Market Wraps

Evening Wrap: ASX 200 higher, iron ore back above US$100, lithium stocks catch a bid

Mon 08 May 23, 5:01pm (AEST)

 The S&P/ASX 200 closed 57 points higher, up 0.78%. 

The Resource sector found some good buying on Monday thanks to higher iron ore, copper and oil prices, Australia's business confidence comes in flat and suggests an equal share of optimists and pessimists, iron ore prices bounce back to US$100 a tonne, lithium stocks are trying to find a bottom and keep an eye out for US inflation data on Wednesday.

Let's dive in.


Today in Review

Mon 08 May 23, 4:16pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,276.5 +0.78%
All Ords 7,472.1 +0.80%
Small Ords 2,925.9 +0.86%
All Tech 2,261.4 +0.61%
Emerging Companies 2,135.5 +0.34%
Currency
AUD/USD 0.6774 +0.35%
US Futures
S&P 500 $4,147.75 -0.06%
Dow Jones $33,728.0 -0.03%
Nasdaq $13,316.25 -0.01%
Name Value % Chg
Sector
Energy 10,725.9 +2.48%
Materials 18,208.7 +1.58%
Information Technology 1,581.6 +1.00%
Financials 6,161.9 +0.73%
Real Estate 3,195.7 +0.36%
Industrials 6,870.0 +0.34%
Consumer Discretionary 3,072.8 +0.34%
Utilities 8,685.1 +0.31%
Communication Services 1,552.8 +0.26%
Health Care 44,166.5 +0.03%
Consumer Staples 13,408.0 -0.87%

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ASX 200 Session Chart

ASX 200 chart
ASX 200 rallies in early trade and closes towards session highs (Source: Market Index)

Markets

The ASX 200 finished higher on Monday and near best levels. Energy and materials were among the best performers and rose for a third-consecutive session. Today's upside was driven by a solid session on Wall Street last Friday and higher commodity prices, most notably copper, oil and iron ore.

Economy

Australian business confidence rose 1 point to 0 index points in April, according to NAB Economics.

  • “A zero reading for confidence in the survey indicates that an equal share of firms are optimistic as pessimistic, which highlights how the outlook is finely balanced.” – NAB Chief Economist Alan Oster

  • Business conditions subindex eased, “continuing a trend of gradual easing but remaining at above-average levels”

  • “Confidence, by contrast, is now mired below average (albeit it has also stabilised in recent months) suggesting firms expect the recent period of resilience to fade.”

  • “Cost growth remained a challenge, with purchase cost growth picking back up after easing in recent months and labour cost growth still high.”

Australian building permits fell 0.1% month-on-month in March, following a 3.9% increase in February, according to the ABS.

  • "Private sector dwellings excluding house approvals increased 5.6 per cent in March, following a 9.7 per cent decrease in February,” said Daniel Rossi, ABS Head of Construction Statistics

  • "This is the sixth consecutive month where the trend result has fallen for total dwellings approved.”


Latest news


Market Insights

Iron ore: Stabilising at US$100 a tonne

Iron ore prices are stabilising around the US$100 a tonne mark after a rather quick 25% pullback from April highs.

Prices of construction steel products across China may see signs of stabilizing or even achieve a rebound this month, in anticipation of domestic steelmakers' output cuts which may last for several weeks in a row, Mysteel predicted in its latest monthly report.

As steel prices in China rise, it generally indicates that there is rising demand for steel, which can lead to higher iron ore prices.

Iron ore price
Singapore iron ore futures (Source: TradingView)

Lithium: Finding a bottom

Lithium stocks rallied in-line with the recent bounce in Chinese spot prices. Earlier today, I covered some of the notes from Morgan Stanley and Macquarie about the "turning point in lithium markets."

A few lithium names experienced a little bit of selling towards close:

  • Pilbara Minerals up 4.55% from session highs of 7.3%

  • Allkem up 0.3% from session highs of 3.5%

The mid cap space was a lot stronger, with many names pushing to levels not seen since February and some trying to push key trendlines.

LLL chart
Leo Lithium chart (Source: TradingView)

Big inflation week: US and China

We'll see some market-moving pieces of economic data later this week from the US and China as well as the Bank of England's interest rate decision.

Time

Data

Previous

Consensus

10:30 pm Wed

US Core Inflation

5.6%

5.5%

10:30 pm Wed

US Inflation

5.0%

5.0%

11:30 am Thu

China Inflation

0.7%

0.3%

9:00 pm Thu

BoE Interest Rate Decision

4.25%

4.50%

10:30 pm Thu

US Producer Price Index MoM

-0.5%

0.3%

Source: TradingEconomics

Interesting news and movers

Trading higher

  • +12.7% Melbana Energy (MAY)

  • +12.0% Lynas (LYC) – Malaysian license extension

  • +9.8% Lindian Resources (LIN)

  • +6.3% Probiotec (PBP) – Takeover approach

  • +5.1% Iluka Resources (ILU) – Upgraded by Macquarie

  • +1.8% Westpac (WBC) – Earnings

  • Lithium sector move:

Trading lower

  • -6.5% Mindax (MDX)

  • -5.4% Syrah Resources (SYR)

  • -5.2% Block (SQ2)

  • -4.9% Estia Health (EHE) – Bain may not proceed with takeover

  • -1.3% 4DMedical (4DX) – Capital Raising


Broker notes

Goldman Sachs notes:

ANZ (ANZ): Neutral with $26.17 target price

  • “ANZ’s 1H23 cash earnings were up 23% on pcp and 4% below GSe, with the miss driven by higher expenses.”

  • “Today’s result provided further evidence of success for ANZ in improving the profitability of its Institutional business.”

  • “Risks appear evenly balanced and with our revised TP offering only 14% upside.”

Macquarie Group (MQG): Neutral with $192.01 target price

  • “MQG’s FY23 NPAT was up +10% on pcp, broadly in line with GSe, but 4% ahead of Visible Alpha consensus.”

  • “Macquarie’s FY23 result was driven by its CGM division, and pleasingly, the division continues to exhibit positive asymmetry in its performance.”

  • “While management has historically been conservative in setting guidance, conditions remain uncertain in MQG’s market-facing businesses, which we think limits the near-term upside risk to earnings.”

Macquarie Australia 2023 Conference Wrap:

  • The 25th Macquarie Conference hosted presentations from over 100 ASX-listed companies

  • “We believe the results of the 25th Australian conference are consistent with our cautious view on the cycle.”

  • “Australia may avoid recession thanks to high immigration, but a US recession is still likely to impact Australian equities.”

  • “We raised Health to our top overweight with an increase in CSL, but reduced exposure to Energy and some expensive defensives."


Scans

Top Gainers

Code Company Last % Chg
CPH Creso Pharma Ltd $0.014 +27.27%
KGD Kula Gold Ltd $0.014 +27.27%
CLU Cluey Ltd $0.12 +20.00%
VRC Volt Resources Ltd $0.012 +20.00%
NYM Narryer Metals Ltd $0.13 +18.18%
View all top gainers

Top Fallers

Code Company Last % Chg
LRD Lord Resources Ltd $0.135 -46.00%
SNX Sierra Nevada Gol... $0.15 -28.57%
SER Strategic Energy ... $0.018 -21.74%
VMT Vmoto Ltd $0.275 -19.12%
ERW Errawarra Resourc... $0.074 -17.78%
View all top fallers

52 Week Highs

Code Company Last % Chg
WA1 WA1 Resources Ltd $3.03 +11.81%
LIN Lindian Resources... $0.45 +9.76%
RXH Rewardle Holdings... $0.034 +9.68%
KAM K2 Asset Manageme... $0.063 +8.62%
PBP Probiotec Ltd $2.55 +6.25%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
LRD Lord Resources Ltd $0.135 -46.00%
SNX Sierra Nevada Gol... $0.15 -28.57%
VMT Vmoto Ltd $0.275 -19.12%
ERW Errawarra Resourc... $0.074 -17.78%
NOX Noxopharm Ltd $0.045 -16.67%
View all 52 week lows

Near Highs

Code Company Last % Chg
FLT Flight Centre Tra... $21.80 +2.16%
SLA Silk Laser Austra... $3.02 0.00%
NHF Nib Holdings Ltd $8.03 +1.65%
RWC Reliance Worldwid... $4.17 +0.73%
CWP Cedar Woods Prope... $4.80 -0.42%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
AEE Aura Energy Ltd $0.175 -2.78%
MGX Mount Gibson Iron... $0.443 -0.56%
OML Ooh!Media Ltd $1.263 +3.48%
UNI Universal Store H... $4.46 +1.36%
SFC Schaffer Corporat... $17.23 -0.98%
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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