Evening Wrap: ASX 200 higher on surging resources sector, gold, copper, and lithium stocks lead way

The S&P/ASX 200 closed 91.9 points higher, up 1.19%.

A bumper day on the market, and an accordingly bumper Evening Wrap for you in store!

I've got all the big moves in the Resources sector, including the reasons for strong gains in gold and lithium stocks.

On gold, I've also got the latest technical analysis on the yellow metal, as well as TA for silver and the S&P/ASX200 in the wake of today's near-record-beating close.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 91.9 points higher at 7,831.8, 1.2% from its session high and just 0.05% from its low. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 205 to 63.

So, it was a broad-based move that closed very near the high – typically a good sign for continuation (see ChartWatch for full technical analysis on the XJO).

All but 2 of the 11 of the major ASX sectors were up today. Let’s start with the losers: Utilities (XUJ) (-1.1%) on pullbacks in major constituents AGL Energy (ASX: AGL) (-1.5%) and Origin Energy (ASX: ORG) (-1.5%).

Looking at just how hard Materials (XMJ) (+2.3%) stocks rallied today, one can’t help but think there’s some last FY’s winners-to-last FY’s losers rotation going on.

Also down today, the Information Technology (XIJ) (-0.36%) sector. It was only a modest fall, but given how well US tech stocks did on Wednesday, I suggest this was a big miss today.

Enjoying its second day at/near the top of the sector performance list was the aforementioned Materials sector. The +2% gain is totally out of kilter with its recent performance since mid-May. That’s a big white candle – likely part rotation, part bargain hunting, and part short covering. Whatever the reasons – let’s hope this rally has some legs!

That’s a big white candle!

The Gold (XGD) (+2.0%) sub-index was a large contributor to the XMJ’s success. Gold and silver prices moved higher Wednesday, although they are edging back a little in Asian trade. Still, nice moves, and potentially pivotal in restarting each precious metals’ long term uptrend (see ChartWatch for full technical analysis on Gold and Silver).

The best of the Materials sector today

Also doing well today were the interest rate sensitives of Real Estate Investment Trusts (XPJ) (+1.3%) and Financials (XFJ) (+1.2%). Benchmark yields pulled back overnight, and this is no doubt helping here.

Also not escaping my attention lithium bulls, was the solid rally in the ASX lithium sector today. Was it due to a rally in beaten down lithium prices? Some great news about increased demand and or reduced supply? Or was it a swathe of stock-specific good news?

As far as I can tell (I'm sure terse emails will follow if required!), it was none of the above. Nope, rather, it was a broad-based rally in US lithium and battery-related stocks. Did they rally on any of that good stuff mentioned above?

Nope again! US lithium / battery stocks rallied on the back of the third sharp day of gains in Tesla. Go figure!

The third sharp day of gains in Tesla

ChartWatch

S&P/ASX 200 (XJO)

Surely, this time!

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 27 June.

In that update, we were contemplating the large intraday drop and recovery (for the most part) by the close of the session.

The candle formed by such price action is symptomatic of excess demand working at lower prices, buying the dip, just as much as it is symptomatic of the supply-sides lack of conviction.

Not a great deal has happened since that candle, with the price continuing to compress within the broader 7489-7911 trading range that has been in place since February.

Until today’s long white candle, that is.

In theory, it is a clear sign that the demand-side is growing more impatient and the supply-side remains unable or unwilling to stand in the way by letting out shares at lower prices.

In theory, this is a good sign.

In theory, it augurs well for a break of the 7911 major point of supply (finally!), and therefore a run at an 8-handle.

That’s all theory. In practice we tend to end up disappointed and you all end up blaming me for getting your hopes up (you might get a kick out of my post on X/Twitter today relating to this exact matter!).

I will leave you with a couple of observations to support the “it's just a matter of time” argument for a break out.

1. Key points of demand keep growing, 7492, 7556, 7601, and most recently 7654 – each nicely supported by the dynamic demand of the long term uptrend ribbon.

2. The supply-side pushes from each peak is diminishing – motivated supply looks to be diminishing each time

Gold Futures (Front month, back-adjusted) COMEX

A tad more decisive, but still rangebound

The last time we covered gold was in ChartWatch in the Evening Wrap on 24 June.

In that update, I gave you two key levels to watch out for: 2308 and 2407. I said a close below the former would extend the short term downtrend, while a close above the latter would end it and likely signal a return to demand-side control.

Well, gold hasn’t done either. We did see a new point of demand at 2304 set on an intraday swing, though.

A clearly defined trading range is forming as the market here looks increasingly tilted toward equilibrium. The lower bound of the range is 2304 and the upper bound of the range is 2477.

There’s probably not going to be a great deal to see here until gold closes on the other side of one of these bounds (bearish and bullish moves respectively). In the meantime, the price action is back to rising peaks and rising troughs after Wednesday’s solid demand-side candle, and the price is again closing above the short term trend ribbon.

Both ticks for confirming a return to demand-side control in the short term.

It’s worth watching now for a follow-up candle that might close the price above 2383, or even better, above 2407. If that were to happen, I suggest there’s a good chance of an eventual test of the major point of supply at 2477.

The downside comes into play on a close below 2304, but would likely be limited by the dynamic demand expected at the long term uptrend ribbon.

Silver Futures (Front month, back-adjusted) COMEX

A tad more decisive again, but again, still rangebound

The last time we covered silver was in ChartWatch in the Evening Wrap on 24 June.

In that update, the supply side was very much in control of the price, but I noted that flip-flopping candles pointed towards “great indecision in the demand-supply environment”.

Wednesday’s long demand-side candle goes a great deal of the way toward turning indecision into decisiveness, in favour of the demand-side.

Note that all of the key price points have shifted up due to the rolling of the contract. That’s standard for futures charting, don’t overthink it – just go with the new prices!

So, the key supply point I previously defined at 30.90 has become 31.23. A close above that would confirm full a return to demand-side control and potentially set us up for a probe of the major point of supply at 33.08.

Watch for a higher trough bottoming out above 30.00 as this would also confirm demand-side control.

Alternatively, demand is 28.35-29.05. A close below this zone would potentially set us up for a probe of dynamic demand at the long term uptrend ribbon. You know the drill – black-bodied candles and or upward pointing shadows equals the supply-side creeping back in!

Economy

Today

• There weren't any major economic data releases in our time zone today

Later this week

Thursday

• All Day USA July 4 Public Holiday - non trading day

Friday

• 22:30 Non-Farm Employment Change, Average Hourly Earnings m/m, Unemployment Rate June

  • +189K forecast vs +272K in May; +0.3% forecast vs +0.4% in May; 4.0% forecast vs 4.0% in May

Latest News

Interesting Movers

Trading higher

• 11.8% Fenix Resources (FEX) - Fenix to Restart Mining at Shine, rise is consistent with prevailing short and long term uptrends 🔎📈

• +11.2% WA1 Resources (WA1) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +11.1% Arafura Rare Earths (ARU) - Arafura confirms German ECA support with Euler Hermes

• +10.8% Zip Co. (ZIP) - No news, rise is consistent with prevailing short and long term uptrends (regular feature in ChartWatch ASX Scans uptrends lists!) 🔎📈

• +9.5% Nuix (NXL) - No news, rise is consistent with prevailing short and long term uptrends (regular feature in ChartWatch ASX Scans uptrends lists!) 🔎📈

• +8.2% Mesoblast (MSB) - No news, stock is typically volatile! 🤔

• +7.1% Core Lithium (CXO) - No news, still a very small rally within the context of its long term decline, US lithium stocks tracked a rally in Tesla shares overnight, spilled over to several ASX lithium stocks

• +6.5% Bellevue Gold (BGL) - No news, generally stronger ASX gold sector today on rising gold price, rise is consistent with prevailing long term uptrend, closed back above short term uptrend ribbon 🔎📈

• +6.5% Firefly Metals (FFM) - No news, high grade copper price higher Wednesday, broad rally in ASX Resources stocks, rise is consistent with prevailing long term uptrend, short term trend transitioning from down to up 🔎📈

• +6.4% Vulcan Energy Resources (VUL) - No news, US lithium stocks tracked a rally in Tesla shares overnight, spilled over to several ASX lithium stocks, third day bouncing from long term uptrend ribbon, closed back above short term trend ribbon 🔎📈

• +6.1% Magellan Financial Group (MFG) - Funds Under Management and Performance Fee Update- June 2024

• +5.5% Arcadium Lithium (LTM) - No news, still a very small rally within the context of its long term decline, US lithium stocks tracked a rally in Tesla shares overnight, spilled over to several ASX lithium stocks

• +5.3% GQG Partners (GQG) - No news, rise is consistent with prevailing short and long term uptrends (regular feature in ChartWatch ASX Scans uptrends lists!) 🔎📈

• +4.8% Mineral Resources (MIN) - No news, still a very small rally within the context of its long term decline, US lithium stocks tracked a rally in Tesla shares overnight, spilled over to several ASX lithium stocks

• +4.2% Santos (STO) - No news, media reports that up to two companies may be mulling bids for STO, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.1% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term uptrends (regular feature in ChartWatch ASX Scans uptrends lists!) 🔎📈

Trading lower

• -13.5% West African Resources (WAF) - West African Receives Firm commitments for A$150m

• -9.1% Cooper Energy (COE) - No news 🤔

• -5.3% Temple & Webster Group (TPW) - No news, fall is consistent with prevailing short term downtrend, long term trend transitioning from down to down 🔎📉

• -5.1% Pro Medicus (PME) - No news, retained at sell at Citi (see Broker Notes)

• -4.8% Cettire (CTT) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -4.6% New Hope Corporation (NHC) - New Hope successfully prices A$300m convertible notes

Broker Notes

Australian Clinical Labs (ACL)

• Retained at buy at Citi; Price Target: $3.35

AGL Energy (AGL)

• Retained at neutral at Macquarie; Price Target: $11.28 from $10.86

Ansell (ANN)

• Retained at neutral at Citi; Price Target: $27.25

Amotiv (AOV)

• Retained at outperform at Macquarie; Price Target: $12.65

Eagers Automotive (APE)

• Retained at neutral at Macquarie; Price Target: $10.60

ARB Corporation (ARB)

• Retained at neutral at Macquarie; Price Target: $40.10

Autosports Group (ASG)

• Retained at outperform at Macquarie; Price Target: $3.10

BHP Group (BHP)

• Retained at equal-weight at Morgan Stanely; Price target $46.65

Chalice Mining (CHN)

• Retained at buy at Bell Potter; Price Target: $5.15 from $5.00

Cochlear (COH)

• Retained at sell at Citi; Price Target: $265.00

CSL (CSL)

• Upgraded to buy from neutral at Citi; Price Target: $335.00 from $305.00

• Retained at outperform at Macquarie; Price Target: $330.00

Cyclopharm (CYC)

• Retained at buy at Bell Potter; Price Target: $3.10 from $3.40

Domino's Pizza Enterprises (DMP)

• Retained at buy at Citi; Price Target: $44.50

Ebos Group (EBO)

• Upgraded to sell from neutral at Citi; Price Target: $31.50 from $33.00

Fisher & Paykel Healthcare Corporation (FPH)

• Retained at neutral at Citi; Price Target: $28.75

Fleetpartners Group (FPR)

• Retained at neutral at Macquarie; Price Target: $3.60

Global X Gold Bullion ETF (GYG)

• Initiated at add at Morgans; Price Target: $30.80

Healius (HLS)

• Retained at sell at Citi; Price Target: $1.10

Jumbo Interactive (JIN)

• Retained at outperform at Macquarie; Price Target: $17.45

Liontown Resources (LTR)

• Retained at hold at Canaccord Genuity; Price Target: $1.05 from $1.30

• Retained at neutral at Goldman Sachs; Price Target: $1.15 from $1.35

• Retained at underweight at Jarden; Price Target: $1.00 from $1.03

McMillan Shakespeare (MMS)

• Retained at outperform at Macquarie; Price Target: $22.63

Mineral Resources (MIN)

• Retained at overweight at Morgan Stanley; Price target $79.00

Namoi Cotton (NAN)

• Retained at sell at Citi; Price Target: $2.70

Pilbara Minerals (PLS)

• Retained at hold at Bell Potter; Price Target: $3.40 from $3.60

Pro Medicus (PME)

• Retained at sell at Citi; Price Target: $95.00 from $80.00

Premier Investments (PMV)

• Retained at buy at Bell Potter; Price Target: $35.00

Ramsay Health Care (RHC)

• Retained at neutral at Citi; Price Target: $50.00 from $56.50

Resmed Inc (RMD)

• Retained at neutral at Citi; Price Target: $30.00

Rio Tinto (RIO)

• Retained at overweight at Morgan Stanley; Price Target: $142

SG Fleet Group (SGF)

• Retained at outperform at Macquarie; Price Target: $3.21

Sonic Healthcare (SHL)

• Downgraded to underperform from buy at Bank of America; Price Target: $23.50 from $29.00

• Retained at neutral at Citi; Price Target: $25.00

Sigma Healthcare (SIG)

• Retained at neutral at Citi; Price Target: $1.30

Smartgroup Corporation (SIQ)

• Retained at outperform at Macquarie; Price Target: $9.51

Strike Energy (STX)

• Retained at neutral at Macquarie; Price Target: $0.22

The Lottery Corporation (TLC)

• Retained at outperform at Macquarie; Price Target: $5.50

• Retained at equal-weight at Morgan Stanley; Price Target $5.35

Scans