Evening Wrap: ASX 200 logs slender gain as results reward and punish! Iron ore and lithium dive again...

A slender gain, but a gain nonetheless. Most sectors outperformed the benchmark ASX 200's performance today, so that implies there were a handful of stocks that did really poorly to drag the broader index back.

We have all the details on those, but also on several that shot the lights out today both in terms of FY24 results, but also how they were duly rewarded by investors.

The iron ore plunge saga continues...and then there's the lithium plunge saga. Too many sagas for my liking – and no doubt for those investors still clinging to these stocks in the hope a low will be found soon. Either that, or they're absolutely certain prices will bounce the second they get out!

There are also about a zillion broker updates today as the financial boffins at Australia's biggest research houses tweak their numbers for the dozens of stocks now reported.

For all of this, and (incredibly) much more...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 14.8 points higher at 7,865.5, 0.42% from its session high and just 0.24% from its low. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 165 to 113.

Communication Services (XTJ) (+1.7%) was the best performing sector today, likely in response to a 2.1% gain in sector heavyweight Telstra Group (TLS) as it reported better than expected Full year results. We’ve got more analysis on the result for you here.

There were also handy gains in other XTJ stocks that recently reported strong results, like Seek (SEK) (+3.3%), and Car Group (CAR) (+2.0%).

Also doing well today was Industrials (XNJ) (+1.2%) (again mainly results driven – this time NRW Holdings (NWH) (+9.7%), Consumer Discretionary (XDJ) (+1.0%), Financials (XFJ) (+0.81%), and Information Technology (XIJ) (+0.78%).

The best of the best ASX sectors today

Doing it tough today was the Utilities (XUJ) (-4.0%) sector. It was pulled in opposite directions by it’s two major counterparts AGL Energy (AGL) and Origin Energy (ORG). AGL (+4.6%) enjoyed two rating upgrades and several price target increases among the brokers for it’s strong set of results released yesterday, while Origin (-9.4%), whose results were released today, were not nearly as warmly received!

It was also another tough day for Resources (XJR) (-1.2%) which again sagged under the weight of sharp falls in iron ore, coking coal, and lithium minerals, and continued malaise in uranium and gold – the latter failing once again to break to a new high. The Energy (XEJ) (-0.65%) sector was another notable loser.

The worst of the worst ASX sectors today

ChartWatch

Iron Ore 62% (Front month, back-adjusted) SGX

There goes the neighbourhood* (*read as: State of Western Australia)

Iron ore is easily the most interesting chart today, but we only did it yesterday – so I will be brief.

The break-down of the 94-99.20 demand zone is in progress. Assuming the current candle (still live at time of writing) closes at or below where it is – the demand zone will transition to a supply zone.

The next major point of demand isn’t until $73.60 (from the weekly chart below). In my experience, when the rally from the major point of demand was clean and direct, the move back down to it is often similar.

You know the drill from here. Somehow – as unlikely as it feels possible at the moment – we need to see some big white candles and or a very long downward pointing shadow. If it’s big enough – and it’s accompanied by enough volume to signal capitulation, short covering, and positional and speculative buying – we’ll have a low.

Supply-side candles like today’s black-bodied variety and or upward pointing shadows – particularly into defined points and zones of supply – will continue the rot.

The future is unknown, anything can happen!.

US 2-year T-Bond Yield vs S&P 500

Is the prospect of lower interest rate in the US good or bad for US stocks?

Is the prospect of lower interest rates in the US good or bad for US stocks?

This is a bit of a fun look at the question which we really need to be able to answer to understand if the US bull market still has more to run.

It’s a bit of a love-hate relationship between the benchmark for short term US rates, the US 2-year T-Bond Yield, and the S&P 500 benchmark of stocks.

For the most part, a lower yield on the 2-year T-Bond, which signals the prospect of a lower policy rate by the Fed, helps stocks to rally. Conversely, a higher yield tends to hurt stocks.

Recently, we reached an inflection point where lower yields all of sudden became bad for stocks – as it signalled a heightened risk of a US recession. In keeping with the inflection, very recently a rebound in the 2-year T-Bond yield has allowed stocks to bounce.

I propose we reached another inflection point last night – a re-inflection point if you will! It looks like falling yields (i.e., a greater prospect of interest rate cuts) is once again positive for stocks.

Somehow the Bull always finds a way!

Economy

Today

• AUS Employment Change & Unemployment Rate July

  • Employment Change: +58,200 vs +20,400 forecast and +52,300 in June (revised higher from 50,200)

  • Unemployment Rate: 4.2% vs 4.1% forecast and 4.1% in June

  • Participation rate increased to 0.2% to 67.1%

  • Full-time employment increased by 60,500 vs part-time employment decreased by 2,300

  • Overall, a very strong reading of the local jobs market, and by extension, of the Australian economy

• CHN Data Dump July

  • Industrial Production y/y +5.1% vs +5.2% forecast and +5.3% in June

  • Retail Sales y/y +2.7% vs +2.6% forecast and +2.0% in June

  • Fixed Asset Investment ytd/y +3.6% vs +3.9% forecast and +3.9% in June

  • Unemployment Rate 5.2% vs 5.1% forecast and +5.0% in June

  • New Home Prices m/m -0.65% vs -0.65% forecast and -0.67% in June

  • Overall, with the exception of slightly better than expected retail sales, another weak performance by the Chinese economy last month

Later this week

Thursday

• 22:30 USA Core Retail Sales July (+0.1% m/m vs +0.4% m/m June)

Friday

• 09:30 AUS RBA Governor Michell Bullock Speaks

Saturday

• 00:00 USA University of Michigan Consumer Sentiment Index August (66.7 forecast vs 66.4 July)

Latest News

Interesting Movers

Trading higher

• +54.2% Latin Resources (LRS) - Pilbara Minerals to acquire Latin Resources

• +15.4% Predictive Discovery (PDI) - Becoming a substantial holder of Predictive Discovery from PRU

• +9.7% NRW (NWH) - Full Year Statutory Accounts and NRW Full Year Results Presentation, rise is consistent with prevailing short and long term uptrends 🔎📈

• +7.8% Ora Banda Mining (OBM) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +7.6% Magellan Financial Group (MFG) - Final Results for the year ended 30 June 2024 and FY24 Results Presentation, rise is consistent with prevailing short uptrend, long term trend is transitioning from down to up 🔎📈

• +5.7% Pro Medicus (PME) - Continued positive response to yesterday's PME FY2024 results presentation, several price target increases among the brokers - see Broker Notes section below, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.6% Netwealth Group (NWL) - Several positive broker comments and price target increases since Tuesday's 2024 Full Year Results Presentation, rise is consistent with prevailing long term uptrend, bouncing off long term uptrend ribbon 🔎📈

• +4.6% AGL Energy (AGL) - Continued positive response to yesterday's FY24 Results Presentation, 2 rating upgrades and several price target increases among the brokers - see Broker Notes section below, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -10.6% Jupiter Mines (JMS) - No news, undid all of yesterday's just as inexplicable bounce and then some…, fall is consistent with prevailing short downtrend, long term trend is transitioning from down to down 🔎📉

• -9.8% Nufarm (NUF) - Trading Update, fall is consistent with prevailing short and long term downtrends 🔎📈

• -9.4% Origin Energy (ORG) - 2024 Full Year Results and Presentation to Analysts and Financial Markets

• -9.1% Fenix Resources (FEX) - No news, another tough day for ASX iron ore stocks, see ChartWatch sector above

• -7.3% Cochlear (COH) - Annual Report and FY24 Result - Presentation

• -7.1% Northern Minerals (NTU) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -7.0% EML Payments (EML) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -6.9% Temple & Webster Group (TPW) - Change in substantial holding (reduction)

• -6.2% Stanmore Resources (SMR) - Coking coal prices are plunging in line with the iron ore price

• -5.6% Droneshield (DRO) - No news

• -4.9% Whitehaven Coal (WHC) - Ditto to a large extent with SMR, but thermal coal prices also down two sessions in a row

• -4.7% Imdex (IMD) - Downgraded to sell from neutral at Citi (price target retained at $2.00)

• -4.4% Syrah Resources (SYR) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -3.9% Pilbara Minerals (PLS) - Pilbara Minerals to acquire Latin Resources, fall is consistent with prevailing short and long term downtrends 🔎📈

• -3.8% Arcadium Lithium (LTM) - No news, lithium rout, fall is consistent with prevailing short and long term downtrends 🔎📈

• -3.6% Rio Tinto (RIO) - No news, iron ore rout, fall is consistent with prevailing short and long term downtrends 🔎📈

• -3.0% Mineral Resources (MIN) - No news, iron ore AND lithium rout! Fall is consistent with prevailing short and long term downtrends 🔎📈

• -2.9% Yancoal Australia (YAL) - Ditto coal

• -2.9% Fortescue (FMG) - Ditto iron ore

Broker Notes

Amaero International (3DA)

• Retained at buy at Shaw and Partners; Price Target: $0.60

Alligator Energy (AGE)

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

AGL Energy (AGL)

• Retained at neutral at Macquarie; Price Target: $11.28

• Upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $12.88 from $10.00

• Upgraded to outperform from sector perform at RBC Capital Markets; Price Target: $12.00 from $11.00

• Retained at neutral at UBS; Price Target: $11.00 from $10.85

Amotiv (AOV)

• Retained at buy at Canaccord Genuity; Price Target: $14.40

• Retained at buy at Citi; Price Target: $12.65 from $12.80

• Retained at hold at CLSA; Price Target: $10.80 from $10.30

• Retained at overweight at JP Morgan; Price Target: $13.00 from $13.25

• Retained at outperform at Macquarie; Price Target: $13.64 from $12.65

• Retained at add at Morgans; Price Target: $13.30 from $13.15

• Retained at buy at UBS; Price Target: $13.00

Bravura Solutions (BVS)

• Retained at neutral at Macquarie; Price Target: $1.32 from $1.26

BWP Trust (BWP)

• Retained at underweight at Morgan Stanley; Price Target: $3.80

Commonwealth Bank of Australia (CBA)

• Retained at sell at Citi; Price Target: $91.50 from $85.00

• Retained at hold at CLSA; Price Target: $121.00 from $115.80

• Retained at underweight at Jarden; Price Target: $106.00 from $105.00

• Retained at underweight at Morgan Stanley; Price Target: $103.00 from $102.00

• Retained at reduce at Morgans; Price Target: $97.38 from $96.13

• Retained at sell at Ord Minnett; Price Target: $100.00

Cobram Estate Olives (CBO)

• Retained at buy at Shaw and Partners; Price Target: $2.05

Centuria Industrial Reit (CIP)

• Retained at buy at UBS; Price Target: $3.55

Close The Loop (CLG)

• Retained at buy at Shaw and Partners; Price Target: $0.70

Charter Hall Long Wale Reit (CLW)

• Retained at neutral at UBS; Price Target: $3.50 from $3.54

Cochlear (COH)

• Retained at underperform at Macquarie; Price Target: $300.00

Computershare (CPU)

• Retained at overweight at Jarden; Price Target: $30.10 from $29.20

• Retained at buy at Jefferies; Price Target: $30.25 from $29.65

• Retained at overweight at JP Morgan; Price Target: $29.00

• Retained at outperform at Macquarie; Price Target: $29.00 from $30.00

• Retained at overweight at Morgan Stanley; Price Target: $30.00 from $29.40

• Retained at buy at UBS; Price Target: $32.00

Dexus Industria Reit. (DXI)

• Upgraded to hold from sell at Bell Potter; Price Target: $2.80

• Retained at outperform at Macquarie; Price Target: $3.19 from $3.11

Evolution Mining (EVN)

• Retained at buy at Canaccord Genuity; Price Target: $4.50

• Retained at buy at Citi; Price Target: $4.40

• Retained at buy at Jefferies; Price Target: $4.70

• Retained at neutral at JP Morgan; Price Target: $3.60 from $3.75

• Retained at outperform at Macquarie; Price Target: $4.40 from $3.81

• Retained at overweight at Morgan Stanley; Price Target: $4.20

• Retained at accumulate at Ord Minnett; Price Target: $4.15 from $4.00

• Retained at neutral at UBS; Price Target: $3.70

Fluence Corporation (FLC)

• Initiated at hold at Bell Potter; Price Target: $0.13

Goodman Group (GMG)

• Retained at buy at Citi; Price Target: $40.00

• Retained at neutral at Macquarie; Price Target: $36.51

Homeco Daily Needs Reit (HDN)

• Retained at neutral at Macquarie; Price Target: $1.19 from $1.14

• Retained at equal-weight at Morgan Stanley; Price Target: $1.35

• Retained at add at Morgans; Price Target: $1.36

• Retained at hold at Ord Minnett; Price Target: $1.27 from $1.22

Imdex (IMD)

• Downgraded to sell from neutral at Citi; Price Target: $2.00

Lifestyle Communities (LIC)

• Retained at sell at Bell Potter; Price Target: $8.30 from $8.95

• Downgraded to neutral from buy at Citi; Price Target: $9.50 from $11.70

• Retained at accumulate at Ord Minnett; Price Target: $11.02 from $12.60

Lotus Resources (LOT)

• Retained at buy at Bell Potter; Price Target: $0.65

Nufarm (NUF)

• Retained at neutral at Macquarie; Price Target: $5.10

NRW (NWH)

• Retained at buy at Citi; Price Target: $3.65

• Retained at buy at UBS; Price Target: $3.50

Netwealth Group (NWL)

• Retained at overweight at Macquarie; Price Target: $23.50 from $24.00

• Retained at buy at UBS; Price Target: $24.00 from $24.50

Orora (ORA)

• Retained at neutral at Citi; Price Target: $2.55 from $2.30

• Retained at overweight at Morgan Stanley; Price Target: $2.90 from $2.70

• Retained at hold at Morgans; Price Target: $2.50 from $2.30

• Retained at neutral at UBS; Price Target: $2.45 from $2.16

Origin Energy (ORG)

• Retained at buy at Citi; Price Target: $11.50

Pilbara Minerals (PLS)

• Retained at neutral at Macquarie; Price Target: $3.25

Pro Medicus (PME)

• Retained at hold at Bell Potter; Price Target: $131.00 from $115.00

• Retained at sell at Citi; Price Target: $100.00 from $95.00

• Downgraded to buy from positive at E&P; Price Target: $154.34 from $152.68

• Retained at hold at Jefferies; Price Target: $140.00 from $120.00

• Downgraded to neutral from overweight at JP Morgan; Price Target: $130.00 from $104.00

• Retained at outperform at Macquarie; Price Target: $152.50 from $127.50

• Retained at hold at Morgans; Price Target: $139.00 from $85.00

Patriot Battery Metals (PMT)

• Retained at outperform at Macquarie; Price Target: $0.90 from $1.50

REA Group (REA)

• Retained at overweight at Macquarie; Price Target: $230.00 from $220.00

Sims (SGM)

• Upgraded to overweight from neutral at Jarden; Price Target: $11.90 from $12.10

Seven Group (SVW)

• Retained at buy at Bell Potter; Price Target: $46.00 from $45.00

• Retained at buy at Goldman Sachs; Price Target: $43.90 from $41.80

• Retained at hold at Jefferies; Price Target: $41.30 from $39.00

• Upgraded to outperform from neutral at Macquarie; Price Target: $43.90 from $42.10

• Retained at buy at UBS; Price Target: $45.00 from $43.00

Seven West Media (SWM)

• Retained at neutral at E&P; Price Target: $0.19 from $0.24

• Retained at hold at Jefferies; Price Target: $0.18 from $0.21

• Retained at neutral at JP Morgan; Price Target: $0.17 from $0.19

• Retained at neutral at Macquarie; Price Target: $0.14 from $0.17

Telstra Group (TLS)

• Retained at outperform at Macquarie; Price Target: $4.30

Temple & Webster Group (TPW)

• Retained at overweight at Morgan Stanley; Price Target: $13.15 from $11.50

Treasury Wine Estates (TWE)

• Retained at neutral at Citi; Price Target: $13.00

• Retained at outperform at Macquarie; Price Target: $14.00

Viva Leisure (VVA)

• Retained at buy at Citi; Price Target: $2.60 from $2.50

Scans