Market Wraps

Evening Wrap: ASX 200 falls + Goldman Sachs turns bearish on rare earths

Thu 06 Jul 23, 5:06pm (AEST)

The S&P/ASX 200 closed 90 points lower, down -1.24%. 

The Index slumps to a one-week low amid weakness across most sectors, Australia's trade surplus surprises to the upside, St Barbara shares almost halve as it returns asset sale proceeds back to shareholders, Goldman Sachs expects the rare earths market to be "well supplied over the medium term" plus a few Macquarie notes of interest.

Let's dive in.

Today in Review

Thu 06 Jul 23, 4:31pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,163.4 -1.24%
All Ords 7,365.0 -1.18%
Small Ords 2,805.9 -1.27%
All Tech 2,412.2 +0.20%
Emerging Companies 2,124.2 -0.71%
AUD/USD 0.6669 +0.21%
US Futures
S&P 500 $4,470.25 -0.30%
Dow Jones $34,415.0 -0.27%
Nasdaq $15,297.0 -0.42%
Name Value % Chg
Information Technology 1,799.2 +0.13%
Utilities 8,852.5 -0.27%
Communication Services 1,552.2 -0.32%
Real Estate 3,070.6 -0.45%
Industrials 6,751.0 -0.54%
Health Care 40,594.0 -0.66%
Consumer Staples 13,249.5 -0.93%
Energy 10,856.8 -1.16%
Financials 6,182.8 -1.45%
Materials 17,884.4 -1.86%
Consumer Discretionary 2,922.4 -1.91%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 lower and finished at worst levels (Source: Market Index)


Ah it's an ASX classic – Taking the staircase up but the elevator down. Wednesday's weakness intensified today, with Resources, Discretionary, Banks and Staples leading to the downside. We've seen this happen far too many times this year, where a strong winning streak comes to an abrupt end and followed by 2-3 big red sessions.

The market is in a little bit of an awkward place. Historically, July has been the third best performing month of the year (up an average 2.19% since 1992). On the other hand, we've got rising geopolitical tensions between China and the US, investors remain overly optimistic (according to CNN's Fear & Greed Index) and bond yields are pushing back to recent highs (US 10-year yield is 4 bps away from reclaiming a four handle). Taking things one day at a time, the market needs to stabilise around these levels or we run the risk of further one of those episodes.


Australia’s trade surplus increased to $11.79bn in May, from $10.45bn in April.

  • Beat analyst expectations of a rise to $10.50bn

  • Overall, exports rose 4.4% in May to $57.77bn which offset a 2.5% increase in imports to $45.9bn

Latest news

Market Insights: Gold Under Pressure

Gold has been drifting lower ever since its brief push above US$2,000 in late May.

Gold price chart
Gold spot price since 2020 (Source: TradingView)

That's in parallel with the recent strength behind bond yields. The US 10-year Treasury yield is up 62 bps since early May, trading at a 5-month high and close to a 4.0% handle again.

US 10 year yield
US 10-year yield (Source: TradingView)

While Fed rate hikes have shrunk from 75 bps to a pause, policymakers continue to reiterate that there's more to come.

"Some participants indicated that they favored raising the target range for the federal funds rate 25 basis points at this meeting or that they could have supported such a proposal," the FOMC minutes noted on Wednesday.

The higher-for-longer narrative has

Interesting news and movers

Trading higher

  • +20.3% Imricor Medical (IMR) – Secures up to $30m from GGY

  • +15.8%% Medical Developments (MVP) – Continuation rally, up 22% in last three

  • +11.4% Australian Mines (AUZ) – Continuation rally, up 118% in last three

  • +10.2% Vista Group (VGL) – Organisational transformation

  • +5.1% Weebit Nano (WBT) 

  • +4.8% Incannex Healthcare (IHL) – Receives ethics approval

  • +4.5% Arafura Rare Earths (ARU)

  • +3.9% Block (SQ2) 

Trading lower

  • -48.2% St Barbara (SBM) – Ex dividend

  • -8.7% Star Entertainment Group (SGR) – Debt investors circling (AFR)

  • -8.3% Magellan Financial (MFG) – Reports FUM

  • -7.6% 29Metals (29M)

  • -7.5% Lifestyle Communities (LIC)

  • -5.4% Universal Store (UNI) – Pullback after +12.4% in last three

  • -5.1% Australian Ethical (AEF) 

  • -4.8% Nanosonics (NAN) – Initiated at RBC

  • -4.8% Neo Metals (NMT) 

  • -4.4% Link Administration (LNK) – Downgraded by Barrenjoey

  • -4.3% ARB Corp (ARB) – Downgraded by Macquarie

  • -3.5% Elders (ELD)

  • Gold sector move: Ramelius (-3.8%), Evolution Mining (-2.6%), Gold Road (-1.9%), Newcrest Mining (-1.5%), Perseus Mining (-0.9%)

Broker notes

Goldman Sachs on rare earths:

  • “NdPr market now well supplied over medium term on China mine supply increase … In March, China announced a production quota of 120/115kt for 1H23 (+20% YoY) for mined/refined light rare earths (unchanged for HRE) which has pushed the market into surplus.”

  • “Channel checks suggest Chinese mine capacity is operating at ~75%, implying further growth is possible.”

  • “We remain positive on the NdPr demand growth from EV’s and Wind and expect RE wind and EV demand to increase from 25% of market in 2022 to ~50% of our ~110kt 2030 consumption estimate, driving ~7% demand CAGR to 2030. However, we expect global demand to outpace supply from 2028 onwards only.”

  • “Based on our new market balance forecasts, we reduce our 2024/2025/2026 NdPr price forecasts to US$80/85/90/kg (from US$90/95/95/kg).”

Plus a few standalone Macquarie notes of interest:

29Metals (29M) – Neutral with $0.80 target price

  • “Phase 1 of the Capricorn recovery plan is on track, with the restart of operations remaining on plan for August 2023.”

  • “29M has now drawn down on additional debt, however the softer cash balance highlights risks to the balance sheet as the restart progresses.”

ARB Corp (ARB) – Underperform with $25.70 target price

  • “We analyse US/Aus. 4x4 product fitment rates post our recent US trip; structural differences reduce ARB's addressable market in the US.”

  • “In the US, fitment rates are materially lower, fall rapidly outside key models, have a different product skew, & more competitors.”

  • “Rising consumer headwinds create downside risk to FY24 earnings in core Aus. aftermarket business (57% sales), D/G to Underperform.”

Bellevue Gold (BGL) – Outperform with $1.80 target price

  • “BGL signed a toll treating agreement to process early ore from Bellevue ahead of plant commissioning, which is still on track for 2QFY24.”

  • “The toll ore will be predominantly form the Vanguard open pit, which was previously scheduled to be stockpiled and treated later in the mine plan.”

  • “In our view, the toll treating agreement is positive for BGL with the opportunity to bring forward cash flows and further bolster the balance sheet …”

Johns Lyng (JLG) – Outperform with $7.70 target price

  • “JLG acquired two essential home services companies funded by $65m placement and $5m SPP.”

  • “We think the acquisition is highly complementary to the BAU and strata businesses, generating recurring income streams at relatively high margins.”

Patriot Battery Metals (PMT) – Outperform with $2.30 target price

  • “DMS testing has confirmed that a spodumene concentrate of +6.0% Li2O is achievable at an average recovery rate of greater than 70%.”

  • “The test results indicate that ores from both CV5 and CV13 could be processed jointly, a key positive in our view.”

  • “Ongoing drilling results at CV5 and CV13 present key near-term catalysts ahead of the maiden resource release in the 3QCY23.”


Top Gainers

Code Company Last % Chg
PEB Pacific Edge Ltd $0.17 +95.40%
RGS Regeneus Ltd $0.017 +88.89%
EPM Eclipse Metals Ltd $0.019 +35.71%
TTM Titan Minerals Ltd $0.07 +32.08%
R8R REGENER8 Resource... $0.21 +31.25%
View all top gainers

Top Fallers

Code Company Last % Chg
SBM ST Barbara Ltd $0.29 -48.21%
MHI Merchant House In... $0.032 -36.00%
TEE Top End Energy Ltd $0.165 -21.43%
FG1 FLYNN Gold Ltd $0.053 -17.19%
HOR Horseshoe Metals Ltd $0.015 -16.67%
View all top fallers

52 Week Highs

Code Company Last % Chg
R8R REGENER8 Resource... $0.21 +31.25%
ALM Alma Metals Ltd $0.013 +30.00%
DVL Dorsavi Ltd $0.017 +13.33%
CMD Cassius Mining Ltd $0.043 +10.26%
CHW Chilwa Minerals Ltd $0.19 +8.57%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
SBM ST Barbara Ltd $0.29 -48.21%
MHI Merchant House In... $0.032 -36.00%
GTE Great Western Exp... $0.031 -13.89%
GBZ GBM Resources Ltd $0.017 -10.53%
GRL Godolphin Resourc... $0.05 -7.41%
View all 52 week lows

Near Highs

Code Company Last % Chg
VLUE Vaneck MSCI Inter... $23.29 -0.47%
SEMI Global X Semicond... $11.58 -1.86%
GMG Goodman Group $20.40 +0.30%
NWL Netwealth Group Ltd $13.49 -1.61%
SLA Silk Laser Austra... $3.32 0.00%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
LNK Link Administrati... $1.62 -4.43%
MSTR Morningstar Inter... $8.65 -0.92%
GTN GTN Ltd $0.42 0.00%
SRV Servcorp Ltd $2.96 +1.37%
OMH Om Holdings Ltd $0.515 +3.00%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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