Evening Wrap: ASX 200 edges higher as financials, property and tech stocks lead, worrying China market move drags down commodities

27.1 points or just 0.33%. That's all that lies between the benchmark S&P/ASX 200 and a new record high close.

It's not like we're champing at the bit to knock it off though. Today's high of 8145, and Friday's similarly unsustainable high of 8144 suggests there's a touch of trepidation in knocking the old level.

Today's close was roughly mid-range and there were roughly just as many stocks falling today as rising...

What will be the catalyst that will power us to a new high? Perhaps it will be Wednesday's FOMC Meeting where we could get the first interest rate cut in a new rate cutting cycle. 0.25% or 0.50% could be the difference between the Aussie share market storming to a new high, or fading away from it in abject disappointment!

You'll find the usual reporting of the major stock-specific moves, the broker responses to them, as well as all of the key upcoming economic data in tonight's Evening Wrap plus I have detailed technical analysis on Chinese stocks and Iron Ore in today's ChartWatch. So....

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 21.7 points higher at 8,121.6, roughly 0.3% from its session high/low. Reflecting the middling performance in the benchmark, in the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 126 to 144.

The Communication Services (XTJ) (+1.1%) sector was the best performing sector today, outpacing its cousin the Information Technology (XIJ) (+0.40%) sector which was still, to be fair, also a market beater.

These two, and the other sectors to log better-then-XJO returns Monday fall into a group of “interest rate sensitives” that tend to do well in the current environment of falling market yields. Those yields continue to decline in anticipation of the Federal Reserve meeting on Wednesday. The Financials (XFJ) (+0.95%) sector, Consumer Discretionary (XDJ) (+0.52%) sector, and the Real Estate (XRE) (+0.50%) sector each prospered today.

RBA Rate Tracker shows five 0.25% RBA cash rate cuts over the next 18 months for the first time in this cycle

Market yields are falling globally, because they are all very much interlinked, and despite our far more hawkish RBA, and the fact that our RBA is starting from a generally lower base at 4.35% compared to most other central banks – local market yields are also dipping. So much so, that interest rate futures are now pricing in five 0.25% RBA cash rate cuts over the next 18 months – the first time this has occurred in this rate cycle.

The best performing stocks from the best performing ASX sectors today

Doing it tough today was the Health Care (XHJ) (-1.1%) sector. Nothing really specific there, perhaps with rates falling there isn’t a great deal of need to play defence. Heavyweights Pro Medicus (ASX: PME) (-3.3%), CSL (ASX: CSL) (-1.2%), and perennial underperformer Ramsay Health Care (ASX: RHC) (-1.1%) were largely to blame. No news on each...

Also bringing up the rear, were commodities-related sectors like Utilities (XUJ) (-1.0%) and its cousin sector Energy (XEJ) (-0.5%), along with the beleaguered Resources (XJR) (-0.31%) sector. Check out today’s ChartWatch for one potential reason why these sectors, and the commodities that power them, are declining.

The worst performing stocks from the worst performing ASX sectors today

ChartWatch

SSE Composite (SSEC) (China) & China Mainland Real Estate Index (HSMPI)

Death of a thousand cuts

The last time we covered Chinese stocks was in ChartWatch in the Evening Wrap on 10 September.

In that update, we lamented the ongoing dire short and long term trends in Chinese general and property stock index charts (in that update I used the FTSE China A50 Index Futures instead of the SSEC). I also drew a straight line from these charts to our own Energy (XEJ) and Resources (XJR) sectors (both charts are a “ditto” with the two above since mid-May).

This is just a quick update to point out that as I type this, the SSEC is less than two points from closing at its worst level since the worst day it experienced during the COVID-19 panic of March 2020, and the HSMPI is a similar margin from printing its worst close in all the data I have on file, which goes back to 2016.

If one thinks about how much progress other major global stock markets have made over those two periods respectively, the magnitude of destruction of value in Chinese equities becomes shockingly apparent. If a country’s stock market is the best barometer of its economic health – then these charts are damming proof that the Chinese economic situation is precarious.

The future is unknown, and today’s candle on each could be the beginning of the next major bull market in Chinese stocks – Beijing could announce the most incredible set of stimulus measures this evening…

But, for now, there is absolutely nothing from a technical standpoint, that is based upon the analysis of demand and supply and how they manifest themselves in price – to suggest the prevailing short and long term downtrends cannot continue.

Iron Ore 62% (Front month, back-adjusted) SGX

C'mon seasonal rally...c'mon...

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

In that update, I pondered:

It’s something of a race against time for iron ore. The seasonal low can kick in any time between now and December and the end of year seasonal rally can be substantial. The big question for me is: Is there one more push down before it starts to clear out the last remaining bulls?

The last couple of candles appear to fit with the “one last push” theory, but, given short and long term downtrends – and the unerring consistency thereof (plus the two above-mentioned charts!), whether it’s one push or 10, the result is likely a lower iron ore price in the short term.

95.55 is the most recent point of supply, occurring no surprise to any long-suffering reader of ChartWatch, smack bang at the dynamic supply of the short term downtrend ribbon.

Demand is 89.60. From previous updates, you might remember that there’s nothing below that until 73.60 😱.

A close below 89.60 would likely seal the deal on an enduring break of the 94-99.20 historical demand zone. There really could be no further doubt.

Alternatively, given the future is unknown and anything can happen: Long white candles and or long downward pointing shadows, followed by a return to risking peaks and rising troughs, as well as a close above 95.55, and eventually above 103 and the long term downtrend ribbon – and the great seasonal rally of 2024 has begun!

Economy

Today

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

Later this week

Tuesday

• 22:30 USA Core Retail Sales August (+0.2% forecast vs +0.4% July)

Wednesday

• 00:00 USA NAHB Housing Market Index September (41 forecast vs 39 August)

• 22:30 USA Building Permits & Housing Starts August (1.41 million & 131 million forecast 1.40 million & 1.24 million in July)

Thursday

• 04:00 USA FOMC Meeting & Statement

  • Federal Funds Rate (+5.25% forecast vs +5.50% previous = first 0.25% cut in cycle!)

• 04:30 USA FOMC Press Conference

• 11:30 AUS Employment Change August (+25,800 vs +58,200 July)

• 21:00 UK Bank of England (BOE) Official Bank Rate (no change at 5.0% forecast)

Friday

• 11:00 CHN Peoples Bank of China (PBOC) 1 & 5-year Loan Prime Rate (no change at 3.35% and 3.85% forecast)

• TBA Bank of Japan (BOJ) Policy Rate (no change at 0.25% forecast)

Latest News

Interesting Movers

Trading higher

• +20.5% Austal (ASB) - Austal awarded US$450 million contract to expand US shipyard

• +14.8% BCI Minerals (BCI) - No news since 10 Sep Approval to commence operations at the Mardie Project, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +8.2% Avita Medical (AVH) - No news, putting together some decent candles and price action lately, but still yet to challenge dynamic supply of long term downtrend ribbon 🤔

• +5.9% Australian Agricultural Company (AAI) - Alcoa to Sell Stake in Maaden JV to Maaden

• +4.3% Pantoro (PNR) - No news, segments of the ASX gold sector still popping today on recent new highs in gold price, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.3% Zip Co. (ZIP) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.2% Evolution Mining (EVN) - Ditto gold sector strength, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.1% Opthea (OPT) - No news since 9 Sep Opthea Corporate Presentation - September 2024, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +3.7% Firefly Metals (FFM) - Downhole geophysics points to new high-grade copper zones, ditto gold sector strength, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.3% Sigma Healthcare (SIG) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.0% Southern Cross Electrical Engineering (SXE) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -11.3% Immutep (IMM) - New Positive Efficacy Data for Efti in Head and Neck Cancer

• -10.1% Cettire (CTT) - No news, fall is consistent with prevailing long term downtrend 🔎📉

• -7.7% Sayona Mining (SYA) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -6.5% Telix Pharmaceuticals (TLX) - No news

• -6.1% Jupiter Mines (JMS) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -5.9% Lotus Resources (LOT) - No news, fall is consistent with prevailing long term downtrend 🔎📉

• -5.9% Emerald Resources (EMR) - Production Guidance Unchanged Following Minor Wall Slip

• -5.5% Renascor Resources (RNU) - No news, fall is consistent with prevailing long term downtrend 🔎📉

• -5.0% Polynovo (PNV) - No news since 13 Sep Annual Report

• -4.6% Stanmore Resources (SMR) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -4.4% Tabcorp (TAH) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

Broker Notes

• 29METALS (29M)

  • Retained at neutral at Macquarie; Price Target: $0.38 from $0.35

• Atlantic Lithium (A11)

  • Retained at outperform at Macquarie; Price Target: $0.30 from $0.40

• The A2 Milk Company (A2M)

  • Retained at buy at Citi; Price Target: $7.04

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.90

• Aeris Resources (AIS)

  • Retained at outperform at Macquarie; Price Target: $0.24 from $0.23

• Aristocrat Leisure (ALL)

  • Retained at overweight at Morgan Stanley; Price Target: $52.30

• Atlas Arteria (ALX)

  • Retained at hold at Morgans; Price Target: $4.97 from $4.98

• ANZ Group (ANZ)

  • Retained at sell at Citi; Price Target: $25.00

• Aspen Group (APZ)

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

• Abacus Storage King (ASK)

  • Retained at buy at Shaw and Partners; Price Target: $1.35

• Avjennings (AVJ)

  • Retained at buy at Bell Potter; Price Target: $0.45

• Accent Group (AX1)

  • Retained at overweight at Morgan Stanley; Price Target: $2.50

• Antipa Minerals (AZY)

  • Retained at buy at Shaw and Partners; Price Target: $0.04

• Bendigo and Adelaide Bank (BEN)

  • Retained at sell at Citi; Price Target: $9.75

• Bank of Queensland (BOQ)

  • Retained at sell at Citi; Price Target: $5.30

• Beach Energy (BPT)

  • Retained at buy at Bell Potter; Price Target: $1.40

• Brazilian Rare Earths (BRE)

  • Retained at neutral at Ord Minnett; Price Target: $6.40

• Breville Group (BRG)

  • Retained at overweight at Morgan Stanley; Price Target: $35.00

• BWP Trust (BWP)

  • Upgraded to equal-weight from underweight at Morgan Stanley; Price Target: $4.00 from $3.80

• Brambles (BXB)

  • Retained at overweight at Morgan Stanley; Price Target: $20.00

  • Retained at buy at Ord Minnett; Price Target: $20.30

  • Retained at buy at UBS; Price Target: $19.10

• Commonwealth Bank of Australia (CBA)

  • Retained at sell at Citi; Price Target: $91.50

• Champion Iron (CIA)

  • Initiated at buy at Bell Potter; Price Target: $7.15

  • Retained at outperform at Macquarie; Price Target: $7.00 from $7.50

• Collins Foods (CKF)

  • Retained at neutral at Citi; Price Target: $7.88

• Capricorn Metals (CMM)

  • Retained at outperform at Macquarie; Price Target: $7.20 from $6.30

• Carnaby Resources (CNB)

  • Retained at outperform at Macquarie; Price Target: $0.88

• Cooper Energy (COE)

  • Retained at hold at Bell Potter; Price Target: $0.23

• Comet Ridge (COI)

  • Retained at buy at Bell Potter; Price Target: $0.27

• Coles Group (COL)

  • Retained at equal-weight at Morgan Stanley; Price Target: $18.80

• Charter Hall Retail Reit (CQR)

  • Retained at equal-weight at Morgans; Price Target: $3.95 from $3.88

• Conrad Asia Energy (CRD)

  • Retained at buy at Bell Potter; Price Target: $1.90

• Coronado Global Resources (CRN)

  • Retained at outperform at Macquarie; Price Target: $1.70 from $1.80

• Capstone Copper Corp. (CSC)

  • Retained at outperform at Macquarie; Price Target: $12.70 from $12.40

• Centaurus Metals (CTM)

  • Retained at outperform at Macquarie; Price Target: $0.65 from $0.70

• Cedar Woods Properties (CWP)

  • Retained at buy at Bell Potter; Price Target: $6.50

• Core Lithium (CXO)

  • Retained at neutral at Macquarie; Price Target: $0.09 from $0.10

• De Grey Mining (DEG)

  • Retained at outperform at Macquarie; Price Target: $2.10 from $1.80

• Domino's Pizza Enterprises (DMP)

  • Retained at overweight at Morgan Stanley; Price Target: $44.00

• Deterra Royalties (DRR)

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

• Dexus Convenience Retail Reit (DXC)

  • Retained at buy at Bell Potter; Price Target: $3.10

• Endeavour Group (EDV)

  • Retained at neutral at Citi; Price Target: $5.18

  • Retained at overweight at Morgan Stanley; Price Target: $6.20

• Evolution Mining (EVN)

  • Retained at outperform at Macquarie; Price Target: $4.50 from $4.40

• GDI Property Group (GDI)

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

• Global Lithium Resources (GL1)

  • Retained at neutral at Macquarie; Price Target: $0.21 from $0.25

• Galan Lithium (GLN)

  • Retained at neutral at Macquarie; Price Target: $0.12

• Genesis Minerals (GMD)

  • Retained at outperform at Macquarie; Price Target: $2.70 from $2.40

• Gold Road Resources (GOR)

  • Retained at outperform at Macquarie; Price Target: $2.10 from $1.90

• Guzman y Gomez (GYG)

  • Retained at overweight at Morgan Stanley; Price Target: $38.50

• Hastings Technology Metals (HAS)

  • Retained at hold at Ord Minnett; Price Target: $0.46

• Healthco Healthcare and Wellness Reit (HCW)

  • Retained at buy at Bell Potter; Price Target: $1.50

  • Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $1.30 from $1.41

• Hub24 (HUB)

  • Retained at overweight at Morgan Stanley; Price Target: $62.00 from $56.50

• Harvey Norman (HVN)

  • Retained at underweight at Morgan Stanley; Price Target: $3.90

• IDP Education (IEL)

  • Retained at overweight at Morgan Stanley; Price Target: $21.50

• IGO (IGO)

  • Retained at outperform at Macquarie; Price Target: $5.60 from $6.10

• Iluka Resources (ILU)

  • Retained at outperform at Macquarie; Price Target: $7.10 from $7.00

• IPH (IPH)

  • Retained at outperform at Macquarie; Price Target: $7.31

• JB HI-FI (JBH)

  • Retained at underweight at Morgan Stanley; Price Target: $60.60

• Jupiter Mines (JMS)

  • Retained at outperform at Macquarie; Price Target: $0.22 from $0.34

• KMD Brands (KMD)

  • Retained at equal-weight at Morgan Stanley; Price Target: $0.35

• Lifestyle Communities (LIC)

  • Retained at sell at Bell Potter; Price Target: $8.20

• Lovisa (LOV)

  • Retained at equal-weight at Morgan Stanley; Price Target: $33.25

• Arcadium Lithium (LTM)

  • Retained at outperform at Macquarie; Price Target: $5.10 from $6.60

• Liontown Resources (LTR)

  • Retained at neutral at Macquarie; Price Target: $0.70 from $1.00'

• Lynas Rare Earths (LYC)

  • Retained at outperform at Macquarie; Price Target: $7.50

  • Retained at accumulate at Ord Minnett; Price Target: $7.40

• Mount Gibson Iron (MGX)

  • Retained at outperform at Macquarie; Price Target: $0.38 from $0.48

• Macquarie Group (MQG)

  • Retained at sell at Citi; Price Target: $176.00

• Metcash (MTS)

  • Retained at neutral at Citi; Price Target: $4.00

  • Retained at overweight at Jarden; Price Target: $4.40

  • Retained at buy at Jefferies; Price Target: $4.10

  • Retained at overweight at JP Morgan; Price Target: $4.50 from $4.30

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.83

  • Retained at buy at Ord Minnett; Price Target: $4.30

  • Retained at buy at UBS; Price Target: $3.90 from $4.00

• National Australia Bank (NAB)

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

• Newmont Corporation (NEM)

  • Retained at outperform at Macquarie; Price Target: $60.00 from $55.00

• New Hope Corporation (NHC)

  • Retained at neutral at Macquarie; Price Target: $4.30 from $4.70

• Nickel Industries (NIC)

  • Retained at outperform at Macquarie; Price Target: $0.95 from $1.13

• Northern Star Resources (NST)

  • Upgraded to overweight from neutral at JP Morgan; Price Target: $16.80 from $14.50

  • Retained at outperform at Macquarie; Price Target: $19.00 from $17.00

• Northern Minerals (NTU)

  • Retained at buy at Ord Minnett; Price Target: $0.04

• Piedmont Lithium (PLL)

  • Retained at neutral at Macquarie; Price Target: $0.11 from $0.15

• Pilbara Minerals (PLS)

  • Retained at neutral at Macquarie; Price Target: $3.25

• Patriot Battery Metals (PMT)

  • Retained at outperform at Macquarie; Price Target: $0.70 from $0.90

• Premier Investments (PMV)

  • Retained at overweight at Morgan Stanley; Price Target: $39.50

• Perseus Mining (PRU)

  • Retained at outperform at Macquarie; Price Target: $3.40 from $3.20

  • Initiated at buy at UBS; Price Target: $3.00

• REA Group (REA)

  • Retained at buy at Citi; Price Target: $230.00

• Red 5 (RED)

  • Retained at outperform at Macquarie; Price Target: $0.50 from $0.46

• Regis Healthcare (REG)

  • Retained at buy at Ord Minnett; Price Target: $6.40 from $4.90

• Regional Express (REX)

  • Retained at outperform at Macquarie; Price Target: $0.40

• Region Group (RGN)

  • Downgraded to underweight from overweight at Morgan Stanley; Price Target: $2.44 from $2.50

• Ramelius Resources (RMS)

  • Retained at neutral at Macquarie; Price Target: $2.30 from $2.20

• Regis Resources (RRL)

  • Retained at outperform at Macquarie; Price Target: $2.90 from $2.70

• Resolute Mining (RSG)

  • Retained at outperform at Macquarie; Price Target: $0.82 from $0.75

• St Barbara (SBM)

  • Retained at outperform at Macquarie; Price Target: $0.33 from $0.28

• Steadfast Group (SDF)

  • Retained at outperform at Macquarie; Price Target: $6.80

• Sandfire Resources (SFR)

  • Retained at outperform at Macquarie; Price Target: $10.00 from $9.80

• Santana Minerals (SMI)

  • Retained at buy at Bell Potter; Price Target: $2.76 from $2.15

• Strike Energy (STX)

  • Retained at buy at Bell Potter; Price Target: $0.32

• Super Retail Group (SUL)

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

• Sayona Mining (SYA)

  • Retained at underperform at Macquarie; Price Target: $0.02 from $0.03

• Syrah Resources (SYR)

  • Retained at outperform at Macquarie; Price Target: $0.32 from $0.80

• Tabcorp (TAH)

  • Retained at overweight at Morgan Stanley; Price Target: $0.90

• The Lottery Corporation (TLC)

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.35

• Talga Group (TLG)

  • Retained at outperform at Macquarie; Price Target: $0.60 from $2.00

• Temple & Webster Group (TPW)

  • Retained at overweight at Morgan Stanley; Price Target: $13.15

• Treasury Wine Estates (TWE)

  • Retained at neutral at Citi; Price Target: $12.97

  • Retained at overweight at Morgan Stanley; Price Target: $14.60

• West African Resources (WAF)

  • Retained at outperform at Macquarie; Price Target: $2.00 from $1.90

• Westpac Banking Corporation (WBC)

  • Retained at sell at Citi; Price Target: $24.75

• Wesfarmers (WES)

  • Retained at underweight at Morgan Stanley; Price Target: $55.70

• Westgold Resources (WGX)

  • Retained at outperform at Macquarie; Price Target: $3.70 from $3.20

• Whitehaven Coal (WHC)

  • Retained at outperform at Macquarie; Price Target: $7.50

• Woolworths Group (WOW)

  • Retained at overweight at Morgan Stanley; Price Target: $38.00

Scans