Evening Wrap: ASX 200 gains as crude price drop sparks massive rally in tech and consumer stocks

The ASX 200 rallied broadly as oil's 3.4% overnight plunge eased inflation fears, pared benchmark bond yields, and sent the Nasdaq to a record high — handing technology, consumer discretionary, and real estate a rare simultaneous winning session. Energy stocks were the sole major losers as oil and gas stocks tracked the crude price.

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. Also, I have detailed technical analysis on the Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch.

Let’s dive in!

***NOTE: THIS IS MY LAST E.W. FOR A WHILE! 🏖️***

But you'll be in very good hands for about a month (yours + Kerry's!)

It's been so much fun writing the Evening Wrap, and no doubt there will be plenty of adventures for the Old Tin Pot while I'm away! All the best for your trading and investing until we catch up again... and always remember: Follow Trend + Manage Risk + Analyse, Accept, and Act 💪

The S&P/ASX 200 (XJO) finished 25.9 points higher at 8,757.8, roughly mid-range, 0.37% from its session low and 0.26% from its high. In the broader-based S&P/ASX 300 (XKO) advancers beat decliners by a solid 172 to 104.

Information Technology (XIJ) (+2.7%) was Tuesday's best sector, and for once the Nasdaq's record-high overnight close resonated locally. Lower bond yields — the direct result of falling oil easing inflation expectations — reduce the discount rate applied to long-duration technology earnings, and a Nasdaq record high likely forced some local fund managers to add exposure to a sector that's been one of the most persistent underperformers this year. Catapult Sports (CAT) (+6.1%), Nuix (NXL) (+5.0%), Megaport (MP1) (+4.3%), NextDC (NXT) (+3.8%), Life360 (360) (+2.9%), and WiseTech Global (WTC) (+2.9%) all gained.

S&P-ASX 200 Information Technology Sector Index intraday chart

Consumer Discretionary (XDJ) (+1.3%) caught the same lower-oil tailwind through a different channel — falling crude prices flow directly to consumers through lower petrol prices, easing the household cost-of-living pressure that has been the sector's primary headwind all year. Beaten-down names attracted the sharpest buying: Corporate Travel (CTD) (+6.6%), Bapcor (BAP) (+6.2%), Lovisa (LOV) (+4.5%), Light & Wonder (LNW) (+4.1%), and Universal Store (UNI) (+3.3%) all rose solidly.

S&P-ASX 200 Consumer Discretionary Sector Index intraday chart

Real Estate (XPJ) (+0.8%) was the textbook bond-proxy beneficiary — when oil falls and inflation expectations ease, benchmark bond yields follow, and the stable income streams of property trusts become comparatively more attractive. Ingenia Communities (INA) (+5.7%), Stockland (SGP) (+1.9%), Lifestyle Communities (LIC) (+1.9%), and Goodman Group (GMG) (+1.4%) all advanced in a sector that had been under sustained pressure from elevated yields through September.

Health Care (XHJ) (+0.8%) extended a run that has now made it the ASX's most consistent performer across good days and bad. Today it caught a modest tailwind from lower yields lifting long-duration healthcare multiples, but the sector has been advancing on days where neither yields nor sentiment supported it — a signal of genuine relative strength. Telix Pharmaceuticals (TLX) (+6.5%), Starpharma (SPL) (+1.9%), and CSL (CSL) (+1.4%) all advanced.

Materials (XMJ) (+0.6%) was lifted by a broad recovery in base metals and critical minerals names. COMEX copper futures gained 0.7% to US$6.811/lb after rising 1.1% overnight, driving enthusiasm across the copper complex. Aeris Resources (AIS) (+4.1%), Aurelia Metals (AMI) (+3.1%), 29Metals (29M) (+2.6%), Sandfire Resources (SFR) (+2.1%), and Nickel Industries (NIC) (+2.5%) were highlights.

Critical minerals and rare earths names were the sector's other bright spot — Lynas Rare Earths (LYC) (+3.8%), IperionX (IPX) (+3.8%), Viridis Mining and Minerals (VMM) (+3.6%), and Iluka Resources (ILU) (+1.8%) all gained.

Financials (XFJ) (-0.1%) was marginally negative in a session where lower bond yields and easing consumer pressure should logically have been a tailwind. A notable laggard... but to be fair, ANZ (ANZ) (+0.3%) and Macquarie Group (MQG) (+0.3%) bucked the drift, while Commonwealth Bank (CBA) (-0.4%), National Australia Bank (NAB) (-0.3%), and Westpac (WBC) (-0.1%) all slipped.

S&P-ASX 200 Financials Sector Index intraday chart

Energy (XEJ) (-1.2%) was the session's sole meaningful loser as ICE Brent crude futures plunged 3.4% overnight before recovering 1.7% to US$102.10/bbl in Asian trade — but as is so often the case, the overnight move is the one that carried (consider that the big money decides in New York and London, not in Sydney!).

Oil and gas producers Woodside Energy (WDS) (-2.4%), Karoon Energy (KAR) (-1.9%), Santos (STO) (-1.4%), and New Hope Corp. (NHC) (-1.0%) all fell. But the sector split cleanly for the second day — as refiners and distributors, whose margins improve when crude falls, moved in the opposite direction. Ampol (ALD) (+2.4%) and Viva Energy (VEA) (+0.9%) both advanced.

Analysis

What a candle for me to go out on! On a bloody rocket ship... to the MOON! 🚀

This is why I say you can never count the Comp out. It's a total BEAST and it can manufacture the most breathtaking rally from anywhere.

Doom and gloom. 😭

Or losing your mind FOMO + HOFU. 🤑

How do I describe Monday's candle? Are there enough superlatives? Gap. Run. Monster white body. High close.

The Comp was in BEAST MODE on Monday night! 💪

It didn't close right on the high, though... (0.23% from it — on a day that Comp was up 2.3% 🤏).

Still, consider the context of Monday's candle appeared: In a zone of supply that has been peskily capping upside price action for nearly four months.

Like it didn't exist. 💨

Because, well, it didn't. I think it got to the point as some stage during the session where there simply wasn't any supply. There was only a wall of FOMO demand... hitting a HOFU supply side vacuum.

And that likely explains Monday's volume. Well, it likely explains both Weds-Friday's and Monday's volume... consider:

1. Weds-Friday was the massive clear out of supply. Sure, Friday was also options expiry... so there's definitely some extra turnover there... but look at Wednesday and Thursday's volumes... this was a multi-day process clearing of supply, of the nervous naysayers who were foolish enough to doubt the Comp's credentials!

2. Monday's volume is still above average... decent supply was encountered and consumed, but we would expect that as more supply that has a low opinion of the price which can be achieved is removed — and replaced with HOFU supply — we should see volume diminish as the wall of demand hits a supply-side vacuum.

And the gap and run + monster white body? Well, you can thank FOMO for that!

Mix FOMO and HOFU together for long enough... and it could be a few-thousand point journey at least... 🤔

But it's a journey I'll be watching from the sidelines as I set off on my own little sojourn! 👋 So for the last time in a little while:

Analysis = BEAST MODE (✅), but 27191 still deserves respect (remember that 0.23%!). The price action remains a little inconsistent (higher peaks vs lower troughs), and the RUT isn't exactly shooting the lights out (remember the whip around the grounds seeks to determine if there's an external threat to our prevailing RP).

Accept = MOTN has swung decidedly back to D > S = P⬆️. There are still some nagging concerns with respect to the narrowness of the rally in risk elsewhere. But, regardless, there's enough evidence here to suggest that the Comp deserves more of my RP.

View

Act = Moving back to 2/3RP on the Comp. A stroll, not panicking back in. A prudent increase. Still a few strategic shorts about the place. Wait and see on the rest (i.e., requires a close above 27191, then preferably a test and hold of what, by then, will be the new demand zone!). (RP = Risk Position – it reflects my personal allowable capital allocation limit for my investments in US stocks. So 1/2RP is 50%, 2/3RP is 67% and FRP is 100%).

Key Levels

267191 is the closest key point of supply vs 25803-910 as the closest key zone of demand.

Analysis

No beast mode here! 🤦

Can I offer: Subdued Mode?

Or just plain old OTP Mode? 🤣

It is what it is — and hey — we all have a choice as to where we allocate our capital.

But, crazier things have happened in markets than the OTP bashing out a few more "at least it wasn't down" candles around the 8708-8656 demand zone — and then finding a way to avoid what looked like a sure-fire bet to fall.

It must contend with what will likely be a stubborn zone of supply sitting within the trend ribbons, presently at 8798-8903 on a combined basis.

I couldn't add RP back until I saw a strong demand side showing in price action and candles that closed confidently towards the very top end of that range — so, a return to:

1. Rising peaks (if I squint, I can confirm that today's higher high and higher low logged yesterday as a higher trough to the 15-Sep trough of 8657).

2. A return to a predominance of confident demand side candles (i.e., those with long white bodies and or long downward pointing shadows — the last couple are hardly inspiring!).

3. Ideally, at least the long term trend ribbon looking like its acting as a zone of dynamic demand (i.e., a trough that forms within, but preferably above it's boundaries).

Hey, it could also just flop back down and break through 8708. That would be more in keeping with the prevailing trends, price action, and candles.

In short... my last bit of analysis on the OTP for a while is much the same as it has been for a while: there's little here to suggest strong demand side control, and therefore there's little to warrant putting a large portion of my cash at risk. 😔

View

I am 1/3RP on Australian shares (i.e., 67% cash vs 33% invested, with some of the invested portion allocated to shorts).

Key Levels

8708-8656 is the critical zone of demand, while the long term trend ribbon (presently 8798-8860) is the the biggest barrier the OTP will have to contend with on the way back up.

(Glossary of acronyms! Old Tin Pot (OTP): S&P/ASX 200 | MOTN: More Often Than Not | FOMO: Fear Of Missing Out | HOFU: Holding On For Upside | BTD: Buy The Dip | NUTE: No Urgency To Enter | FOHO: Fear Of Holding On | STR: Sell The Rally | RP: Risk Position | FFS: Fund Flow Shenanigans!)

TODAY

• RBA Governor Michelle Bullock chat with Committee for Economic Development of Australia:

  • Risks are still "materialising" on the inflation front, and there still remains too much excess demand in the Australian economy.

  • First round effects (i.e., the spike in prices) could trigger second round effects (i.e., workers demand higher wages, causing businesses to jack up prices even more...).

  • In short... she didn't give much away as usual, but clearly hinted that she still feels that more needs to be done to ensure that inflation doesn't become more entrenched... Logically, this could require a higher cash rate.

LATER THIS WEEK

WEDNESDAY

• 09:00 AUS September Flash Purchasing Managers Index (PMI)

  • Manufacturing: previous was 52.0

  • Services: previous was 53.2 (revised up from 52.9)

• 23:45 USA September Flash Purchasing Managers Index (PMI)

  • Manufacturing: 53.4 forecast vs 53.9 in August (revised up from 53.2)

  • Services: 56.0 forecast vs 56.5 in August (revised down from 56.8)

THURSDAY

• 11:30 AUS August Employment

  • Employment change: +20,900 m/m forecast vs -15,800 m/m in July

  • Unemployment rate: 4.5% unchanged

FRIDAY

• 22:30 USA August Core Durable Goods Orders (+0.5% m/m forecast vs +0.4% m/m in July)