Evening Wrap: ASX 200 gains, lithium developers and tin stocks surge, gold takes a breather

The local sharemarket extends gains for a second straight session, the ASX 200 Discretionary Index rallies to a 14 month high, tin stocks surge as 10% of the world's production is at risk, gold stocks pullback sharply and a handful of broker takes on lithium, miners and Australian agriculture.

Let's dive in.

ASX 200 Session Chart

Another positive close but off session highs (Source: Market Index)

Markets

A relatively uneventful session. The ASX 200 is up 12 of the last 14 sessions, now sitting at a two month high. The index eased a little off session highs of 0.4%.

• Real Estate led to the upside thanks to broad-based gains from names including Scentre Group, Stockland, Vicinity Centres and Goodman Group

• Discretionary stocks were higher as heavyweight Wesfarmers rallied to levels not seen since February 2022

• Defensive and resource stocks led to the downside

Economy

No major economic announcements. Tomorrow we have (AEST):

• 11:30 am: RBA Meeting Minutes

• 12:00 pm: China Q1 GDP Growth Rate (4.0% expected, 2.9% in 4Q22)

• 12:00 pm: China Industrial Production, Retail Sales, Unemployment, Fixed Asset Investment for March

Latest news

Market Insights

Tin prices surge

China's most traded tin futures jumped 10% on Monday after Myanmar's Wa State suspended all mining operations by August 1 to protect its remaining mineral resources. In 2020, Myanmar produced an approximate 44,000 tonnes of tin, which accounted for about 10% of the world's total tin production.

Tin prices have halved from March 2022 highs of almost US$50,000 a tonne. Could Myanmar taking supply offline be a major catalyst to bring prices back to life?

Metals X (ASX: MLX), one of the most advanced tin pure plays, rallied 18.6% on Monday to a near two month high.

Gold: A pullback

Gold prices fell around 2% last Friday as the market begins to realise the world isn't ending quite yet (or because of a bounce in bond yields and the US dollar).

Several ASX-listed gold names that have experienced V-shaped rallies eased 3-5% on Monday. So now we're in an awkward place where the stocks are technically overextended but gold is trying to hold that key US$2,000 level.

Here are some interesting takes for gold bugs.

Bank of America says the US dollar is entering its fourth bear market in the last half century.

Source: Bank of America

The sentiment for gold is a little bit above neutral, which suggest there's a lot more room for optimism. Aka things aren't full blown frothy.

Gold optix (Source: SentimenTrader)

Interesting news and movers

Trading higher

• +18.5% Lake Resources (LKE) – Lilac increases Kachi stake to 20%

• +17.6% Atlantic Lithium (A11)

• +16.95% Metals X (MLX) - Tin prices jump

• +16.7% Linsay Australia (LAU) – FY guidance

• +13.9% EML Payments (EML) – Strategic review, CEO resigns

• +10.3% Sayona Mining (SYA) – Upgrades Moblan resource

• +10.0% Genesis Minerals (GMD) – To acquire St Barbara assets

Trading lower

• -34.7% AMA Group (AMA) – Revises FY23 guidance

• -25.0% Tigers Realm Coal (TIG) – DFAT deems ops likely prohibited

• -9.5% New Hope (NHC) – Ex-dividend

• Gold sector move: Westgold (-7.0%), Bellevue Gold (-5.6%), Perseus (-4.0%), Ramelius (-3.3%)

Broker updates

Macquarie on lithium:

• “Total plug-in sales in the US rose 3.2% MoM to 111k units with a 23.9% increase in PHEV sales growth while BEV sales were largely flat.”

• “China EVs sold in March increased by 24.4%, shrugging off concerns of Internal Combustion Engine stock clearance impacts.” 

• “The EV sales in Europe saw a strong rebound, up 87.5% MoM with higher sales in both BEV and PHEV sales at 159k and 64k, respectively.”

• “MIN and PLS are our preferred producers with PMT and GL1 key picks of the exploration plays.”

Morgan Stanley on OZL, BHP and Rio Tinto:

• “Adding OZL into BHP adds an average 3% pa Cu Eq growth for FY24/25e, followed by an average of ~5% in later years.”

• “BHP, post completion of OZL deal is expected to be in the upper half of its US$5-15bn net debt range,adding current provisions of US$3.3bn (with potential upside risk to Samarco provisions) could impact BHP's ability to pay dividends.”

• “RIO still enjoys a higher CuEq CAGR vs. BHP post completion of the OT transaction.”

• MS is Overweight on Rio and Underweight on BHP 

UBS on Australian agriculture:

• “The global agriculture backdrop for FY23 appears favourable with soft commodity prices and hence farmer profitability well above LT averages.”

• “This continues to be driven by very tight global grain & oilseed stock-to-use ratios which are at c.15yr lows.”

• “Solid planted area growth as well as elevated soft commodity prices mean that farmers should be incentivised to maximise yield by applying agchems such as crop protection products.”

• UBS is Buy rated on Nufarm with a $7.50 target price and Neutral on Elders with a $9.20 target price

Scans