Market Wraps

Evening Wrap: ASX 200 falls, investors dump lithium stocks, US futures mixed

Thu 15 Dec 22, 4:59pm (AEST)

The S&P/ASX 200 closed 47 points lower, down -0.64%.

The local sharemarket gave back all of Wednesday's gains, lithium stocks sold off after Pilbara Minerals flagged a potential peak in spot prices, Credit Suisse downgrades three key retail stocks and Australia's unemployment rate holds steady at 3.4 per cent.

Let's dive in.


Today in Review

Thu 15 Dec 22, 4:37pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,204.8 -0.64%
All Ords 7,390.3 -0.65%
Small Ords 2,856.0 -1.11%
All Tech 2,109.5 -0.42%
Emerging Companies 2,113.8 -1.29%
Currency
AUD/USD 0.6826 -0.55%
US Futures
S&P 500 $4,001.5 +0.09%
Dow Jones $34,037.0 +0.13%
Nasdaq $11,746.0 -0.04%
Name Value % Chg
Sector
Consumer Staples 12,789.2 +0.73%
Energy 11,110.2 +0.40%
Information Technology 1,482.9 -0.05%
Financials 6,483.9 -0.30%
Industrials 6,483.5 -0.56%
Utilities 8,233.4 -0.59%
Communication Services 1,454.8 -0.59%
Health Care 42,615.7 -0.78%
Real Estate 3,107.8 -0.96%
Consumer Discretionary 2,859.2 -1.25%
Materials 17,817.4 -1.35%

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Markets

The ASX 200 helplessly closed at session lows after a hawkish Powell said "we're not at a restrictive enough stance even with today's move" and signalled to more "ongoing increases" to combat inflation.

  • Materials led to the downside with notable falls from lithium heavyweights Pilbara Minerals (-10.9%), Allkem (-5.1%) and Mineral Resources (-4.9%)

  • Discretionary stocks were under pressure after Credit Suisse downgraded retailers including JB Hi-Fi (-3.0%), Breville (-3.9%) and Harvey Norman (-2.3%) citing a deteriorating near-term earnings outlook for companies exposure to household goods

  • Real Estate was another area of weakness, with a spike in bond yields to blame. The Australia Government 10-year Yield has jumped from 3.38% to 3.46%

  • An awkward mix of defensive and growth outperformed benchmarks: Staples, Energy and Tech

  • 140 of the top 200 declined (70%)

Economy

Australia’s unemployment rate was unchanged at 3.4% in November.

  • "The participation rate increased by 0.2 percentage points to 66.8 per cent in November, returning to the record high we saw in June 2022. It was 1.0 percentage point higher than before the pandemic.” - Bjorn Jarvis, Head of Labor Statistics at the ABS

  • "The record high participation rate continues to show that it is a tight labour market, especially when coupled with very low unemployment.”

China released a slew of economic data, all of which missed analyst expectations.

  • Industrial production rose 2.2% year-on-year in November vs. 3.6% expected

  • Retail sales fell -5.9% in November vs. -3.7% expected

  • Fixed asset investment rose 5.3% in November vs. 5.6% expected

Commodities 

“Commodity markets were cautious going into the FOMC decision. Gains were led by energy, where signs of strong demand are starting to emerge,” said ANZ senior commodity analyst, Daniel Hynes. 

Iron ore futures +0.3% to US$109.2 a tonne despite China's steel production falling -6.5% month-on-month to 74.5m tonnes in November.


Latest news


Post market brief

A weak session but the ASX 200 appears to be respecting recent lows and the 20-day moving average, for now.

XJO chart

There was a bit of volatility from the open through to noon. But after that ,the market just drifted lower. Is this what illiquid Christmas price action looks like?

XJO chart

XJO intraday chart (Source: TradingView)

Most lithium name sold off on Thursday after Pilbara Minerals' spodumene auction results fell -3.2% month-on-month from a record US$7,805/t in November to US$7,552/t. The concerns about peak lithium prices alongside the end of China's EV subsidy (1 January 2023) sparked a sector wide selloff.

A few wraps ago, we noted how names like Allkem and Pilbara Minerals had fallen to key inflection points. These were key areas that found support during previous selloffs. Today's sharp decline cements this 'roll over'. Could this mark a near-term top for the hot sector?

PLS chart
Pilbara Minerals (Source: TradingView)
AKE chart
Allkem (Source: TradingView)

Major announcements

Larger caps (>$1bn)

  • APM Human Services (APM) +4.5%: Enters into a binding agreement to acquire 100% of Everyday Independence, a leading NDIS provider of Allied Health Services for $52.5m 

  • Auckland Airport (AIA) -0.5%: Reaffirmed that it has no intentions to carry out an equity raise and plans to fund a new domestic terminal with debt

  • Select Harvests (SHV) -2.9%: Guided to 30,000 tonnes of almond harvest for FY23 compared to 29,250 tonnes in FY22. Management said weather conditions have been cooler and wetter than normal, tree health remains ‘good’ 

  • Pilbara Minerals (PLS) -11.4%: Spodumene concentrate auction sold a 10,000 tonne cargo for US$7,552/t, down -3.2% month-on-month 

Mid-to-small caps

  • Appen (APX) +1.5%: Appoints Armughan Ahmad as CEO effective from no later than 30 January 2023. Ahmad was formerly the President and Managing Partner of Digital at KPMG Canada

  • Global Lithium (GL1) -1.0%: Delivered a 148.5% resource increase to 50.7m tonnes at its Manna and Marble Bar hard-rock lithium projects in WA. The company notes “significant scope”  to further grow its resource in the near-term 

  • Australian Ethical (AEF) -10.8%: Expects 1H22 underlying profit after tax to be $4.5m to $5.0m, down from $5.4m a year ago 


Broker updates 

Ticker

Company

Broker

Action

Rating

Target price

BRG

Breville Group

Credit Suisse

Downgrade

Underperform from Neutral

$18.61 from $22.28

CIA

Champion Iron

Citi

Retain

Buy

$7.80 from $6.70

ILU

Iluka Resources

Citi

Downgrade

Sell from Neutral

$9.50

JBH

JB Hi-FI

Credit Suisse

Downgrade

Neutral from Outperform

$45.73 from $55.11

NHC

New Hope

Citi

Upgrade

Buy from Neutral

$6.70 from $4.50

WHC

Whitehaven Coal

Citi

Upgrade

Buy from Neutral

$11.10 from $8.00


Scans

Top Gainers

Code Company Last % Chg
PGD Peregrine Gold Ltd $0.485 +64.41%
GCM Green Critical Mi... $0.022 +29.41%
TNY Tinybeans Group Ltd $0.23 +27.78%
TMH The Market Herald... $0.44 +22.22%
HTG Harvest Technolog... $0.073 +19.67%
View all top gainers

Top Fallers

Code Company Last % Chg
TUL Tulla Resources Plc $0.305 -20.78%
FG1 FLYNN Gold Ltd $0.115 -20.69%
HAR Haranga Resources... $0.105 -19.23%
NME NEX Metals Explor... $0.03 -18.92%
WR1 Winsome Resources... $1.015 -18.15%
View all top fallers

52 Week Highs

Code Company Last % Chg
GCM Green Critical Mi... $0.022 +29.41%
KIL Kiland Ltd $1.70 +4.62%
APZ Aspen Group $1.85 +2.21%
EBO Ebos Group Ltd $40.01 +2.09%
RCT Reef Casino Trust $3.42 +1.18%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
TUL Tulla Resources Plc $0.305 -20.78%
HAR Haranga Resources... $0.105 -19.23%
EXL Elixinol Wellness... $0.019 -17.39%
OCT Octava Minerals Ltd $0.125 -13.79%
PMT Patriot Battery M... $0.825 -13.16%
View all 52 week lows

Near Highs

Code Company Last % Chg
SMLL Betashares Aust S... $3.48 -1.14%
OZBD Betashares Austra... $44.51 -0.65%
PCI Perpetual Credit ... $1.005 0.00%
WVOL Ishares Edge MSCI... $35.49 -0.34%
NUF Nufarm Ltd $6.25 +0.81%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
GAS State GAS Ltd $0.215 +2.38%
DUN Dundas Minerals Ltd $0.19 +5.56%
MGTDB Magnetite Mines Ltd $0.64 0.00%
GLN Galan Lithium Ltd $1.13 -4.64%
DOW Downer Edi Ltd $3.73 -3.37%
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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