

• 09:30 AU RBA Governor Bullock speaks

Latest News

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Interesting Movers

Trading higher

• +20.0% Syrah Resources (SYR) - No news, decent volume spike on big white candle after long downtrend, smells like a little short covering here and there! 🤔

• +18.2% Calix (CXL) - Heidelberg Materials assessing alternative sites for L2, smells like a little short covering here and there! 🤔

• +14.6% Piedmont Lithium Inc (PLL) - Continued positive response to yesterday's: Piedmont Lithium Provides Corporate Update, smells like a little short covering here and there!

• +10.3% AGL Energy (AGL) - FY24 Half-Year Results Announcement

• +7.9% Bannerman Energy (BMN) - No news, rise is consistent with prevailing short and long term uptrends

• +6.5% Nuix (NXL) - No news, bouncing off long term uptrend ribbon, closed above short term downtrend ribbon

• +6.3% Liontown Resources (LTR) - No new, smells like a little short covering here and there! 🤔

• +6.3% News Corporation (NWS) - FY2024 Second Quarter Earnings Release, rise is consistent with prevailing short and long term uptrends

• +6.1% Humm Group (HUM) - No news, rise is consistent with prevailing short and long term uptrends

• +6.0% Novonix (NVX) - No new, smells like a little short covering here and there! 🤔

• +5.8% Chalice Mining (CHN) - No new, smells like a little short covering here and there! 🤔

• +5.7% Ainsworth Game Technology (AGI) - No news, rise is consistent with prevailing short and long term uptrends

• +5.5% Cettire (CTT) - Continued positive response to yesterday's: H1 FY24 Appendix 4D and Financial Report, rise is consistent with prevailing short and long term uptrends

• +5.0% Lovisa Holdings (LOV) - Bell Potter raised price target to $26.50 from $25.00, rise is consistent with prevailing short and long term uptrends

Trading lower

• -8.3% Platinum Asset Management (PTM) - Continued negative response to yesterday's: Funds Under Management - January 2024, fall is consistent with prevailing short and long term downtrends

• -4.5% Alliance Aviation Services (AQZ) - HY24 Results Release

• -4.2% REA Group (REA) - REA Group H1 FY24 Financial Information Released

• -4.0% Lotus Resources (LOT) - Change in substantial holding (decrease) from MQG

• -4.0% McMillan Shakespeare (MMS) - No news 🤔

• -3.7% Ebos Group (EBO) - No news, fall is consistent with prevailing short and long term downtrends

• -3.4% Anteris Technologies (AVR) - No news, fall is consistent with prevailing short and long term downtrends

• -3.2% Grange Resources (GRR) - No news, fall is consistent with prevailing short and long term downtrends

• -3.0% APM Human Services International (APM) - No news, fall is consistent with prevailing short and long term downtrends

Broker Notes

• AIC Mines (A1M) initiated buy at Moelis Australia; Price Target: $0.52

• Australian Agricultural Company (AAC) retained at buy at Bell Potter; Price Target: $2.00 from $1.90

• Adore Beauty Group (ABY) retained at buy at Citi; Price Target: $1.25

• Amcor (AMC)

  • Retained at accumulate at Ord Minnett; Price Target: $17.80 from $17.45

  • Retained at neutral at UBS; Price Target: $15.60 from $15.40

  • Retained at equalweight at Morgan Stanley; Price Target: $14.50

• Aurelia Metals (AMI) retained at buy at Ord Minnett; Price Target: $0.21 from $0.20

• AUB Group (AUB) retained at overweight at Morgan Stanley; Price Target: $38.30 from $37.55

• Alumina (AWC) retained at overweight at Morgan Stanley; Price Target: $1.10

• Beacon Lighting Group (BLX) retained at buy at Citi; Price Target: $2.65

• BWP Trust (BWP)

  • Upgraded to neutral from underweight at JPMorgan; Price Target: $3.60 from $3.50

  • Retained at hold at Ord Minnett; Price Target: $3.60

• Centuria Industrial REIT (CIP)

  • Retained at hold at Ord Minnett; Price Target: $3.30

  • Retained at hold at Bell Potter; Price Target: $3.30 from $3.25

  • Retained at equalweight at Morgan Stanley; Price Target: $3.30

• Charter Hall Long Wale REIT (CLW) retained at neutral at UBS; Price Target: $4.10

• CSR (CSR) downgraded to hold from add at Morgans; Price Target: $6.90 from $6.75

• Dexus (DXS) retained at sell at Bell Potter; Price Target: $2.80 from $2.70

• Fortescue (FMG) retained at underweight at Morgan Stanley; Price Target: $18.80

• IGO (IGO) retained at equalweight at Morgan Stanley; Price Target: $7.25

• Iluka Resources (ILU) retained at equalweight at Morgan Stanley; Price Target: $7.15

• Kogan.Com (KGN) retained at sell at Citi; Price Target: $4.30

• Lovisa Holdings (LOV) retained at buy at Bell Potter; Price Target: $26.50 from $25.00

• Arcadium Lithium (LTM) initiated underweight at Piper Sandler; Price Target: $6.90

• Mineral Resources (MIN) retained at equalweight at Morgan Stanley; Price Target: $62.50 from $63.00

• McMillan Shakespeare (MMS) initiated at at Canaccord Genuity; Price Target: $19.60

• National Australia Bank (NAB) retained at equalweight at Morgan Stanley; Price Target: $30.30

• Nick Scali (NCK) upgraded to buy from neutral at Citi; Price Target: $15.55 from $12.60

• Pilbara Minerals (PLS)

  • Retained at neutral at Citi; Price Target: $3.60

  • Retained at underweight at Morgan Stanley; Price Target: $3.00

• Prospect Resources (PSC) retained at overweight at Morgan Stanley; Price Target: $5.85 from $5.90

• Platinum Asset Management (PTM) retained at sell at Citi; Price Target: $1.00

• REA Group (REA) retained at neutral at UBS; Price Target: $167.00

• Red 5 (RED) retained at buy at Ord Minnett; Price Target: $0.37

• Rio Tinto (RIO) retained at overweight at Morgan Stanley; Price Target: $144.50

• Steadfast Group (SDF) retained at equalweight at Morgan Stanley; Price Target: $6.20 from $6.30

• Smartgroup Corporation (SIQ) initiated at at Canaccord Genuity; Price Target: $10.20

• Temple & Webster Group (TPW) retained at neutral at Citi; Price Target: $7.40

• Virgin Money UK LSE (VUK) retained at accumulate at Ord Minnett; Price Target: $4.00

• Whitehaven Coal (WHC) retained at overweight at Morgan Stanley; Price Target: $8.80

• Worley (WOR) upgraded to buy from neutral at BofA; Price Target: $19.00 from $18.90

• Wisetech Global (WTC) retained at neutral at Citi; Price Target: $71.75

Scans