Evening Wrap: ASX 200 higher, Syrah gives back its gains, Lynas soars on licence update

The Index breaks a three-day losing streak but finished well-off best levels on Tuesday, resource stocks including lithium and iron ore led to the upside, Australia's manufacturing conditions continued to deteriorate in October while services tumbled back into contraction, Syrah Resources finished lower from a session high of 26.7% and Citi's take on weight loss drugs (and what it means for fast food).

Let's dive in.

ASX 200 Session Chart

ASX 200 higher but off best levels (Source: Market Index)

Markets

The ASX 200 finished higher but off session highs of 0.50%. The market mustered an underwhelming bounce from oversold levels. We remain in no man's land – Far from any key price point or moving average. At least bond yields have put in a bit of a short-term top after Bill Ackman covered his Treasury short.

Materials led to the upside, with notable gainers including Lynas (+12.4%), Pilbara Minerals (+5.3%), IGO (+2.9%) and Fortescue Metals (+2.4%). Much like the Index, we're starting to see some oversold names in the iron ore and lithium space begin to bounce.

Economy

Australia’s Manufacturing PMI eased to 48 in October from 48.7 in September.

• “Latest data pointed to marked reductions in both output and new orders as demand conditions deteriorated. Moreover, in both cases the falls were the most pronounced in almost three-and-a-half years.”

• “Input costs rose sharply, with the rate of inflation hitting a seven-month high.”

• “Weakening market conditions meant business confidence dipped to a three-and-a-half year low.”

Australia’s Services PMI fell to 47.6 in October from 51.8 in September.

• Activity has decreased in three of the past four months

• “Renewed reductions in total new business and new orders from abroad were also signalled amid challenging market conditions and a customer response to higher interest rates.”

• “Cost pressures remained elevated, often reflecting increased wages but also in part due to higher fuel prices.”

• “Companies raised their own selling prices accordingly, albeit at the slowest pace since March as demand conditions weakened.”

Latest news

Graphite Run Hits a Wall

The graphite resurgence might be running out of steam after Syrah Resources (ASX: SYR) closed 5.3% lower from a session high of 26.7%.

Syrah intraday price chart (Source: TradingView)

It's a pretty volatile stock (and sector) to watch given:

• Syrah Resources had around 10% short interest which means short covering has likely played a big part in the rally

• Most stocks in the sector are down 50-70% year-to-date

• The ban is set to take place on December 1

Lynas Soars on Malaysian License

Lynas (ASX: LYC) abruptly soared at 3:30 pm AEDT. But don't worry, China hasn't banned rare earth exports.

Lynas intraday price chart (Source: Market Index)

Lynas was issued with an operating licence to continue importing lanthanide concentrate from its Mt Weld Mine to its Malaysia processing facility. Under this operating licence, Lynas Malaysia will commit to increasing its existing research and development in Malaysia from 0.5% to 1.0% of its gross sales. The amended licence is valid until 2 March 2026.

Why does this matter: Lynas is targeting 12,000 tonnes of NdPr production by 2025. To achieve this target, the company has to either:

• Successfully appeal on the conditions prohibiting lanthanide processing in Malaysia

• Expand the Kalgoorlie cracking and leeching facility by installing an additional kiln to take concentrate feed capacity to approximately 220,000 tonnes (current nameplate is 162,000 tonnes)

Interesting news and movers

Trading higher

• +6.7% Zip Co (ZIP) – Q1 results and FY guidance

• +6.1% Bubs (BUB) – Q1 results

• +5.9% Pilbara Minerals (PLS) – Jarden upgrade

• +3.2% Aurelia Metals (AMI) – Federation project mining lease grant

• +2.5% Regis healthcare (REG) – Q1 trading update

Trading lower

• -20.7% Next Science (NXS) – Wilsons downgrade

• -14.3% Dreadnought Resources (DRE) – Completes drilling at Tarraji-Yampi

• -10.0% Cooper Energy (COE) – Q1 results

• -3.0% Immutep (IMM) – Reports clinical trial data

Broker notes

Citi’s take on GLP-1s and fast-food demand:

• “Leveraging insights from our recent consumer surveys, which we conducted with the assistance of Citi’s Research Innovation Lab, we would expect the impact from weight loss drugs on Domino’s and Collins Foods to be somewhat muted.”

• “Pizza is often a gathering type of experience and as such we don’t think it would be majorly impacted.”

• “Historically only 25% of patients stay on these drugs beyond 1 year, and penetration remains modest with <1 million obesity patients treated with GLP-1.”

• “We recently upgraded Domino’s to Buy as we are encouraged by the evolution of the company’s strategies over the last 12 months, which we see as more conducive to facilitate improvements in SSS growth and franchisee profitability.”

Morgan Stanley on gold:

• “Gold briefly touched $2000/oz in intraday trading on Friday. Looking at gold versus real yields suggests the move has been triggered by safe haven demand. For current pricing to persist, geopolitical tensions need to remain, or real yields need to move lower.”

• “Calling a peak in yields is tricky, and our economists note that "markets appear unanchored to economic fundamentals and yields have risen well beyond what strong data could justify."

Scans