Evening Wrap: ASX 200 higher + Morgan Stanley expects the RBA to pause in June

The ASX managed to bounce and close near session highs, China's Caixin Manufacturing PMI unexpectedly bounces back into expansion territory, uranium stocks rally after the US House of Committee approved a bill to ban Russian uranium imports and a few broker notes of interest.

Let's dive in.

ASX 200 Session Chart

ASX 200 closed higher and near best levels (Source: Market Index)

Markets

A bit of buying started to kick in around 11:00 am AEST. The session was led by Healthcare, Staples and Tech sectors, notably CSL (+1.3% and near a 4-month high), Xero (+1.9%) and Woolworths (+1.5%). The market trying to bounce from a rather oversold level. Let's see if the dust can settle around these levels and if we can have a strong finish to the week tomorrow.

Economy

China’s Caixin Manufacturing PMI advanced to 50.9 in May from 49.5 in the previous month.

• The Caixin PMI covers small-to-medium enterprise while the NBS PMI on Wednesday covers large and state-owned companies

• Beat consensus expectations of a stagnant 49.5 reading in May

Latest news

Interesting news and movers

Trading higher

• +21.4% Yojee (YOJ) – 3-year logistics agreement

• +20.8% Neometals (NMT) – Promobius JV update

• +16.1% Lynch Group (LGL) – Market update

• +14.9% Catalyst Metals (CYL) – Drilling result

• +3.3% Link Administration (LNK) – Potential takeover target

• Gold sector move: Perseus (+4.7%), Ramelius (+4.4%), Gold Road (+4.0%), Bellevue Gold (+3.1%), Northern Star (+3.1%), Newcrest (+2.4%)

• Uranium sector bounce: Peninsula Energy (+17.2%), Bannerman (+13.9%), Paladin Energy (+11.0%), Lotus Resources (+9.1%), Deep Yellow (+8.6%)

Trading lower

• -14.8% Aurelia Metals (AMI) – Institutional capital raise

• -13.8% Hastings Tech (HAS) – Downgraded by Macquarie

• -6.3% Argosy Minerals (AGY) – Operations update

• -5.3% Champion Iron (CIA) – Earnings (Wed)

• -4.8% PeopleIn (PPE) – Guidance and strategic review

• -3.6% Mineral Resources (MIN) – Initiated underperform at CSLA

Broker notes

Macquarie notes of interest: 

Champion Iron (CIA) – Outperform with $7.80 target price

• “CIA's FY23 financial result was softer than expected and the final dividend was below our forecasts.”

• “Bloom Lake phase 2 continues to ramp up, driving CIA volumes to ~15mtpa which is a tailwind into FY24.”

• “We note that there remains organic growth upside given the large resource base, and the recent DRPF study highlights the strategy to target higher-quality product.”

Hastings Technology Metals (HAS) – Neutral with $1.70 target price

• “The development plan for the Yangibana rare earths project has been split into two stages.”

• “The updated capital cost assumptions for Yangibana were broadly in line with our estimates, while stage 1 cash costs were 44% higher than we expected.”

• “Higher cash costs for Stage 1 and removing Stage 2 translates to material cuts to our forecasts and TP, and we cut our rating to Neutral.”

Morgan Stanley’s take on Wednesday’s CPI:

• “Almost the entirety of the acceleration in the month was driven by the fuel inflation increasing from -8.2%Y to +9.5%Y”

• “Outside of this, most categories showed some marginal easing in inflation - with the notable exception of rents which continue to increase”

• “We think the RBA has more tightening to do but will still favour a slower hiking path. We see the next hike in August, with Friday's minimum wage decision the last key catalyst ahead of next week's June meeting.”

Scans