Evening Wrap: ASX 200 jitters return as Westpac results and surprise OPEC production increase hit banks, energy

The S&P/ASX 200 closed 80.2 points lower, down 0.97%.

It had to happen eventually. If you had been lulled into the false sense of security that the ASX 200 only went up over the last couple of weeks – that’s probably fair enough – it has been an absolutely stonking run! 🚀

But, we all knew at some point the sellers would return and or the buyers would take a bit of a breather. Let’s hope that’s all it is, and soon we’re be back to our winning ways 🤞.

To make sense of all the above, I have detailed technical analysis on the Nasdaq Composite and S&P/ASX 200 in today's ChartWatch.

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

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 80.2 points lower at 8,157.8, 1.01% from its session high and smack–bang on its session low. For the first time in many sessions, in the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a convincing (not in a good way) 69 to 201.

It had to happen eventually. If you had been lulled into the false sense of security that the ASX 200 only went up over the last couple of weeks – that’s probably fair enough – it has been an absolutely stonking run!

But, we all knew at some point the sellers would return and or the buyers would take a bit of a breather. Let’s hope that’s all it is, and soon we’re be back to our winning ways.

On the topic of winning ways, it wasn’t all doom and gloom on the ASX today. Gold stocks managed a modest rebound, adding 0.67% at a sector level, as Gold Road Resources (GOR) (+9.4%) (entered scheme of arrangement to be acquired by US major Gold Fields), and Evolution Mining (EVN) (+2.1%) led the way.

The rest, well, there wasn’t much else to cheer from there on a day you might want to skip checking your portfolio!

Energy stocks were worst hit as the price of crude oil traded lower on news OPEC+ would be increasing production. Santos (STO) fell 3.94% and Woodside Energy (WDS) shed 3.6%. Interestingly, elsewhere within the sector, uranium was mixed bag despite a continued rally in the uranium futures price on Friday. Nexgen Energy (NXG) fell 4.6% while Boss Energy (BOE) rose 0.8%.

Financials were next worst hit, as Westpac Banking Corp. (WBC) (-3.0%) led the big banks lower after investors reacted poorly to its interim profit results.

ChartWatch

NASDAQ Composite Index

The Comp is nearing a critical balance point ⚖️ (click here for full size image)

Friday’s candle is the closest thing we’ve seen to indecision on the Comp for some time. It’s upward and downward pointing shadows indicate a push-pull between the demand and supply-sides – albeit won finally by the demand-side (white body).

It perhaps demonstrates an inkling of a more balanced demand-supply environment after what has been a very solid show of dominance by the demand-side since the 15865 higher trough.

Occurring within the supply zone of the long term trend ribbon, and in the shadow of the 18282 point of supply, Friday’s candle makes plenty of sense in context – a breather here, if only for a few candles – would not be surprising.

Otherwise, there is little to fault in the short term technicals:

• The price action is rising peaks and rising troughs

• The candles are predominantly demand-side in nature (i.e., white bodied and or downward pointing shadows)

• The short term trend ribbon is beginning to rise again and it is acting as a zone of dynamic demand

So, one must stay the course until evidence to the contrary.

Such evidence would be a credible supply-side showing in the form of a solid black candle (i.e., close at session low) or a long upward pointing shadow and close at low – to signal supply has returned to the market in force / and the demand-side is no longer capable to absorb it.

18282-605 is a clear and credible zone of supply – and therefore between it and the long term trend ribbon is the most likely area a supply-side showing is likely to occur.

My gut feel is that the Comp is nearing a critical balance point where the next few candles could shape its performance for the rest of this year.

I.e., log just a few more emphatic demand-side candles and it will be impossible for the bears to ignore – they’ll have to concede defeat and we’re likely to retest the all time highs.

Versus, concede a few emphatic supply-side candles and it could easily hobble the recently reclaimed confidence in stocks and set us up for a rejection of the long term trend ribbon / retest of the short term trend ribbon.

S&P/ASX 200 (XJO)

Supply has arrived (click here for full size image)

There’s a very good chance we’re leading, and the US is following at the moment – which is a little unnerving for what might occur tonight on the Comp – particularly with respect to those two abovementioned scenarios!

We found supply today. It hasn’t been there in any shape or form…and now it is: A solid black candle – opening at the high and closing at the low.

Unequivocal supply-side control between the opening and closing bells.

Positives: Consider today’s candle range did not eclipse Friday’s candle range, a small mercy in terms of the relative magnitude of supply vs previously demand-side control – and volume was below average signalling a lesser degree of conviction today compared to Friday.

I might be sugar-coating a little. Because the most likely path from here is a test of the long term uptrend ribbon, presently around 8025-75. Another small mercy is the fact that ribbon has reverted to green – a welcome signal the long term trend is mending back towards demonstrating long term demand-side control.

The confirmation of that long term uptrend status will come with a test and hold of the long term trend ribbon, i.e., a trough set at or above the ribbon, and preferably with some emphatic demand-side candles.

So, much like the Comp, things are also reaching a potentially critical juncture on the XJO. If we can get a successful test and hold of the long term uptrend ribbon under our belts, it will confirm the supply-side is largely a spent force – the path of least resistance becomes new highs.

Don’t fear a pullback here!

The great thing about a pullback / short term supply-side showing for technical traders is it allows us to gauge the strength and motivation of the supply-side and the demand-side’s ability to defend against it.

The nature of the upcoming pullback and the subsequent rally or lack thereof will speak volumes for the next major leg up or down.

• Scenario 1: A bit of a pullback and strong bounce = Long term uptrend confirmed, path of least resistance is new highs.

• Scenario 2: Slash straight back below the long term uptrend ribbon, log a reinforcing lower peak = Back to equilibrium, or potentially much worse.

Economy

Today

• AUS MI Inflation Gauge April m/m: +0.6 m/m vs +0.7% m/m in March

• AUS Job Ads April (m/m): +0.5% m/m actual vs +0.4% m/m in March

Later this week

Tuesday

• 00:00 ISA ISM Services Purchasing Managers Index (PMI) April: 50.2 forecast vs 50.8 in March

• 11:30 AUS Building Approvals March m/m: -1.7% m/m forecast vs -0.3% in February

• 11:45 CHN Caixin Services PMI April: 51.7 forecast vs 51.9 in March

Wednesday

• 03:00 USA 10-y Bond Auction

Thursday

• 04:00 USA FOMC Meeting, Federal Funds Rate & Statement: no change at 4.5% forecast

• 04:30 USA FOMC Press Conference

• 21:00 Bank of England Official Cash Rate: -0.25% to 4.25% forecast

Friday

• TBA CHN Trade Balance: +CNY 695 billion vs +CNY 737 billion previous

Saturday

• 11:30 CHN Consumer Price Index (CPI) & Producer Price Index (PPI) Inflation April y/y

  • CPI: -0.2% p.a. forecast vs -0.1% p.a. in March

  • PPI: -2.6% p.a. forecast vs -2.5% p.a. in March

Latest News

Interesting Movers

Trading higher

• +21.1% Koonenberry Gold (KNB) – No news since 30-Apr Multiple zones of visible gold in sixth drill hole at Enmore, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +19.8% Warriedar Resources (WA8) – Ricciardo Project MRE Update (Amended), rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +16.3% Syrah Resources (SYR) – Balama site access restored.

• +13.0% Immutep (IMM) – Excellent Overall Survival in Head & Neck Cancer Patients.

• +11.6% Tyro Payments (TYR) – Tyro Withdraws from Smartpay Acquisition Process.

• +9.4% Gold Road Resources (GOR) – Scheme Implementation Deed entered into with Gold Fields, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +9.1% Appen (APX) – No news 🤔.

• +7.8% PYC Therapeutics (PYC) – No news 02-May Foundation Fighting Blindness Presentation Materials.

• +7.3% Brightstar Resources (BTR) – High grade gold results continue from Sandstone Gold Project.

• +5.3% iShares Asia 50 ETF (IAA) – No news, Asian equities ETF.

• +5.1% Block (XYZ) – No news since 02-May Quarterly Report for quarterly period ended March 31, bounced in the wake of the recent sharp selloff.

• +4.8% Turaco Gold (TCG) – Afema Project JORC Resource Grows to 3.55Moz Gold and Investor Presentation, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

Trading lower

• -18.5% Dateline Resources (DTR) –Rare Earths Drilling at ColloseumN.

• -16.7% Rox Resources (RXL) – Institutional Placement to Accelerate Project Development and On the Path to Development.

• -13.4% Aldoro Resources (ARN) – No news 🤔.

• -11.8% Brainchip (BRN) – No news 🤔.

• -8.6% Siteminder (SDR) – No news, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -8.0% Metals X (MLX) – No news, general weakness across the broader Resources sector today.

• -7.3% Dimerix (DXB) – No news since 01-May Dimerix Licenses DMX-200 in the US, pulled back in the wake of recent sharp rally.

• -7.1% Nuix (NXL) – No news, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -6.9% Clarity Pharmaceuticals (CU6) – No news, fall is consistent with prevailing long term downtrend, a regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -5.8% Stanmore Resources (SMR) – No news, fall is consistent with prevailing long term downtrend, a regular in ChartWatch ASX Scans Downtrends list 🔎📉

• -5.8% Helia Group (HLI) – No news, two broker downgrades (see Broker Moves for details).

• -5.7% Coronado Global Resources (CRN) – No news, fall is consistent with prevailing short and long term downtrends, one of the most Featured (highest conviction) stocks in ChartWatch ASX Scans Downtrends list 🔎📉

Broker Moves

• 29METALS (29M)

  • Retained at sell at Citi; Price Target: $0.120 from $0.160

  • Retained at equal-weight at Morgan Stanley; Price Target: $0.130

• Atlantic Lithium (A11)

  • Retained at outperform at Macquarie; Price Target: $0.250 from $0.400

• Amcor (AMC)

  • Upgraded at add at Morgans; Price Target: $16.00 from $16.45

• Burgundy Diamond Mines (BDM)

  • Downgraded to hold from buy at Bell Potter; Price Target: $0.050 from $0.100

• Boss Energy (BOE)

  • Retained at equal-weight at Morgan Stanley; Price Target: $2.70 from $2.45

  • Retained at buy at Ord Minnett; Price Target: $4.50

• Brazilian Rare Earths (BRE)

  • Retained at buy at Ord Minnett; Price Target: $7.00

• Capstone Copper Corp. (CSC)

  • Retained at buy at Citi; Price Target: $10.50 from $11.80

  • Retained at outperform at Macquarie; Price Target: $11.60

  • Retained at buy at Ord Minnett; Price Target: $12.00

• Corporate Travel Management (CTD)

  • Retained at buy at Canaccord Genuity; Price Target: $13.70 from $14.85

  • Retained at buy at Citi; Price Target: $15.65 from $17.55

  • Retained at outperform at CLSA; Price Target: $12.75 from $14.65

  • Upgraded to buy from hold at Jefferies; Price Target: $14.20 from $17.50

  • Retained at neutral at Macquarie; Price Target: $13.07 from $17.48

  • Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $11.80 from $15.30

  • Retained at add at Morgans; Price Target: $16.05 from $18.72

  • Retained at hold at Ord Minnett; Price Target: $12.88 from $14.48

  • Retained at buy at Shaw and Partners; Price Target: $15.20 from $18.00

  • Retained at neutral at UBS; Price Target: $17.60

  • Upgraded to overweight from market-weight at Wilsons; Price Target: $12.93 from $16.16

• Deterra Royalties (DRR)

  • Retained at outperform at Macquarie; Price Target: $4.40

• Evolution Mining (EVN)

  • Retained at underweight at Morgan Stanley; Price Target: $5.60

• Fortescue (FMG)

  • Retained at overweight at Morgan Stanley; Price Target: $16.50

• Global Lithium Resources (GL1)

  • Retained at underperform at Macquarie; Price Target: $0.140 from $0.130

• Helia Group (HLI)

  • Downgraded to underperform from hold at Jefferies; Price Target: $3.60 from $3.14

  • Downgraded to underperform from neutral at Macquarie; Price Target: $3.25 from $3.55

• IGO (IGO)

  • Retained at outperform at RBC Capital Markets; Price Target: $6.00

• Iluka Resources (ILU)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.50

• Image Resources (IMA)

  • Retained at outperform at Macquarie; Price Target: $0.140

• Judo Capital (JDO)

  • Retained at buy at UBS; Price Target: $2.20 from $2.55

• Lotus Resources (LOT)

  • Retained at buy at Ord Minnett; Price Target: $4.50

• Lynas Rare Earths (LYC)

  • Retained at buy at UBS; Price Target: $10.40 from $7.95

• Meteoric Resources (MEI)

  • Retained at outperform at Macquarie; Price Target: $0.360

  • Retained at buy at Ord Minnett; Price Target: $0.200

• Mineral Resources (MIN)

  • Retained at buy at Ord Minnett; Price Target: $32.00

• Medallion Metals (MM8)

  • Retained at Canaccord Genuity; Price Target: $0.650

• Nick Scali (NCK)

  • Retained at buy at Citi; Price Target: $20.64

• Nickel Industries (NIC)

  • Retained at buy at Bell Potter; Price Target: $1.510 from $1.470

  • Retained at equal-weight at Morgan Stanley; Price Target: $0.650 from $0.550

• New World Resources (NWC)

  • Retained at buy at Canaccord Genuity; Price Target: $0.070

• Orica (ORI)

  • Upgraded to overweight from neutral at Jarden; Price Target: $17.90 from $18.50

• Paladin Energy (PDN)

  • Retained at overweight at Morgan Stanley; Price Target: $5.70

  • Retained at buy at Ord Minnett; Price Target: $9.50

• Peel Mining (PEX)

  • Retained at buy at Canaccord Genuity; Price Target: $0.170 from $0.400

• Pilbara Minerals (PLS)

  • Retained at overweight at Morgan Stanley; Price Target: $1.700

• Platinum Asset Management (PTM)

  • Retained at sell at UBS; Price Target: $0.500

• QBE Insurance Group (QBE)

  • Retained at overweight at Morgan Stanley; Price Target: $25.05

• Qube (QUB)

  • Retained at accumulate at Ord Minnett; Price Target: $4.30 from $4.23

  • Retained at neutral at UBS; Price Target: $4.40

• Ramsay Health Care (RHC)

  • Retained at equal-weight at Morgan Stanley; Price Target: $37.20 from $36.10

  • Retained at neutral at UBS; Price Target: $38.50

• Rio Tinto (RIO)

  • Retained at equal-weight at Morgan Stanley; Price Target: $119.50

• Resmed Inc (RMD)

  • Retained at buy at UBS; Price Target: US$385 from US$290

• Regis Resources (RRL)

  • Retained at neutral at Citi; Price Target: $4.10

  • Retained at equal-weight at Morgan Stanley; Price Target: $4.10

• Resolute Mining (RSG)

  • Retained at buy at Canaccord Genuity; Price Target: $1.400 from $1.000

• South32 (S32)

  • Retained at overweight at Morgan Stanley; Price Target: $3.05

• SGH (SGH)

  • Downgraded to hold from buy at Bell Potter; Price Target: $54.50 from $57.00

• Sovereign Metals (SVM)

  • Retained at outperform at Macquarie; Price Target: $1.000

• Syrah Resources (SYR)

  • Retained at equal-weight at Morgan Stanley; Price Target: $0.220 from $0.200

• Turaco Gold (TCG)

  • Retained at buy at Canaccord Genuity; Price Target: $0.800

  • Retained at buy at Morgans; Price Target: $1.100 from $1.050

• Temple & Webster Group (TPW)

  • Retained at outperform at Macquarie; Price Target: $17.60

• Treasury Wine Estates (TWE)

  • Retained at neutral at Citi; Price Target: $10.50

• Westpac Banking Corporation (WBC)

  • Retained at underperform at Macquarie; Price Target: $28.00

• Block (XYZ)

  • Downgraded to neutral from outperform at Macquarie; Price Target: US$50.00 from US$110.00

  • Downgraded to neutral from overweight at Piper Sandler; Price Target: US$51.00 from US$85.00

Scans