Evening Wrap: ASX 200 inches higher on strong tech and consumer shares, sentiment swings positive towards lithium and uranium stocks

Interest rate sensitives like Information Technology, Consumer Discretionary, and Communication Services were the best performing sectors today as investors added stocks most likely to benefit from the continued decline in risk-free market yields.

Also doing well today was “the other poorer sibling” consumer sector, Consumer Staples, and for a nice change, Energy and Resources weren’t completely awful. Within each of the latter two sectors respectively – beaten down uranium and lithium stocks rallied. Hooray! 🥳

Really, the only laggards today in what was generally a quiet but productive day for Aussie stocks was the Gold sub-index, and Health Care stocks.

Click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all of the key upcoming economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on major US stock indices and US T-Bonds in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 11.7 points higher at 8,447.9, 0.16% from its session low and 0.22% from its high. Despite the modest gain in the benchmark index, in the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a narrow 136 to 144.

Interest rate sensitives like Information Technology (XIJ) (+0.91%), Consumer Discretionary (XDJ) (+0.87%), and Communication Services (XTJ) (+0.30%) were the best performing sectors today as investors added stocks most likely to benefit from the continued decline in risk-free market yields. If you have no idea what this means, then I have further analysis for you in this evening’s ChartWatch section below.

Also doing well today was “the other poorer sibling” consumer sector, Consumer Staples (XSJ) (+0.31%), and for a nice change, Energy (XEJ) (+0.64%) and Resources (XJR) (+0.27%) weren’t completely awful.

Probably the two most interesting nuggets from today's trade were a tidy bounce in both lithium and uranium stocks. Both sectors have been smashed in 2024 on next-big-thing-itis.

Next-big-thing-itis is a nasty affliction that weakens investors' immunity to hanging on in hope that their original narrative holds true – despite commodity prices collapsing and telling them otherwise. 🤮

For lithium stocks, investors cheered the latest ASIC short seller data that showed a big drop in short exposure in Pilbara Minerals (ASX: PLS) (+1.7%) to 11.6% last week from 17.7% the week before. It was hovering over 22% in August.

The general theory here is that short sellers were keeping a lid on prices in the sector, and if they're moving onto the next play thing, it could result in a sustained rally in the sector.

For uranium, it was just one of those days. No change in the uranium price – just a change in sentiment towards uranium stocks. You gotta watch that sentiment thing – it's fickle and it can change quickly!

Today's best performing stocks from from the best sectors

Really, the only laggards today in what was generally a quiet but productive day for Aussie stocks was the Gold (XGD) (-1.6%) sub-index, and Health Care (XHJ) (-0.40%).

As far as gold goes plenty of action there today as news broke that largest Australian based gold producer Northern Star Resources (ASX: NST) (-5.3%), would acquire smaller counterpart De Grey Mining (ASX: DEG) (+29.6%) in an all scrip deal where DEG shareholders would receive 0.119 NST shares.

The offer represents a 37% premium to DEG’s close on Friday – hence the big pop in that company’s shares. It’s customary for the acquirer to dip on takeover news – hence NST’s drop – but because it has the much larger weighting in the XGD, it means a loss at sector level.

To be fair though, the rest of the gold sector wasn’t that great, most stocks were weaker today on a fall in the gold price in Asian trade.

Today's best performing stocks from from the best sectors

ChartWatch

NASDAQ Composite Index

Just another couple of weeks in the bull market... (click here for full size image)

The last time we covered the Comp was in ChartWatch in the Evening Wrap on 18 November.

In that update, we were tracking how a sharp increase in risk-free market yields post the US election result had put the brakes on the US bull market (see below for analysis on those risk-free market yields).

The good news is that those market yields have moderated, and stocks have regained the oxygen to rally. It’s about the oldest relationship in markets: Stocks love lower risk-free market yields.

Fundamentals aside (because at the end of the day – let’s face it – all fundamentals end up in the price action), the short term uptrend ribbon has done its job perfectly and has acted as a zone of dynamic demand.

We’ve observed several demand-side candles (i.e., those with white bodies and or downward pointing shadows) in the short term trend ribbon, and the price action is back to rising peaks and rising troughs indicating demand reinforcement and supply removal. Check and check ✅✅

19366 is an obvious and I’ll go so far as to say “credible” point of supply. I can’t see anything so sinister in the price action or candles to suggest it cannot be overcome, however.

18598 is demand. The short term uptrend remains intact until the Comp price closes below it. Below 18083 something is very wrong. Below the long term uptrend ribbon, something is very, very wrong. But no doubt I would have updated you on proceedings well before that happens (should it happen)!

I’m going to say this is a boring chart. Boring but…(sighs in trend follower admiration) beautiful.

You know all of those “experts” who have complained this year about overvaluation in the stock market, about lost senses of investor reality, and of course about the inevitable day of impending reckoning: “This cannot possibly gooooo ooonnnn…!!!!”

Well, you never heard it from me. All you’ve gotten from me in 2024 is the straight dope: Don’t fight the trend!

Russell 2000 Index (RUT)

Hovering but healthy (click here for full size image)

The last time we covered the RUT was in ChartWatch in the Evening Wrap on 26 November.

In that update, the Russell had just tipped a new all time high. This is just a quick update to dovetail the Comp and US 10-yr T-bond analysis (below), but things remain very solid here too.

Trends – both in terms of trend ribbon direction and strength / dynamic demand behaviour, price action, and candles remain indicative of strong demand-side control.

But remember! As with the Comp (or any chart I comment on in my Evening Wrap rants!) – I have no idea what’s going to happen next. This is because I can’t predict the future. 🔮

So, if you thought I was some guru who could, then you are very wrong. If you ask Siri to find you a market commentator who thinks they can predict the future, she will no doubt say “Ok, I found this on the web for a market analyst that can tell the future…”

You won’t see my name in the results. I can only go on what I see. If something changes I will see it. It might even make me change my mind. But until then, I can’t see any reason not to continue to trust the trend here.

US 10 Year T-Bond Yield

Scenario analysis = ✅ (click here for full size image)

The last time we covered US 10-yr T-Bonds was in ChartWatch in the Evening Wrap on 24 November.

In that update, I noted that stocks were coming under some selling pressure post-Trump Bump due to the impact the Trump + Red Sweep US election result was having on market yields – namely sending them rocketing back up to 6-month highs.

With respect to the impact on stock prices, I remarked that there were “two potential ‘good result’ outcomes: Sideways or down” with “very gradually down” likely the best possible result.

The chart above shows that yields have come down – hardly gradually – but from the first two charts above it's clearly facilitated higher stock prices.

Gradually down (from here) is still the best outcome. The reason why I keep saying gradually is because a sharp fall / collapse in risk-free market yields would mean there’s either something very wrong with the US and global economies, or there’s been a major geopolitical event causing significant uncertainty.

Neither would be good for stocks.

Back up? That would take hotter than expected US labour market data (I can’t see it just now), or something really shocking going on with US inflation (I can’t see that either). So, I’m gonna say risk-free yields are probably going to grind sideways to gradually down = neutral-to-supportive for stocks for the next little bit.

Anything can happen, but at least you know the potential scenarios and their potential impact on stock prices.

Economy

Today

• AUS Building approvals +4.2% in October vs +1.2% forecast and +5.8% in September (revised up from +4.4%)

• AUS Company operating profits -4.6% in September Qtr vs June Qtr vs +0.6% q/q forecast and -6.8% q/q (revised down from -5.3%)

• CHN Caixin Manufacturing Purchasing Manufacturers Index (PMI) 51.5 in November vs 50.6 forecast and 50.3 in October (readings over 50 indicate growth in a sector, so better than expected growth here).

Later this week

Tuesday

• 02:00 USA ISM Manufacturing PMI November (47.7 forecast vs 46.5 in October)

• 11:30 AUS Current Account September Qtr (-10.3 billion forecast vs -10.7 billion in June Qtr)

Wednesday

• 02:00 USA JOLTS Job Openings November (7.49 million forecast vs 7.44 million in October)

• 11:30 AUS Gross Domestic Product (GDP) September Qtr (+0.5% q/q forecast vs +0.2% q/q in June Qtr)

• 12:45 CHN Caixin Manufacturing (PMI) November (52.5 forecast vs 52.0 in October.

Thursday

• 02:00 USA ISM Services PMI November (55.5 forecast vs 56.0 in October)

• 05:45 USA Federal Reserve Chairman Jerome Powell Speaks

Friday

• 00:30 USA Weekly Unemployment Claims (215,000 forecast vs 213,000 previous)

Saturday

• 00:30 USA Non-Farm Employment Change November (+202,000 forecast vs +12,000 in October)

• 00:30 USA Average hourly earnings November (+0.3% m/m forecast vs +0.4% m/m in October)

• 00:30 USA Employment Rate November (4.2% forecast vs 4.1% in October)

Latest News

Interesting Movers

Trading higher

• +29.6% De Grey Mining (DEG) - Northern Star agrees to acquire De Grey, also consider though, rise is consistent with prevailing short and long term uptrends, DEG has appeared several times recently in ChartWatch ASX Scans Uptrends lists 🔎📈

• +12.3% Myer (MYR) - No news, rise is consistent with prevailing short and long term uptrends, MYR is one of the most Featured stocks in ChartWatch ASX Scans Uptrends lists over the past few months 🔎📈

• +9.8% Select Harvests (SHV) - Delayed positive response to 29-Nov FY2024 Financial Results, mainly on the back of several brokers upgrading their rating for the stock - see Broker Moves section below

• +9.4% Gold Road Resources (GOR) - No news, suggest DEG takeover rubbing off here, perhaps also this Becoming a substantial holder notice from Friday, rise is consistent with prevailing short and long term uptrends 🔎📈

• +7.7% The Star Entertainment Group (SGR) - Group CEO and Managing Director - Regulatory Approval

• +7.6% Webjet (WJL) - No news, consistent with volatility following 25 Nov 1H25 Half-year results

• +6.2% Mineral Resources (MIN) - No news, ASX lithium sector generally stronger today on news that shorts in Pilbara Minerals have fallen substantially as per ASIC short seller data released over the weekend. Best described as a 'relief' rally in what is one of the most beaten down sectors of 2024!

• +6.2% IGO (IGO) - Ditto ASX lithium relief rally! Phew!

• +5.8% Weebit Nano (WBT) - No news, but has bounced perfectly out of short and long term trend ribbons, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +5.3% Silex Systems (SLX) - No news, but has bounced perfectly out of short term trend ribbon, rise is consistent with prevailing short and long term uptrends, SLX has appeared several times recently in ChartWatch ASX Scans Uptrends lists 🔎📈

• +4.8% Develop Global (DVP) - Ditto ASX lithium relief rally! Phew!

• +4.8% Ioneer (INR) - Ditto ASX lithium relief rally! Phew!

Trading lower

• -14.0% GQG Partners (GQG) - Continued negative fallout from 21 Nov Update on GQG's Strategy Investments in Adani Gp Companies, also downgraded to NEUTRAL from BUY at UBS with price target cut to $2.30 from $3.30

• -7.5% Vulcan Energy Resources (VUL) - Continued negative fallout from 27 Nov Vulcan announces Board appointments and committee changes

• -6.3% Nuix (NXL) - No news, has struggled since 13 Nov Annual General Meeting 2024 Chairman and Group CEO Address

• -6.2% Clarity Pharmaceuticals (CU6) - No news, has struggled since 5 Nov CMS final rule on radio-diagnostic reimbursement policy, fall is consistent with prevailing short term downtrend

• -6.2% Ora Banda Mining (OBM) - No news, has struggled since US election result / gold price reversal, fall is consistent with prevailing short term downtrend

• -5.3% Northern Star Resources (NST) - Northern Star agrees to acquire De Grey

• -5.0% Netwealth Group (NWL) - December 2024 Business Update

Broker Notes

• Ampol (ALD)

  • Retained at outperform at Macquarie; Price Target: $33.75 from $32.25

• AMP (AMP)

  • Initiated at neutral at Goldman Sachs; Price Target: $1.54

• ANZ Group (ANZ)

  • Retained at sell at Citi; Price Target: $25.25

  • Retained at neutral at UBS; Price Target: $34.00 from $32.00

• Bluebet (BBT)

  • Retained at Morgans; Price Target: $0.35 from $0.33

• Bendigo and Adelaide Bank (BEN)

  • Retained at equal-weight at Morgan Stanley; Price Target: $12.00

  • Retained at sell at UBS; Price Target: $11.45 from $10.00

• Bank of Queensland (BOQ)

  • Retained at sell at UBS; Price Target: $6.50 from $5.75

• Commonwealth Bank of Australia (CBA)

  • Retained at sell at Citi; Price Target: $91.50

  • Retained at sell at UBS; Price Target: $115.00 from $110.00

• City Chic Collective (CCX)

  • Downgraded to sell from hold at Bell Potter; Price Target: $0.07 from $0.14

• Carnaby Resources (CNB)

  • Retained at outperform at Macquarie; Price Target: $0.90 from $0.88

• Dicker Data (DDR)

  • Initiated at overweight at Wilsons; Price Target: $11.29

• Findi (FND)

  • Retained at buy at Ord Minnett; Price Target: $7.76 from $8.72

• GQG Partners (GQG)

  • Downgraded to neutral from buy at UBS; Price Target: $2.30 from $3.30

• Hub24 (HUB)

  • Retained at neutral at Citi; Price Target: $75.50 from $56.70

  • Downgraded to hold from accumulate at Ord Minnett; Price Target: $73.00 from $68.00

• Humm Group (HUM)

  • Retained at buy at Shaw and Partners; Price Target: $1.00

• Harvey Norman (HVN)

  • Retained at buy at Bell Potter; Price Target: $5.80

  • Retained at outperform at Macquarie; Price Target: $5.00

• IGO (IGO)

  • Retained at neutral at Macquarie; Price Target: $5.60

  • Upgraded to neutral from sell at UBS; Price Target: $5.50

• Intelligent Monitoring Group (IMB)

  • Initiated at buy at Morgans; Price Target: $0.70

• Imdex (IMD)

  • Downgraded to neutral from buy at UBS; Price Target: $2.60 from $2.35

• JB HI-FI (JBH)

  • Retained at outperform at Macquarie; Price Target: $77.00

• Judo Capital (JDO)

  • Retained at buy at UBS; Price Target: $2.40 from $2.10

• Liontown Resources (LTR)

  • Retained at sell at UBS; Price Target: $0.50 from $0.80

• Macquarie Group (MQG)

  • Retained at neutral at UBS; Price Target: $235.00 from $225.00

• Metcash (MTS)

  • Retained at neutral at Citi; Price Target: $3.40

  • Retained at buy at UBS; Price Target: $3.60

• National Australia Bank (NAB)

  • Retained at sell at Citi; Price Target: $26.50

  • Retained at sell at UBS; Price Target: $37.50

• Newmont Corporation (NEM)

  • Initiated at underperform at CLSA; Price Target: $56.85

• Northern Star Resources (NST)

  • Retained at buy at Citi; Price Target: $18.30

• Paradigm Biopharmaceuticals (PAR)

  • Retained at buy at Bell Potter; Price Target: $0.80 from $0.47

• Pilbara Minerals (PLS)

  • Retained at sell at UBS; Price Target: $2.40 from $2.35

• Patriot Battery Metals (PMT)

  • Retained at buy at UBS; Price Target: $0.60 from $0.85

• Pinnacle Investment Management Group (PNI)

  • Retained at add at Morgans; Price Target: $27.25 from $21.50

• Peoplein (PPE)

  • Retained at buy at Ord Minnett; Price Target: $1.14 from $1.12

• QBE Insurance Group (QBE)

  • Downgraded to hold from buy at Bell Potter; Price Target: $19.20 from $19.05

• Retail Food Group (RFG)

  • Retained at buy at Bell Potter; Price Target: $0.11

• Steadfast Group (SDF)

  • Upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $6.98 from $6.64

• Select Harvests (SHV)

  • Retained at buy at Bell Potter; Price Target: $5.00 from $4.60

  • Retained at hold at CLSA; Price Target: $3.60

  • Upgraded to buy from accumulate at Ord Minnett; Price Target: $4.95 from $4.60

  • Upgraded to buy from neutral at UBS; Price Target: $4.40

• Strike Energy (STX)

  • Retained at buy at Bell Potter; Price Target: $0.29

  • Retained at buy at Canaccord Genuity; Price Target: $0.16

• Southern Cross Gold (SXG)

  • Retained at buy at Bell Potter; Price Target: $4.00

• Westpac Banking Corporation (WBC)

  • Retained at sell at Citi; Price Target: $26.25

  • Upgraded to buy from neutral at UBS; Price Target: $37.00

• Wildcat Resources (WC8)

  • Retained at buy at Ord Minnett; Price Target: $0.50

• Wesfarmers (WES)

  • Retained at neutral at Macquarie; Price Target: $75.30

Scans