Evening Wrap: ASX 200 falls for third session as bank selloff outweighs resource rally

The market appears to be in the midst of a rotation out of banks and into beaten up mining stocks, Australia's annual inflation rate in August fell to the lowest level since 2021 at 2.7%, Premier Investments misses FY24 earnings expectations and postponed its demerger plans, uranium stocks pulled back after a massive rally on Wednesday.

Let's dive in.

ASX 200 Session Chart

ASX 200 struggles to hold on to early gains, closes near worst levels (Source: Market Index)

Markets

• ASX 200 finished slightly lower as gains from the resource sector failed to offset weakness across banks, tech and retail stocks

• Materials rallied for a second straight session following China's flurry of stimulus measures announced on Tuesday

• S&P/ASX 200 Materials Index is up 5.3% in the last two sessions, marking the biggest two-day rally since November 2022

• Notable gainers in the resource space include MinRes (+5.4%), Fortescue (+4.7%), BHP (+3.8%), Rio Tinto (+3.7%) and South32 (+3.0%)

• Financials tumbled for a third straight session, the S&P/ASX 200 Financials Index is down 4.0% since Monday

• The market may be rotating from Financials (which had run almost 30% year-to-date) into beaten up Materials (down as much as 20% year-to-date)

• Local big tech names were also subject to broad-based selling, with names including Wisetech, Xero, NextDC and Technology One all down around 1-2%

Economy

Australia's monthly CPI indicator rose 2.7% year-on-year in August, down from 3.5% in September and below market expectations of 2.8%. Here are some of the key insights from the ABS:

• Core CPI was 3.0% in August, down from 3.7% in July

• Annual trimmed mean inflation was 3.4%, down from 3.8% in July

• Inflation readings in August were the lowest in 2.5 years

• At the Group level, top contributors were Housing (+2.6%), Food and non-alcoholic beverages (+3.4%) and Alcohol and tobacco (+6.6%)

• Automotive fuel were significant moderators of inflation, down 7.6% compared to August 2023

• Energy relief rebates drove the largest annual fall in energy prices on record of 17.9% in August

Interesting Movers

Trading higher:

• Iron ore miners: Champion Iron (+13.4%), Fortescue (+4.7%), BHP (+3.8%) and Rio Tinto (+3.7%)

• Lithium stocks: Piedmont Lithium (+13.6%), Global Lithium (+8.3%), Sayona Mining (+7.6%), Patriot Battery Metals (+6.9%), Vulcan Energy (+6.1%), Liontown Resources (+1.4%)

• Copper stocks: Hillsgrove (+12.9%), 29Metals (+3.5%), Metals Acquisition (+2.6%), Sandfire Resources (+2.4%)

• Coal stocks: Coronado Global (+5.8%), Stanmore Resources (+5.2%), Whitehaven Coal (+3.5%), New Hope (+2.2%)

Trading lower:

• -9.0% Premier Investments (PMV) – FY24 earnings missed analyst expectations, FY25 trading update

• -7.5% Cettire (CTT) – Pullback after yesterday's 79% rally (auditor approved previously rejected FY24 result)

• -3.5% Sigma Healthcare (SIG) – 1H24 earnings missed expectations, ACCC decision for Chemist Warehouse overhang

• Uranium pullback: Lotus Resources (-7.0%), Alligator Energy (-6.1%), Peninsula Energy (-2.1%), Paladin Energy (-2.0%), Bannerman Energy (-1.6%), Boss Energy (-1.2%)

Broker Notes

Broker notes are on pause for today.

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