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

 The S&P/ASX 200 closed 20 points higher, up 0.28%. 

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