Evening Wrap: ASX 200 firms on financials, energy and gold, as lithium selloff enters dangerous new phase

It was another small, hard-fought gain on the S&P/ASX 200 – but we'll take it!

Gold and financial stocks were clear winners today, and Energy stocks staged a rare but welcome bounce.

One sector of the market suffered acutely, however. ASX lithium stocks have had a tough time for a long time, we know – but selling in the sector took on an extra degree of desperation today.

There's plenty of results to discuss, as well as several dozen broker moves, plus technical analysis that points to a potentially imminent breakout in the gold price.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 13.1 points higher at 7,826.8, 0.32% from its session low and just 0.11% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a narrow 142 to 129.

The Gold (XGD) (+2.3%) sub-index was the best performing sector today, likely in response to the third consecutive session of firmer gold prices. Check today’s ChartWatch for technical analysis of the gold price.

ASX Gold stocks today

Also doing well today was the Financials (XFJ) (+0.94%) sector. It prospered on a 6.5% jump in Challenger (ASX: CGF) after it reported better than expected FY24 results. Elsewhere, Zip Co (ASX: ZIP) (+5.1%) continued its winning ways, and The Big 4 rose after they each received price target upgrades from UBS. The broker also saw fit to upgrade its ratings on ANZ Group (ASX: ANZ) (from NEUTRAL to BUY) and on Westpac Banking Corporation (ASX: WBC) (from SELL to NEUTRAL).

ASX Financial stocks today

It was good to see Energy (XEJ) (+0.58%) and Resources (XJR) (+0.43%) stocks bouncing back, as crude oil prices surged Monday, and base metals also edged higher. Energy's gain was clear cut, but Resources was a little more murky.

Certainly, gains in gold likely boosted the XJR, and gains in majors BHP Group (ASX: BHP), Rio Tinto (ASX: RIO) and South32 (ASX: S32) were responsible for the bulk of the sector's points...but it was a tough day for many others, including iron ore and battery metals plays.

Lithium stocks were particularly harshly dealt with, as lithium minerals prices continued to tumble in China, and the sector grappled with a media report (paywall) that Albemarle may be looking to offload its stake in the Greenbushes mine. See today's ChartWatch for technical analysis of two key lithium prices.

The best and worst of the Resources sector today

ChartWatch

Gold Futures (Front month, back-adjusted) COMEX

Can gold go for...um, gold!?

The last time we covered gold was in ChartWatch in the Evening Wrap on 31 July.

In that update, we lamented the resilience of the 2351-2536 trading range: “And so goes the gold chart until it can close on either side of what is becoming a very well defined trading range between 2351 and 2536.”

Good news…gold appears on the verge of potentially breaking through the top of that range, gearing up for its fourth credible attempt at a breakout since April.

Candles look good here – we’re heading into this one with three decent demand-side showings in the last three completed candles (the final candle on the chart, the black one, is today so it’s still live – discount it!).

But I note, the candles have looked good into the 2503-2536 supply zone before – only for gold to baulk and come tumbling back down again.

My gut says this time it can: I’m at least 51% sure! 🤞

Demand is 2399-2404. Before that, it’s at the short term uptrend ribbon (dynamic). There’s not much more I can add…it’s up to the gold demand-side now…can they go for...🥇!?

Lithium Carbonate Futures (Benchmark moneth, back-adjusted) GFEX, Platts Spodumene 6% (S&P Global)

Where's the low? An excellent case study in trusting the trend over narratives...

This is a sad and sorry tale, but it's also a fantastic case study in trusting the trend over narratives...

If you follow me on X/Twitter, you'll know I'm very close to the lithium story, having published daily chart updates for over 2 years now. In that time I enjoyed the rally, nailed the call on the commencement of the bear market, and stuck to that bear market call all the way down to December last year. I called that bounce, and then in May, I called the roll-back-over into the current decline.

The last time I covered the Platts Spodumene 6% in ChartWatch was in the Evening Wrap on 10 July.

In that update I discussed the importance of a V-shaped bounce in the chart of any security that has suffered a major decline. The alternative is a bump along the bottom at best, or at worst, continued falls.

I can't tell the future. Today's bounce in GFEX Lithium Carbonate futures could be the exact low and the beginning of the next great lithium bull market.

But that's not my game. I don't deal in trying to pick the bottom. I'm happy to miss the first 20% of the next bull market if that means I'm sure the demand-supply environment has returned confidently to demand-side control.

Every investor chooses their own approach. Mine's trend following. You're welcome to join the club (I think you get a sticker and a mug!).

I have only one view on lithium prices based upon the evidence I can see, and that is the charts suggest a wall of supply, and very little demand thus far prepared to get in its way.

How will you know demand has returned and supply has subsided? Easy! The usual fingerprints of demand-side control: white-bodied candles, rising peaks and rising troughs, and trend ribbons turning higher.

Economy

Today

• AUS Westpac- MI Consumer Sentiment August

  • +2.8% to 85 vs -1.1% in July (100 = neutral, i.e., equal number of pessimists and optimists, values < 100 = pessimism vs values > 100 = optimism)

  • From Westpac:

    • "Views on family finances bounce back from last month but remain weak"

    • "Some clearer signs of support from tax cuts and fiscal measures"

    • "Consumers less worried about further interest rate increases than last month"

    • "Australians still untroubled by jobs outlook"

    • "Home-buyer sentiment sinks to new lows as price expectations cool"

Westpac-MI Consumer Sentiment August. Sources: Westpac Economics, Melbourne Institute

• AUS NAB Business Confidence Survey July

  • 1 vs 4 in June

  • From NAB: "Business conditions stayed resilient in July and inflation-related measures rose, challenging expectations that the economy would continue to cool as 2023 wears on. Key measures of demand, profitability and employment all held steady at above-average levels and capacity utilisation also rebounded to be well above average at 84.5%. Confidence remained low, as did forward orders, but both measures have been weighed down by deeply negative readings in the retail sector."

Chart 1- Confidence & Conditions (Net Balance, SA) Source National Australia Bank

• AUS Wage Price Index q/q June

  • +0.8% vs +0.9% forecast vs +0.9% March (revised from 0.8%)

Later this week

Tuesday

• 22:30 USA Core Producer Price Index (PPI) m/m July (+0.2% m/m and +2.4% p.a. forecast vs +0.4% m/m and +2.6% p.a. June)

Wednesday

• 22:30 USA Core Consumer Price Index (CPI) m/m July (+0.2% m/m and +3.4% p.a. forecast vs +0.1% m/m and +3.4% p.a. June)

Thursday

• 11:30 AUS Employment Change & Unemployment Rate July

  • Employment Change: +20,400 forecast vs +50,200 in June

  • Unemployment Rate: 4.1% forecast vs 4.1% in June

• 12:00 CHN Data Dump July

  • Industrial Production y/y +5.3% forecast vs +5.3% June

  • Retail Sales y/y +2.6% forecast vs +2.0% June

  • Fixed Asset Investment ytd/y +3.9% forecast vs +3.9% June

  • Unemployment Rate +5.1% forecast vs +5.0% June

  • New Home Prices m/m -0.65% forecast vs -0.67% June

• 22:30 USA Core Retail Sales July (+0.1% m/m vs +0.4% m/m June)

Friday

• 09:30 AUS RBA Governor Michell Bullock Speaks

Saturday

• 00:00 USA University of Michigan Consumer Sentiment Index August (66.7 forecast vs 66.4 July)

Latest News

Interesting Movers

Trading higher

• +23.3% Temple & Webster Group (TPW) - Appendix 4E & Financial Report and FY24 Investor Presentation, closed back above long term trend ribbon 🔎📈

• +19.2% Orora (ORA) - Receipt and Rejection of NBIO from Lone Star (takeover offer)

• +12.9% Pantoro (PNR) - No news, rise is consistent with long term uptrend 🔎📈

• +10.7% Sims (SGM) - SIMS SIGNS A BINDING AGREEMENT TO SELL UK METAL, upgraded to sector perform from underperform at RBC Capital Markets and price target increased to $12.50 from $10.75, retained at buy at Citi and price target increased to $13.80 from $13.50

• +8.3% Genesis Minerals (GMD) - No news, benefited from rising gold price / general strength today in ASX gold sector, rise is consistent with prevailing short and long term uptrends 🔎📈

• +8.0% Droneshield (DRO) - No news, closed back above long term trend ribbon 🔎📈

• +6.5% Challenger (CGF) - 2024 Annual Report and 2024 Investor Presentation and outlook

• +5.8% Ramelius Resources (RMS) - No news, benefited from rising gold price / general strength today in ASX gold sector, rise is consistent with prevailing long term uptrend 🔎📈

• +5.6% De Grey Mining (DEG) - No news, benefited from rising gold price / general strength today in ASX gold sector, closed back above long term trend ribbon 🔎📈

• +5.1% Zip Co. (ZIP) - No news, rise is consistent with prevailing long term uptrend 🔎📈

• +5.1% Dexus (DXS) - No news, closed back above long term trend ribbon 🔎📈

• +5.0% Abacus Storage King (ASK) - FY24 Annual Report and Apppendix 4E and FY24 Investor Presentation

Trading lower

• -12.0% Latin Resources (LRS) - Tough day generally for ASX lithium sector as most lithium minerals prices continued to plumb multi-year lows in China, fall is consistent with prevailing long term downtrend 🔎📉

• -8.8% Seven West Media (SWM) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -6.6% Seek (SEK) - SEEK Appendix 4E and FY2024 Annual Report and SEEK FY2024 Full Year Results Presentation, fall is consistent with prevailing short and long term downtrends 📉

• -5.8% Liontown Resources (LTR) - Ditto LRS, fall is consistent with prevailing short and long term downtrends 🔎📉

• -5.6% Netwealth Group (NWL) - 2024 Full Year Annual Report & Appendix 4E and 2024 Full Year Results Presentation

• -5.4% Nanosonics (NAN) - No news, fall is consistent with prevailing short and long term downtrends 📉

• -4.8% Audinate Group (AD8) - No news, fall is consistent with prevailing short and long term downtrends 📉

• -4.6% CSL (CSL) - Full Year Statutory Accounts for 30 June 2024 and Results Presentation

• -4.6% Nine Entertainment (NEC) - No news, fall is consistent with prevailing short and long term downtrends 📉

• -4.4% Pilbara Minerals (PLS) - Ditto ASX lithium, but also FY24 Full Year Results Advisory, fall is consistent with prevailing short and long term downtrends 📉

• -4.2% Arcadium Lithium (LTM) - Ditto ASX lithium…fall is consistent with prevailing short and long term downtrends 📉

• -3.7% Sayona Mining (SYA) - Ditto ASX lithium, but also downgraded to underperform from neutral at Macquarie and price target cut to $0.03 from $0.04, fall is consistent with prevailing short and long term downtrends 📉

Broker Notes

Atlantic Lithium (A11)

• Upgraded to outperform from neutral at Macquarie; Price Target: $0.40 from $0.42

ARN Media (A1N)

• Retained at neutral at Macquarie; Price Target: $0.63 from $1.04

ANZ Group (ANZ)

• Upgraded to buy from neutral at UBS; Price Target: $32.00 from $30.00

Arena Reit. (ARF)

• Upgraded to outperform from neutral at Macquarie; Price Target: $4.02

Abacus Storage King (ASK)

• Retained at buy at Citi; Price Target: $1.40

Aurizon (AZJ)

• Retained at neutral at Citi; Price Target: $3.55 from $4.00

• Downgraded to hold from outperform at CLSA; Price Target: $3.40 from $3.80

• Downgraded to underweight from neutral at Jarden; Price Target: $3.25 from $3.75

• Retained at buy at Jefferies; Price Target: $4.08 from $4.37

• Retained at neutral at Macquarie; Price Target: $3.60 from $3.73

• Upgraded to equal-weight from underweight at Morgan Stanley; Price Target: $3.55 from $3.77

• Retained at hold at Morgans; Price Target: $3.42 from $3.77

• Upgraded to sector perform from underperform at RBC Capital Markets; Price Target: $3.50 from $3.80

• Retained at neutral at UBS; Price Target: $3.40 from $3.70

Bendigo and Adelaide Bank (BEN)

• Retained at sell at UBS; Price Target: $10.00 from $8.75

Beach Energy (BPT)

• Retained at buy at Bell Potter; Price Target: $1.40 from $1.85

• Retained at sell at Citi; Price Target: $1.30

• Retained at positive at E&P; Price Target: $1.90

• Retained at neutral at Jarden; Price Target: $1.31 from $1.55

• Retained at overweight at JP Morgan; Price Target: $1.60 from $1.80

• Retained at neutral at Macquarie; Price Target: $1.30 from $1.45

• Retained at equal-weight at Morgan Stanley; Price Target: $1.45

• Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $1.40 from $1.75

• Retained at buy at UBS; Price Target: $1.60 from $1.75

Car Group (CAR)

• Retained at buy at Citi; Price Target: $39.30

• Retained at buy at Goldman Sachs; Price Target: $40.90 from $41.40

• Retained at buy at Jefferies; Price Target: $40.50 from $39.24

• Retained at neutral at JP Morgan; Price Target: $33.50 from $33.50

• Retained at outperform at Macquarie; Price Target: $35.40 from $34.60

• Retained at overweight at Morgan Stanley; Price Target: $40.00

• Retained at hold at Morgan Stanley; Price Target: $35.40 from $34.70

• Retained at outperform at RBC Capital Markets; Price Target: $38.00 from $35.50

• Retained at buy at UBS; Price Target: $39.80 from $40.50

Commonwealth Bank of Australia (CBA)

• Retained at sell at UBS; Price Target: $110.00 from $107.00

Challenger (CGF)

• Retained at neutral at Citi; Price Target: $6.95

• Retained at neutral at Macquarie; Price Target: $7.30

CSL (CSL)

• Retained at outperform at Macquarie; Price Target: $330.00

Dexus Convenience Retail Reit (DXC)

• Retained at buy at Bell Potter; Price Target: $3.10 from $3.00

• Retained at add at Morgans; Price Target: $3.25 from $3.23

• Retained at accumulate at Ord Minnett; Price Target: $3.01 from $2.82

Electro Optic Systems (EOS)

• Initiated at buy at Bell Potter; Price Target: $2.80

Fletcher Building (FBU)

• Retained at equal-weight at Macquarie; Price Target: $2.84

Global Lithium Resources (GL1)

• Retained at neutral at Macquarie; Price Target: $0.25 from $0.30

Galan Lithium (GLN)

• Retained at neutral at Macquarie; Price Target: $0.12 from $0.20

Healthco Healthcare and Wellness Reit (HCW)

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

• Retained at outperform at Macquarie; Price Target: $1.32 from $1.29

• Retained at equal-weight at Morgan Stanley; Price Target: $1.41

JB HI-FI (JBH)

• Retained at buy at Citi; Price Target: $85.00 from $74.00

• Retained at outperform at CLSA; Price Target: $77.75 from $68.50

• Retained at underweight at Jarden; Price Target: $64.80 from $50.50

• Retained at underperform at Jefferies; Price Target: $61.00 from $55.50

• Retained at outperform at Macquarie; Price Target: $77.00 from $71.90

• Retained at underweight at Morgan Stanley; Price Target: $54.70

• Retained at hold at Morgans; Price Target: $69.00 from $62.00

• Retained at hold at Ord Minnett; Price Target: $68.00

• Retained at sell at UBS; Price Target: $64.00 from $60.00

James Hardie Industries (JHX)

• Retained at neutral at Citi; Price Target: $42.50

• Retained at outperform at Macquarie; Price Target: $66.60

Monadelphous Group (MND)

• Retained at hold at Morgans; Price Target: $13.20 from $14.40

Megaport (MP1)

• Retained at outperform at Macquarie; Price Target: $15.50 from $18.30

National Australia Bank (NAB)

• Retained at sell at UBS; Price Target: $32.00 from $31.00

Nick Scali (NCK)

• Retained at outperform at Macquarie; Price Target: $16.25 from $16.10

Nine Entertainment (NEC)

• Retained at neutral at Macquarie; Price Target: $1.31 from $1.64

Neuren Pharmaceuticals (NEU)

• Retained at buy at Bell Potter; Price Target: $25.00

Netwealth Group (NWL)

• Retained at sell at Citi; Price Target: $18.90

• Retained at underperform at Macquarie; Price Target: $16.75

News Corporation (NWS)

• Retained at outperform at Macquarie; Price Target: $49.00 from $46.00

Nextdc (NXT)

• Retained at outperform at Macquarie; Price Target: $21.10 from $20.00

OOH!Media (OML)

• Retained at outperform at Macquarie; Price Target: $2.28 from $2.31

Pharmaust (PAA)

• Retained at add at Morgans; Price Target: $0.42

Piedmont Lithium (PLL)

• Downgraded to neutral from outperform at Macquarie; Price Target: $0.15 from $0.25

QBE Insurance Group (QBE)

• Upgraded to buy from hold at Bell Potter; Price Target: $18.27 from $18.47

Region Group (RGN)

• Retained at buy at Citi; Price Target: $2.60

• Retained at underweight at Macquarie; Price Target: $2.42

Sims (SGM)

• Retained at buy at Citi; Price Target: $13.80 from $13.50

• Upgraded to sector perform from underperform at RBC Capital Markets; Price Target: $12.50 from $10.75

Seven Group (SVW)

• Retained at hold at Jefferies; Price Target: $39.00

Seven West Media (SWN)

• Retained at neutral at Macquarie; Price Target: $0.17 from $0.22

Southern Cross Media Group (SXL)

• Retained at neutral at Macquarie; Price Target: $0.61 from $0.94

Sayona Mining (SYA)

• Downgraded to underperform from neutral at Macquarie; Price Target: $0.03 from $0.04

Telix Pharmaceuticals (TLX)

• Retained at buy at Bell Potter; Price Target: $21.34 from $22.60

Technology One (TNE)

• Downgraded to hold from buy at Bell Potter; Price Target: $22.25 from $20.50

Temple & Webster Group (TPW)

• Retained at buy at Citi; Price Target: $11.00

• Retained at outperform at Macquarie; Price Target: $12.30

Westpac Banking Corporation (WBC)

• Upgraded to neutral from sell at UBS; Price Target: $30.00 from $25.00

Scans