Evening Wrap: ASX 200 logs three gains in a row as market rates ease, uranium stocks keep rising

The S&P/ASX 200 enjoyed another solid day of gains, and at three in a row now, perhaps some semblance of stability has returned.

Largely, this new stability is a result of a pullback in market rates, and it will only remain as long as those rates continue to subside. It's no surprise then that the best performing sectors today were the interest rate sensitives.

Today's special mention goes to Aussie uranium stocks which just keep on keeping on after last weeks news the US Senate had passed a bill to ban imports of Russian uranium products.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 53.4 points higher at 7,682.4, 0.70% from its session low and just 0.02% from its high. Despite the strong headline performance, it is a little concerning though to note that in the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a narrow 149 to 120.

The Real Estate Investment Trusts (XPJ) (+1.8%) sector was the best performing sector today, likely in response to a decent pullback in benchmark bond yields on Friday (see chart below). Property trusts are generally a big ball of debt, so any dip in bond yields, which influence lending rates, is welcome for this sector.

It is no coincidence that the best sectors today are those most sensitive to interest rates

Also doing well today were 'the other interest rate sensitives' of Utilities (XUJ) (+1.2%), Financials (XFJ) (+1.0%), and Information Technology (XIJ) (+0.95%).

The first two love lower relative yields, that is, investors usually target these sectors for their high dividend yields. If you can earn more in a safe government bond, then you're typically going to switch out of high yielding stocks – and vice versa – as we saw today.

As for Tech, again, generally heavily debt funded for growth, plus usually pre-earnings / long duration, which means lower market yields help out via lower discount rates.

Just three of the 11 major ASX sectors were in the red today, and fortunately none of them by a great deal. Still, Industrials (XNJ) (-0.18%), Consumer Staples (XSJ) (-0.13%), and Health Care (XHJ) (-0.06%) are notable for their underperformance.

Special mention today (again) for Aussie uranium stocks. They just keep on keeping on after last weeks news the US Senate had passed a bill to ban imports of Russian uranium products.

Today's special mention goes to Aussie uranium stocks

ChartWatch

High Grade Copper COMEX

A good start in nullifying the two reversal candles from last week...

Just a quick update here, because we only covered it in Friday's Evening Wrap.

In that update, I voiced some concerns about two recent reversal candles, suggesting that given overall trends were still very much intact, they likely merely indicated "the end of the beginning of this copper uptrend – not necessarily the beginning of the end".

I also said candles would be crucial in confirming the return of the demand-side. In this regard, Friday's white candle is a good start, and if it can be confirmed by the developing Monday candle (still live!), then copper's short term uptrend remains intact.

Copper bulls want to wake up tomorrow morning and see that the last candle in the chart above is still white, and has closed at or very near the high of the session.

4.695-4.731 is the key point of supply. Assuming all goes well, 4.466 moves to demand.

Iron Ore 62% SGX

The reversal continues

I last covered iron ore in the Evening Wrap from 24 April. It had just tested and held the old resistance zone between 109.25 and 111.95. So often you'll find that solid areas of supply act as just as solid areas of future demand.

I noted in the 24/4 update the importance of iron ore repeating the process of breaking, testing, and holding above the dynamic supply held by the long term trend ribbon. I suggest today's candle is on track to accomplish this goal, and should it succeed – my model considers a new long term uptrend has begun.

A close above supply at 120.15 opens up the rally to potentially probe points of supply at 126.80 and 131.60.

114.35 is now demand, but really there's a very solid zone of demand now between 109.25 and 114.35.

Economy

Today

• AUS MI Inflation gauge

  • Headline +0.1% in April and +3.7% p.a. vs +0.4% in March and +3.8% p.a.

  • Trimmed Mean (core) +0.2% in April and +3.2% p.a. vs +0.4% in March and 3.8% p.a.

  • Lowest reading since April 2022 on headline and lowest since June 22 on Trimmed Mean = good news for the RBA

• AUS ANZ Job Ads

  • +2.8% in April vs -1.0% in March

Later this week

Tuesday

• 14:30 AUS RBA Cash Rate, Monetary Policy Statement, Monetary Policy Statement

  • Expected no change at 4.35%

Friday

• 03:00 USA 30 year bond auction

Saturday

• USA Preliminary University of Michigan Consumer Sentiment

  • Expected -0.9% to 76.3% vs -0.9% to 77.2% in April

Latest News

Interesting Movers

Trading higher

• +20.8% Southern Cross Electrical Engineering (SXE) - Profit guidance, rise is consistent with prevailing short and long term uptrends 🔎📈

• +10.2% Brainchip Holdings (BRN) - New Australian Patent Granted

• +10.0% Botanix Pharmaceuticals (BOT) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +8.0% Immutep (IMM) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.5% Healius (HLS) - Becoming a substantial holder

• +6.5% Mesoblast (MSB) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.3% Bannerman Energy (BMN) - Uranium stocks still basking in warm afterglow of sector rerating on US ban on Russia imports passing Senate news

Trading lower

• -36.8% Tourism Holdings Rentals (THL) - thl reduces FY24 NPAT guidance, fall is consistent with prevailing short and long term downtrends 🔎📉

• -9.3% Block (SQ2) - Quarterly Report quarterly period ended March 31

• -6.1% Imugene (IMU) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.9% Syrah Resources (SYR) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.8% Audinate Group (AD8) - No news 🤔

• -4.5% IPD Group (IPG) - No news 🤔

• -4.3% Lotus Resources (LOT) - No news 🤔

• -4.2% Spark New Zealand (SPK) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.6% Graincorp Class A (GNC) - Updated earnings guidance and preliminary 1H24 result

Broker Notes

• Alligator Energy (AGE)

  • Retained at buy at Bell Potter; Price Target: $0.10

• Boss Energy (BOE)

  • Retained at buy at Bell Potter; Price Target: $6.35

• Beach Energy (BPT)

  • Retained at buy at Bell Potter; Price Target: $1.80

• Centuria Industrial REIT (CIP)

  • Retained at hold at Bell Potter; Price Target: $3.35

• Collins Foods (CKF)

  • Upgraded to overweight from neutral at Jarden; Price Target: $10.25 from $10.00

• Centuria Capital Group (CNI)

  • Retained at hold at Bell Potter; Price Target: $1.70

• Cooper Energy (COE)

  • Retained at hold at Bell Potter; Price Target: $0.21

• Centuria Office REIT (COF)

  • Retained at hold at Bell Potter; Price Target: $1.30

• Comet Ridge (COI)

  • Retained at buy at Bell Potter; Price Target: $0.27

• Conrad Asia Energy. (CRD)

  • Retained at buy at Bell Potter; Price Target: $1.85

• DUG Technology (DUG)

  • Retained at buy at Shaw and Partners; Price Target: $3.45

• Dexus Convenience Retail REIT (DXC)

  • Retained at buy at Bell Potter; Price Target: $3.00

• Dexus Industria REIT/Units (DXI)

  • Retained at sell at Bell Potter; Price Target: $2.80

• Deep Yellow (DYL)

  • Retained at buy at Bell Potter; Price Target: $1.90

• GDI Property Group (GDI)

  • Retained at buy at Bell Potter; Price Target: $0.75

• Healthco Healthcare and Wellness REIT (HCW)

  • Retained at buy at Bell Potter; Price Target: $1.50

• Homeco Daily Needs REIT (HDN)

  • Retained at hold at Bell Potter; Price Target: $1.30

• Hartshead Resources (HHR)

  • Retained at buy at Bell Potter; Price Target: $0.03

• HMC Capital (HMC)

  • Retained at hold at Bell Potter; Price Target: $7.05

• Imdex (IMD)

  • Downgraded to neutral from buy at Citi; Price Target: $2.20 from $2.25

• Immutep (IMM)

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

• Lotus Resources (LOT)

  • Retained at buy at Bell Potter; Price Target: $0.50

• Arcadium Lithium (LTM)

  • Initiated at buy at Argus Research; Price Target: US$6.25

• Macquarie Group (MQG)

  • Retained at neutral at Goldman Sachs; Price Target: $178.74 from $186.38

  • Retained at buy at Jefferies; Price Target: $210.00 from $205.00

  • Retained at overweight at JP Morgan; Price Target: $205.00 from $195.00

  • Retained at overweight at Morgan Stanley; Price Target: $215.00 from $225.00

  • Retained at neutral at UBS; Price Target: $200.00 from $185.00

• Nickel Industries (NIC)

  • Retained at buy at Bell Potter; Price Target: $1.54 from $1.50

• Pointsbet Holdings (PBH)

  • Retained at buy at Bell Potter; Price Target: $0.63 from $1.02

• Paladin Energy (PDN)

  • Retained at buy at Bell Potter; Price Target: $16.50

• Block (SQ2)

  • Retained at buy at Mizuho Securities; Price Target: US$106.00

  • Retained at outperform at RBC Capital Markets; Price Target: US$88.00

  • Retained at buy at UBS; Price Target: US$100.00 from US$95.00

• Strike Energy (STX)

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

• Technology One (TNE)

  • Initiated at neutral at E&P; Price Target: $15.82

• Woodside Energy Group (WDS)

  • Upgraded to neutral from underweight at Barrenjoey; Price Target: $28.50

• Wesfarmers (WES)

  • Retained at underweight at Barrenjoey; Price Target: $50.00

  • Retained at underperform at CLSA; Price Target: $64.30 from $60.40

  • Retained at hold at Jefferies; Price Target: $60.00

  • Retained at neutral at Macquarie; Price Target: $64.60 from $61.20

  • Retained at neutral at UBS; Price Target: $66.00 from $61.00

• Whitehaven Coal (WHC)

  • Initiated at buy at Citi; Price Target: $9.50

• Worley (WOR)

  • Initiated at add at Morgans; Price Target: $18.00

• Woolworths Group (WOW)

  • Retained at neutral at E&P; Price Target: $34.04

  • Retained at overweight at Jarden; Price Target: $39.90 from $40.40

  • Retained at neutral at JP Morgan; Price Target: $31.40 from $33.50

  • Retained at hold at Morgans; Price Target: $31.00 from $34.70

  • Retained at neutral at UBS; Price Target: $32.50 from $33.50

Scans