Evening Wrap: ASX 200 lower despite RBA minutes tipping rate hikes off table, gold stocks shine again

Stocks edged lower but closed off their lows in a quiet session. Gold stocks were the strongest as the gold price continues to climb into record territory, while Telco, Health and Property stocks featured heavily in the losers column.

In economics news, RBA minutes all but ruled out the possibility of further rate hikes, but the timing of the first cut remains uncertain.

Let’s dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 9 points higher at 7,887.9, smack-bang at the mid-point of the session's range. In the broader-based S&P/ASX 300 (XKO), advancers and decliners were equally undecided, lagging by a narrow 124 to 149 margin.

The Gold (XGD) (+3.5%) sub-index was again the best performing sector today, likely in response to fresh highs in the gold price since our last Evening Wrap.

Gold stocks were again top of the pops

Also doing well today was the broader Resources (XJR) (+1.3%) sector of which the XGD is part of, but there was definitely a growth-oriented theme today with the Energy (XEJ) (+0.62%) sector logging the next best gain.

Doing it tough today was the Communication Services (XTJ) (-0.98%) sector, but also unloved were Health Care (XHJ) (-0.94%) and Real Estate Investment Trusts (XPJ) (-0.88%).

ChartWatch

Red 5 (ASX: RED)

A solid example of a 'continuation' setup

A couple of gold stocks in today's ChartWatch for obvious reasons: Look where the strength is I always say! In recent Evening Wraps we've investigated larger capitalisation ASX gold stocks, so this time around I thought I'd look at two near the smaller end of the curve.

First up is RED. At a $1.4 billion market cap it's hardly a minnow, and with forecast FY 2024 production of 195-215koz from its King of the Hill operation near Leonora in WA's gold belt, its hardly a minnow in terms of annual production, either.

That's not why I'm interested, though. You know I just like the chart! Bottom left-top-right tells me there's plenty of excess demand. This is what I call a 'continuation setup'.

In this setup I trust those with cash know what they're doing by hoovering up shares - even if it means having to obtain them at even higher prices. Just as trustworthy are those shareholders, or lack thereof, who are selling. They're also likely in the know of RED's fundamental checkmarks, and this is why they're so clearly hanging on for more.

Trends, price action, candles, and a lack of overhead historical supply equals a healthy technical picture. The short term trend remains up as long as the price continues to close above the historical point of demand at $0.33.

Pantoro (ASX: PNR)

An interesting example of a 'turnaround' setup

Topping today's sector list was PNR. It's market capitaliation of around 360 million would keep it off the radar of most of the bigger fund managers, but looking at the chart, it's clearly gaining increasing attention from other segments of the market.

Not a continuation setup like RED. Not at all. This is what I call a 'turnaround setup'. The short term trend is up, it's well-established now, and it appears to be accelerating. The long term trend is down - yes down! This is OK for me as long as the long term trend is showing signs of transitioning to up. This is evidenced by its contraction and a switch to orange indicating a neutral trend.

Next up, I need to see the price action move back into rising peaks and rising troughs, as this signals a return to supply removal and a buy the dip mentality among market participants. Importantly, the price action needs to be punctuated by a growing number of white candles.

So far so good.

Ideally, there's a recent increase in volume to signal increased interest and supply removal (in keeping with the rising peaks).

Most important, though, I need to see the price close back above the long term downtrend ribbon followed by a test and hold of said ribbon. This tells me this crucial trend zone has gone from acting as an area of dynamic supply to an area of dynamic demand.

All of the above are now present on the PNR chart with today's strong demand-side candle which has bounced off the long term trend ribbon.

Historical supply at 0.092 is likely to come into play at some stage, and the key demand point moves to 0.061.

Economy

Today

• RBA meeting minutes (March meeting)

  • Unlike at previous meetings since they started increasing rates in this cycle, a rate increase was NOT discussed

  • "Members observed that inflation had continued to moderate over prior months"

  • But also, "it was difficult to either rule in or out future changes in the cash rate target"

  • Important reference to maintaining a strong labour market: "members noted the importance of preserving as many of the gains in the labour market as possible"

Later this week

Wednesday

• 01:00 USA JOLTS Job Openings (8.76M forecast vs 8.86M previous)

• 20:00 EU Core CPI (+3.0% forecast vs +3.1% previous)

• 23:15 USA ADP Non-Farm Employment Change (148K forecast vs 140K previous)

Thursday

• 01:00 USA ISM Services PMI (52.8 forecast vs 52.6 previous)

• 03:10 USA Fed Chair Powell Speaks

Friday

• 23:30 USA March employment data

  • Non-Farm Employment Change (+205K forecast vs 275K previous)

  • Unemployment Rate (3.9% forecast vs 3.9% previous)

  • Average Hourly Earnings m/m (+0.3% forecast vs +0.1% previous)

Latest News

Interesting Movers

Trading higher

• +71.2% Mesoblast (MSB): Change in substantial holding (increase) and continued positive response to last week's FDA Notifies Clinical Data Sufficient for Refiling aGVHD BLA

• +14.9% Bowen Coking Coal (BCB): No news 🤔 bounce in a massive long-term downtrend

• +12.0% 29METALS (29M): No news, retained at overweight at Morgan Stanley, price target increased to $0.55 from $0.50

• +11.4% WA1 Resources (WA1): No news 🤔 undid Thursday's falls!

• +11.1% Anson Resources (ASN): No news 🤔 bounce in a massive long-term downtrend

• +11.1% Pantoro (PNR): No news, strong ASX gold sector on rising gold price, rise is consistent with prevailing short-term uptrend, long-term trend ribbon transitioning from down to up, closed above long-term downtrend ribbon

• +10.5% Austal (ASB): Response to media regarding non-binding offer from Hanwha, rise is consistent with prevailing short and long-term uptrends

• +10.1% Nexgen Energy (NXG): No news, broad ASX uranium sector rally following similar strong performance of Cameco (NYSE CCJ) on Monday, rise is consistent with prevailing short and long-term uptrends

• +9.7% Brainchip Holdings (BRN): No news, still trying to bounce off long-term trend ribbon

• +9.5% Droneshield (DRO): No news, rise is consistent with prevailing short and long-term uptrends

• +9.2% SSR Mining (SSR): No news, strong ASX gold sector on rising gold price

• +8.7% Novonix (NVX): NOVONIX to receive US$103m in tax credits

• +8.6% Clinuvel Pharmaceuticals (CUV): No news 🤔

• +7.4% Kingsgate Consolidated (KCN): No news, strong ASX gold sector on rising gold price, closed back above long-term downtrend ribbon

• +7.1% Ora Banda Mining (OBM): No news, strong ASX gold sector on rising gold price, rise is consistent with prevailing short and long-term uptrends

• +6.3% EBR Systems (EBR): No news, rise is consistent with prevailing short and long-term uptrends

• +6.3% West African Resources (WAF): No news, strong ASX gold sector on rising gold price, rise is consistent with prevailing short and long-term uptrends

• +5.9% Evolution Mining (EVN): No news, strong ASX gold sector on rising gold price, rise is consistent with prevailing short and long-term uptrends

• +5.7% Westgold Resources (WGX): No news, strong ASX gold sector on rising gold price, rise is consistent with prevailing short and long-term uptrends

Trading lower

• -15.8% Cettire (CTT): No news, downgraded to hold from buy at Bell Potter, price target cut to $4.50 from $4.80

• -14.7% Orora (ORA): ORA - FY24 Trading Update, fall is consistent with prevailing short and long-term downtrends

• -7.9% Zip Co (ZIP): No news, follow-through selling from Thursday's big black candle

• -6.5% Megaport (MP1): No news, has moved to falling peaks and falling troughs, closed below short-term uptrend ribbon

• -6.5% Impedimed (IPD): No news, fall is consistent with prevailing short and long-term downtrends

• -5.9% Temple & Webster Group (TPW): No news 🤔

• -5.8% Nuix (NXL): No news 🤔

• -5.8% Lindsay Australia (LAU): No news 🤔, closed below long-term uptrend ribbon

Broker Notes

• 29METALS (29M): Retained at overweight at Morgan Stanley; Price Target: $0.55 from $0.50

• AIC Mines (A1M): Retained at buy at Shaw and Partners; Price Target: $0.90

• Ampol (ALD): Retained at equal-weight at Morgan Stanley; Price Target: $40.00

• ALS (ALQ):

  • Downgraded to hold from add at Morgans; Price Target: $13.70 from $13.35

  • Retained at sell at Ord Minnett; Price Target: $8.90

• AMP (AMP): Upgraded to buy from hold at Jefferies; Price Target: $1.32 from $1.15

• Alumina (AWC): Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $1.30 from $1.10

• Antipa Minerals (AZY): Retained at buy at Shaw and Partners; Price Target: $0.04

• BHP Group (BHP): Retained at equal-weight at Morgan Stanley; Price Target: $47.00 from $44.50

• Beach Energy (BPT): Upgraded to neutral from sell at Goldman Sachs; Price Target: $1.90 from $1.67

• Bluescope Steel (BSL): Initiated at sector perform at RBC Capital Markets; Price Target: $24.50

• Catapult Group International (CAT): Retained at hold at Bell Potter; Price Target: $1.50 from $1.43

• Charter Hall Group (CHC): Retained at buy at Citi; Price Target: $13.40

• Champion Iron (CIA): Retained at buy at Citi; Price Target: $9.60

• Computershare (CPU): Upgraded to buy from hold at Jefferies; Price Target: $29.65 from $28.50

• Charter Hall Retail REIT (CQR): Retained at buy at Citi; Price Target: $4.00

• Coronado Global Resources (CRN): Retained at buy at Bell Potter; Price Target: $1.65 from $1.85

• Cettire (CTT): Downgraded to hold from buy at Bell Potter; Price Target: $4.50 from $4.80

• Domain Holdings Australia (DHG): Retained at hold at Bell Potter; Price Target: $3.75 from $3.90

• Deterra Royalties (DRR): Retained at overweight at Morgan Stanley; Price Target: $5.60

• Evolution Mining (EVN): Retained at overweight at Morgan Stanley; Price Target: $3.90 from $3.95

• Firefly Metals (FFM): Retained at buy at Shaw and Partners; Price Target: $1.10 from $1.20

• Fortescue (FMG): Retained at underweight at Morgan Stanley; Price Target: $19.40 from $18.65

• Fisher & Paykel Healthcare (FPH):

  • Upgraded to neutral from underweight at JPMorgan; Price Target: $24.00 from $20.00

  • Retained at hold at Ord Minnett; Price Target: $22.00

• Helia Group (HLI): Upgraded to hold from underperform at Jefferies; Price Target: $3.80

• IGO (IGO): Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $5.95 from $7.20

• Iluka Resources (ILU): Retained at equal-weight at Morgan Stanley; Price Target: $7.20

• Lynas Rare Earths (LYC): Retained at underweight at Morgan Stanley; Price Target: $5.00

• Mineral Resources (MIN): Retained at equal-weight at Morgan Stanley; Price Target: $67.00 from $32.60

• Nickel Industries (NIC): Retained at overweight at Morgan Stanley; Price Target: $0.95

• Northern Star Resources (NST): Retained at equal-weight at Morgan Stanley; Price Target: $13.55 from $12.40

• Netwealth Group (NWL): Downgraded to underperform from hold at Jefferies; Price Target: $18.60 from $19.68

• Orora (ORA): Retained at buy at Goldman Sachs; Price Target: $3.40

• Pilbara Minerals (PLS): Retained at underweight at Morgan Stanley; Price Target: $3.30

• Platinum Asset Management (PTM): Retained at hold at Ord Minnett; Price Target: $1.00 from $1.25

• QBE Insurance Group (QBE): Retained at buy at Goldman Sachs; Price Target: $18.65

• REA Group (REA): Retained at buy at Bell Potter; Price Target: $191.00 from $174.00

• Ramsay Health Care (RHC):

  • Retained at neutral at Citi; Price Target: $56.50

  • Downgraded to underweight from neutral at JPMorgan; Price Target: $50.00 from $57.50

• Rio Tinto (RIO):

  • Retained at buy at Citi; Price Target: $137.00

  • Retained at overweight at Morgan Stanley; Price Target: $140.00 from $138.00

• Regis Resources (RRL): Retained at overweight at Morgan Stanley; Price Target: $2.45 from $2.40

• South32 (S32): Retained at overweight at Morgan Stanley; Price Target: $3.35 from $3.60

• Scentre Group (SCG): Retained at neutral at Citi; Price Target: $3.10

• Sandfire Resources (SFR): Retained at equal-weight at Morgan Stanley; Price Target: $7.65 from $6.35

• Syrah Resources (SYR):

  • Retained at equal-weight at Morgan Stanley; Price Target: $0.45 from $0.39

  • Retained at buy at Shaw and Partners; Price Target: $1.10 from $1.30

• Treasury Wine Estates (TWE):

  • Retained at overweight at Morgan Stanley; Price Target: $13.75

  • Retained at buy at UBS; Price Target: $15.25 from $14.00

• Viva Energy Group (VEA): Retained at equal-weight at Morgan Stanley; Price Target: $3.65

• Vulcan Steel (VSL): Initiated at sector perform at RBC Capital Markets; Price Target: $9.00

• Westpac Banking Corporation (WBC): Retained at sell at UBS; Price Target: $23.00

• Woodside Energy Group (WDS): Retained at sell at Citi; Price Target: $24.00 from $26.00

• Whitehaven Coal (WHC):

  • Retained at hold at Bell Potter; Price Target: $7.55 from $7.65

  • Retained at overweight at Morgan Stanley; Price Target: $8.50

Scans