Market Wraps

Evening Wrap: ASX 200 hits 4-month high, lithium stocks rally, Fortescue hits another record high

Thu 14 Dec 23, 4:56pm (AEDT)

The S&P/ASX 200 closed 120 points higher, up 1.66%.

The ASX 200 marks its highest close since 2 August, real estate stocks cheer at the sight of falling bond yields, lithium stocks continue to bounce as Chinese lithium futures extend gains, Australia's unemployment rate ticks up to 3.9% in November and more high stakes central bank decisions tonight!

Let's dive in.


Today in Review

Thu 14 Dec 23, 4:25pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,377.9 +1.66%
All Ords 7,599.4 +1.75%
Small Ords 2,844.8 +2.75%
All Tech 2,607.0 +2.11%
Emerging Companies 1,932.8 +2.39%
Currency
AUD/USD 0.6711 +0.75%
US Futures
S&P 500 $4,728.5 +0.43%
Dow Jones $37,219.0 +0.29%
Nasdaq $16,664.5 +0.61%
Name Value % Chg
Sector
Real Estate 3,334.7 +4.01%
Information Technology 1,809.1 +2.90%
Materials 18,631.3 +2.35%
Communication Services 1,545.2 +2.21%
Consumer Discretionary 3,141.2 +1.37%
Health Care 41,139.9 +1.36%
Energy 10,336.3 +1.27%
Utilities 8,049.2 +1.23%
Financials 6,559.7 +0.97%
Industrials 6,706.0 +0.82%
Consumer Staples 12,121.2 +0.63%

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ASX 200 Session Chart

ASX 200 session chart
ASX 200 gapped up and traded sideways (Source: Market Index)

Markets

The ASX 200 experienced a sizable gap up thanks to the strong lead from Wall Street and traded sideways for most of the day. Things are feeling pretty euphoric at the moment – As the market now expects the Fed to cut 6-7 times next year. Fed fund futures currently expect rates to finish at 3.75% to 4.0% by end-2024. The ASX 200 is now up almost 9% since the late October low and less than 4% away from all-time highs. 

The pull forward in rate cut expectations is pumping life back into the real estate sector. Most large cap names rallied 3-5% but Charter Hall topped the leaderboards with an 12.2% gain. This reminds me of some commentary from Morgan Stanley which noted “the correlation between 10-year bond yields and CHC’s price-to-earnings is -0.75.”

The Technology sector was equally as strong, led by names like Life360 (+7.8%), Wisetech Global (+3.6%) and Xero (+2.7%). Lower rates means easier and cheaper money for growth heavy companies.

Material stocks experienced a broad-based rally as iron ore prices hovered just below US$135 a tonne, gold pushed above US$2,000 an ounce and Chinese lithium futures continued to bounce. Fortescue hit another record high, currently on a six day win streak and up 45% since its late August low.

Food for thought – We're in the midst of a bit of a lockout rally, where it's becoming increasingly difficult to get exposure because everything starts to look vertical. And nobody likes entering a chart that's vertical. Today, I watched a few consolidating sectors and names move out like construction stocks, Kogan, Ampol, Aurizon etc. If you didn't get the exposure you wanted around the October low or late November sideways period – You're going to have to chase. But do you really want to?


Economy

Australia’s unemployment rate ticked up 0.1 percentage point to 3.9% in November.

  • Consensus expected unemployment to remain unchanged at 3.8%

  • “The combination of strong growth in both employment and unemployment in November saw the employment-to-population ratio return to a record high of 64.6 per cent and the participation rate reach a new high of 67.2 per cent,” said ABS Head of Labour Statistics Bjorn Jarvis 

What to watch out for: We have another massive night for central bank decisions

  • 11:00 pm AEDT: The Bank of England is widely expected to keep rates on hold at 5.25%. Much like the Fed, it's commentary will be key. Traders have priced in 100 bps of rate cuts next year.

  • 12:15 am AEDT: The European Central Bank is also expected to keep rates on hold at 4.5%


Latest News


The Lithium Puzzle

Lithium is a wild one. Chinese lithium futures opened lower on Wednesday, only to finish at limit-up of 10%. It's trading around 8% higher on Thursday.

Pilbara Minerals (ASX: PLS) finished the session 8.6% higher, which has probably got a lot of people thinking – "Here comes the almighty short squeeze". But this is why the lithium trade is so complex and volatile.

  • Lithium prices and a lot of stocks have slumped to extreme oversold territory, which can produce some of the strongest rallies

  • Bearish lithium headlines continue to flow through. In the past few days: UBS said it expects European and US EV growth to slow from 47% this year to 10-15% in 2024 and Ford slashed its Electric F-150 plans amid demand concerns

  • While local lithium stocks rallied on Thursday, the reaction was far more muted for Chinese names like Ganfeng and Tianqi, which are currently trading -0.10% and +0.6% respectively


Interesting Movers

Trading higher

  • +17.9% Latin Resources (LRS) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

  • +11.8% Charter Hall Group (CHC) - Broad based rally in Real Estate sector on sharp decline in long term bond yields.

  • +11.3% IGO (IGO) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

  • +10.5% Weebit Nano (WBT) - No news, wouldn't be a normal day without WBT somewhere in this list!

  • +9.9% Allkem (AKE) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

  • +9.8% Emerald Resources (EMR) - Gold sector recovery on higher gold price

  • +9.5% Piedmont Lithium Inc (PLL) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

  • +9.2% Centuria Capital Group (CNI) - No news, technical turnaround, broader real estate sector strength

  • +8.9% West African Resources (WAF) - Gold sector recovery on higher gold price

  • +8.7% Alumina (AWC) - WA Mining Permits Update

  • +8.6% Pilbara Minerals (PLS) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

  • +8.3% Liontown Resources (LTR) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

  • +8.2% Life360 Inc (360) - Technical bounce after major pullback

  • +8.2% Core Lithium (CXO) - Major turnaround in GFEX lithium carbonate futures spurs ASX lithium stocks rally

Trading lower


Broker Notes

  • Charter Hall Group (CHC) retained at buy Citi; Price Target: $14.00

  • Comet Ridge (COI) initiated speculative buy at Morgans; Price Target: $0.28

  • Clean Seas Seafood (CSS) retained at hold Bell Potter; Price Target: $0.26 from $0.47

  • Corporate Travel Management (CTD) retained at neutral Macquarie; Price Target: $20.40

  • Downer EDI (DOW) initiated neutral at Barrenjoey; Price Target: $4.60

  • Flight Centre Travel Group (FLT) retained at outperform Macquarie; Price Target: $22.15

  • Goodman Group (GMG) retained at buy Citi; Price Target: $25.50

  • GPT Group (GPT) retained at buy Citi; Price Target: $4.90

  • Green Technology Metals (GT1) retained at buy Bell Potter; Price Target: $0.72 from $1.15

  • HUB24 (HUB) initiated hold at Moelis Australia; Price Target: $36.88

  • Imdex (IMD) retained at neutral Citi; Price Target: $1.60

  • IPH (IPH) retained at outperform Macquarie; Price Target: $10.60 from $13.50

  • Lifestyle Communities (LIC) retained at buy Citi; Price Target: $21.00

  • Lendlease Group (LLC) retained at buy Citi; Price Target: $9.50

  • Mirvac (MGR)

    • Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $2.30

    • Mirvac Group (MGR)Retained at buy Citi; Price Target: $2.50

  • Newmont Corporation (NEM) retained at outperform Macquarie; Price Target: $69.00

  • National Storage Reit (NSR) retained at buy Citi; Price Target: $2.60

  • Perpetual (PPT) retained at buy Bell Potter; Price Target: $28.67 from $27.09

  • Stockland (SGP) retained at buy Citi; Price Target: $5.00

  • The Reject Shop (TRS) upgraded to add from hold at Morgans; Price Target: $6.25 from $5.85

  • West African Resources (WAF) retained at outperform Macquarie; Price Target: $1.60

  • Woodside Energy Group (WDS) retained at neutral Macquarie; Price Target: $31.00

  • Webjet (WEB)

    • Initiated buy at BofA; Price Target: $8.25

    • Retained at outperform Macquarie; Price Target: $8.37

  • Wesfarmers (WES) downgraded to neutral from buy at UBS; Price Target: $55.00 from $56.00


Scans

Top Gainers

Code Company Last % Chg
BAT Battery Minerals Ltd $0.13 +54.76%
WEC White Energy Comp... $0.049 +44.12%
VHT Volpara Health Te... $1.095 +41.29%
WLD Wellard Ltd $0.045 +28.57%
DCL Domacom Ltd $0.02 +25.00%
View all top gainers

Top Fallers

Code Company Last % Chg
ZMM ZIMI Ltd $0.026 -35.00%
CF1 Complii Fintech S... $0.02 -23.08%
ARU Arafura Rare EART... $0.163 -18.75%
NKL Nickelx Ltd $0.039 -18.75%
BUX Buxton Resources Ltd $0.155 -18.42%
View all top fallers

52 Week Highs

Code Company Last % Chg
VHT Volpara Health Te... $1.095 +41.29%
AUE Aurum Resources Ltd $0.25 +21.95%
KIN KIN Mining NL $0.067 +11.67%
ATP Atlas Pearls Ltd $0.15 +11.11%
GOR Gold Road Resourc... $1.955 +8.01%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
CF1 Complii Fintech S... $0.02 -23.08%
ARU Arafura Rare EART... $0.163 -18.75%
NKL Nickelx Ltd $0.039 -18.75%
NVO Novo Resources Corp $0.133 -14.52%
OEQ Orion Equities Ltd $0.07 -12.50%
View all 52 week lows

Near Highs

Code Company Last % Chg
PCI Perpetual Credit ... $1.08 0.00%
WVOL Ishares Edge MSCI... $36.92 -0.30%
GCI Gryphon Capital I... $2.03 0.00%
VVLU Vanguard Global V... $65.17 +0.23%
IHD Ishares S&P/ASX D... $13.74 +1.18%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
KAR Karoon Energy Ltd $1.915 +1.86%
NVX Novonix Ltd $0.65 +4.00%
IR1 Iris Metals Ltd $1.025 +7.90%
TLG Talga Group Ltd $0.79 +2.60%
EVO Embark Early Educ... $0.575 +3.60%
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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