Evening Wrap: ASX 200 escapes Middle East scare as Santos takeover and surging energy stocks steady ship

The S&P/ASX 200 closed 1.0 points higher, up 0.01 %.

A narrow win for the ASX 200 today might seem like a non event. However, considering the events of the weekend (vis-à-vis the terrible and dangerous escalation in the conflict in the Middle East), one must call today's "non event" a resounding victory for Aussie stocks 💪.

Still, even this depends largely on your perspective, as the ASX 200 was to some extent saved by a massive spike in the Energy Sector (XEJ) (+5.2%). It would be easy to dismiss this move as a direct result of higher crude oil prices, but no! To pour fuel on the fire (a poor pun indeed!), Energy stocks were further boosted by a takeover offer for No 2. constituent Santos (STO) (+11.0%) no less!

The rest of the major sectors were largely steady, again, we're happy to take that, with really only the Gold Sub-Index (XGD) (-5.1%) seeing any real selling on a combination of whip-sawing fund flows and a rating downgrade for Northern Star Resources (NST) (-8.2%).

To make sense of all the above, I have detailed technical analysis on the Nasdaq Composite, S&P/ASX 200, and Gold in today's ChartWatch.

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.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 1.0 points higher at 8,548.4, 0.36% from its session high and just 0.11% from its low. Much like the narrow win on the benchmark, in the broader-based S&P/ASX 300 (XKO) advancers beat decliners by a slim 142 to 139. Hey – a win is a win! 💪

ChartWatch

NASDAQ Composite Index

An interesting chart (click here for full size image)

In addition to the 11-Jun candle, Friday’s decisive supply-side showing indicates we have indeed found some motivated supply on the Comp.

There’s every chance we see a follow through on the open this evening, however as I always say here – the open is irrelevant – it’s the close that counts.

And a strong, demand-side candle (i.e., white-bodied and or downward pointing shadow), particularly dipping into and rebounding from the dynamic excess demand of the short term trend ribbon would be a fantastic confirmation of demand-side control.

I also note the congestion zone around the historic supply zone of 19415 and into the 19242 peak – it should also serve as a solid zone of excess demand going forward.

In short, there are plenty of reasons to expect a bounce either tonight or tomorrow night from here or hereabouts. If we get it, all previous assumptions of demand-side control remain intact – if we don’t – then something else is going on!

In conclusion, I'm staying the course here. A smidge concerned about that new peak and the candles that formed it – but happy to back the broader trends for now.

S&P/ASX 200 (XJO)

An interesting chart (click here for full size image)

A commendable effort today. Very little has changed from my prior analysis. Demand-side control…pretty decent at that. No need to panic. I'm watching carefully to see if this view needs to change due to major supply-side candles or a lower peak to 8640. In the meantime, I see no reason not to continue to stay the course on the XJO.

Gold Futures (Front month, back-adjusted) COMEX

An interesting chart (click here for full size image)

You'd be forgiven for looking at the above chart and not having a clue why your ASX gold stocks got belted today. 🤷

There’s nothing at all in the gold technicals to suggest anything but strong short and long term demand-side control.

Okay, that last candle is black – but it’s also live – so discount it. It doesn’t exist in our calculations!

The rest is upward pointing short and long term trend ribbons (also demonstrating solid dynamic support of price), rising peaks and rising troughs, and a modest predominance of demand-side candles (agree this could be more convincing).

3475.6-3537.4 is supply. No news there. If we spent a candle or two here, really it’s no big deal in the context of the broader technical picture – it would even be expected considering the importance of this level.

The major issue for ASX gold stocks today – and yet another stark reminder that ASX gold stocks don’t automatically move up with the gold price – was a couple of ratings downgrades from UBS.

Or at least, that’s a plausible narrative – because unless we go and ask everyone who supplied why they did it and everyone with cash why they weren’t more aggressive with their buying to soak up all that supply – we’ll never know. The two broker moves I’m referring to are:

Evolution Mining (EVN)

• Downgraded to Sell from Neutral at UBS; Price Target: $6.70 from $8.00

Northern Star Resources (NST)

• Downgraded to Neutral from Buy at UBS; Price Target: $23.00 from $25.80

Whether they were the cause or not (it’s irrelevant), today’s candle is what it is – a very credible supply side showing on the XGD.

S&P/ASX All Ordinaries Gold SubInd Index (click here for full size image)

Still, it’s not enough for me to label it a species ending event (the last candle I used this term on was 23-Apr). So, as far as ASX gold stocks go – case by case for their respective charts of course – but at an index level, I'm only alert and not alarmed.

Back to gold. I'm not alarmed here at all. As long as the gold price continues to close above the short term trend ribbon everything is hunky dory. If not, less so, and below 3269.1 even more still!

Economy

Today

• CHN May Data Dump

  • New Home Prices m/m: -0.22% m/m actual vs -0.12% m/m in April

  • Industrial Production y/y: +5.8% y/y actual vs +5.9% y/y forecast and +6.1% y/y in April

  • Retail Sales y/y: +6.4% y/y actual vs +4.9% y/y forecast and +5.1% y/y in April

  • Fixed Asset Investment ytd/y: +5.8% ytd/y actual vs +5.9% ytd/y forecast and +6.1% ytd/y in April

  • Unemployment Rate: +5.0% actual vs +5.1% forecast and +5.1% in April

  • Comment: Generally strong, particularly retail sales, but larger than expected decline in new home prices confirms a critical pillar of Chinese economy continues to falter

Later this week

Tuesday

• 22:30 USA Core Retail Sales May m/m (+0.2% m/m forecast vs +0.1% m/m previous)

Wednesday

• 00:00 USA NAHB Housing Market Index (35 points forecast vs 34 points previous)

• 10:30 AUS Leading Index

• 22:30 USA Building & Housing Permits May (1.43 million and 1.36 million forecast vs 1.41 million and 1.36 million in April respectively)

Thursday

• 04:00 USA Federal Funds Rate, FOMC Statement & FOMC Economic Projections (no change at 4.5% forecast)

• 04:30 USA Federal Reserve Chairman Jerome Powell press conference

• 11:30 AUS Employment Change May (+19,900 forecast vs +89,000 in April; rate unchanged at 4.1%)

• ALL DAY USA - US markets closed Thursday for Juneteenth National Independence Day

Friday

• 11:00 CHN 1-yr & 5-yr Loan Prime Rate (no change at 3.0% and 3.5% respectively forecast)

Saturday

• 00:00 USA CB Leading Index m/m (-0.1% forecast vs -1.0% previous)

Latest News

Interesting Movers

Trading higher

• +56.0% Tourism Rentals (THL) – THL receives unsolicited non-binding offer.

• +23.9% Silex Systems (SLX) – No news, general strength across the broader Uranium sector today due to Middle East conflict escalation, plus likely some fund flows switching from gold.

• +21.2% Deep Yellow (DYL) – No news, general strength across the broader Uranium sector today, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +17.7% Boss Energy (BOE) – No news, general strength across the broader Uranium sector today, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +17.0% Iperionx (IPX) – No news, general strength across the broader Critical Minerals sector today, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +15.6% Paladin Energy (PDN) – No news, general strength across the broader Uranium sector today, rise is consistent with prevailing short term uptrend and rising peaks and rising troughs 🔎📈

• +14.3% Bannerman Energy (BMN) – No news, general strength across the broader Uranium sector today.

• +13.5% Trigg Minerals (TMG) – No news, general strength across the broader Critical Minerals sector today, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up 🔎📈

• +12.9% Lotus Resources (LOT) – No news, general strength across the broader Uranium sector today.

• +10.9% Santos (STO) – XRG Consortium nonbinding indicative proposal to acquire STO.

• +9.9% Dateline Resources (DTR) – Colosseum Geochemistry Exploration Update, rise is consistent with prevailing short and long term uptrends 🔎📈

• +9.0% Adriatic Metals (ADT) – Adriatic to be acquired by Dundee Precious Metals, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +8.3% Nexgen Energy (NXG) – No news, general strength across the broader Uranium sector today, rise is consistent with prevailing short and long term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

Trading lower

• -57.1% 4DS Memory (4DS) – Company Update.

• -12.4% Catalyst Metals (CYL) – No news, general weakness across the broader Gold sector today (UBS rating downgrades for EVN and NST likely driving losses across broader sector, but fund flows in and out of ASX gold are fickle at the best of times!).

• -8.2% Northern Star Resources (NST) – No news, general weakness across the broader Gold sector today.

• -8.0% Evolution Mining (EVN) – No news, general weakness across the broader Gold sector today.

• -7.6% Westgold Resources (WGX) – No news, general weakness across the broader Gold sector today.

• -7.5% Ramelius Resources (RMS) – No news, general weakness across the broader Gold sector today.

• -7.2% Ora Banda Mining (OBM) – No news, general weakness across the broader Gold sector today.

• -6.7% ASX (ASX) – ASX Statement on ASIC Commencing Inquiry.

• -6.6% Spartan Resources (SPR) – No news, general weakness across the broader Gold sector today.

Broker Moves

Adriatic Metals Plc (ADT)

• Retained at Hold at Canaccord Genuity; Price Target: $5.50

Ampol (ALD)

• Retained at Sector perform at RBC Capital Markets; Price Target: $29.00

ANZ Group Holdings (ANZ)

• Retained at Hold at Citi; Price Target: $27.50

ASX (ASX)

• Downgraded to Neutral at Bank of America; Price Target: $72.00

• Downgraded to Underperform at Bank of America; Price Target: $72.00

Accent Group (AX1)

• Downgraded to Hold at Morgans; Price Target: $1.85 from $2.00

Aurizon Holdings (AZJ)

• Retained at Sector perform at RBC Capital Markets; Price Target: $3.20 from $3.60

Commonwealth Bank of Australia (CBA)

• Retained at Sell at Ord Minnett; Price Target: $105.00

• Retained at Sell at Citi; Price Target: $100.00

Collins Foods (CKF)

• Retained at Neutral at Macquarie; Price Target: $8.20

Cettire (CTT)

• Downgraded to Neutral from Speculative buy at E&P; Price Target: $1.18 from $1.87

Domino's Pizza Enterprises (DMP)

• Upgraded to Neutral from Underweight at JPMorgan; Price Target: $22.90 from $29.50

Evolution Mining (EVN)

• Downgraded to Sell from Neutral at UBS; Price Target: $6.70 from $8.00

IGO (IGO)

• Retained at Outperform at Macquarie; Price Target: $5.50

Liontown Resources (LTR)

• Retained at Neutral at Macquarie; Price Target: $0.65

Mirvac Group (MGR)

• Retained at Equal weight at Morgan Stanley; Price Target: $2.45 from $2.25

Medibank Private (MPL)

• Retained at Neutral at Macquarie; Price Target: $4.25

Monash IVF Group (MVF)

• Retained at Buy at Ord Minnett; Price Target: $0.95 from $1.05

National Australia Bank (NAB)

• Retained at Sell at Citi; Price Target: $30.50

• Retained at Hold at Citi; Price Target: $30.50

Newmont Corporation (NEM)

• Retained at Buy at UBS; Price Target: $105.00

NIB Holdings (NHF)

• Retained at Underperform at Macquarie; Price Target: $5.55

Northern Star Resources (NST)

• Downgraded to Neutral from Buy at UBS; Price Target: $23.00 from $25.80

Nufarm (NUF)

• Retained at Buy at Bell Potter; Price Target: $3.45

Regis Healthcare (REG)

• Retained at Buy at Ord Minnett; Price Target: $8.25 from $7.40

Rox Resources (RXL)

• Retained at Speculative buy at Canaccord Genuity; Price Target: $0.61

Stockland (SGP)

• Retained at Overweight at Morgan Stanley; Price Target: $6.75 from $6.50

Santos (STO)

• Downgraded to Neutral from Positive at E&P; Price Target: $7.90

Sayona Mining (SYA)

• Retained at Outperform at Macquarie; Price Target: $0.04

Vicinity Centres (VCX)

• Retained at Neutral at Citi; Price Target: $2.40

Ventia Services Group (VNT)

• Upgraded to Hold from Trim at Morgans; Price Target: $4.90 from $4.05

Westpac Banking Corporation (WBC)

• Retained at Sell at Citi; Price Target: $27.75

Zip Co (ZIP)

• Retained at Buy at Ord Minnett; Price Target: $3.40 from $3.00

Scans