Evening Wrap: ASX 200 makes it three in a row on banks surge, all-time high back in sight!

The S&P/ASX 200 chalked up a welcome third day of gains to take it to within 1.6% of the all time highs. Gains were relatively steady across the major sectors compared to recent sessions, with the powerful Financials (XFJ) and Healthcare (XHJ) sectors topping the winners list.

There were plenty of companies delivering updates. Mainly quarterly production updates for those in the resources sector, but for a growing number of companies, we're seeing a few confessions ahead of first half reporting season which kicks off in February!

Let's dive in!

Markets

ASX 200 Session Chart

Tuesday's chart is full of grace...

The S&P/ASX200 (XJO) finished 38.3 points higher at 7,514.9, 0.51% from its session low and 0.2% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 161 to 113.

The Health Care Sector (XHJ) +1.0% and the Financials Sector (XFJ) +0.75% were again among the best performing sectors today. Each of these indices are dominate by their mega-cap counterparts, the Big 4 banks in the case of Financials, and CSL, Cochlear (COH), and Resmed (RMD) in the case of Healthcare.

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Financials and Healthcare stocks were the best performers today

Interestingly, resources companies managed to log a rare gain with the S&P/ASX 200 Resources Sector (XJR) rising 0.64%. The sector is down a disturbing 7% since the start of the year, but was helped by small gains in key industrial metals prices such as iron ore, copper, and nickel over the last 24-hours.

Just 3 of the 11 major ASX sectors found themselves in the losers column today, but losses among this group were small. The Consumer Discretionary Sector (XDJ) -0.34% was the worst as it took a breather after a strong performance over the last two weeks, while Real Estate Investment Trusts (XPJ) fell 0.24% and seemingly perennial underperformer Energy (XEJ) dipped 0.12%.

After all was said and done, the S&P/ASX 200 finds itself just 1.6% away from its record high of 7633 set all the way back in August 2021. Three white candles, of decent size, are usually a reliable indicator of excess demand, and it appears the short term trend ribbon is holding up. The long term trend ribbon indicates the longer term trend remains up.

The bulls may face some stiff opposition above 7542

There are still some issues for the bulls to deal with before they can start popping champaign corks! I see the 9 January high of 7542 as commencing a well defined and likely stubborn area of excess supply which could substantially impede the current short term rally. If you see black candles and or upward pointing shadows in there, my concerns are valid and we could be setting up for a double top below the last 7633 peak.

On the other hand, if you see white candles and or downward pointing shadows in this zone, it suggests either that supply hasn't manifested, or demand is just too strong and is doing an excellent job of clearing it out. A resumption of higher peaks and higher troughs would further set us up for an assault on the record highs.

Economy

• NAB Business Confidence Survey

  • Conditions down 2 points to +7, fall led by manufacturing and construction

  • Confidence +7 points to -1, rise led by mining and retail

  • Profitability steady at +6, employment down 1 point to +7, capacity utilisation fell to 82.7% from 83.6%

  • Price and cost growth dropped sharply, overall price growth eased to 0.9% from 1.2%

  • Indicates some easing of significant pressures on consumers in 2023, helping confidence, but conditions deteriorating shows still tough out there for Aussie business

Confidence & Conditions (Net Balance, SA). Dotted lines are long-run averages since Mar-97. Source: NAB

What to watch out for...

Later this week:

• Wed - European Flash PMIs

• Thu - US Flash PMIs

• Fri - ECB interest rate decision; US Durable Goods, US New & Pending Home Sales, US PCE Price Index, US Personal Spending & Personal Incomes

Latest News

Interesting Movers

Trading higher

• +16.6% Judo Capital Holdings (JDO) - Judo 1H24 Trading Update

• +8.9% Adairs (ADH) - No news 🤔

• +6.8% Cettire (CTT) - No news 🤔, rally is consistent with prevailing short and long term uptrends

• +6.3% Polynovo (PNV) - No news since 22-Jan 1H24 Trading Result, rally is consistent with prevailing short and long term uptrends

• +4.7% Arcadium Lithium (LTM) - No news, one of the few ASX lithium stocks to enjoy a bounce after severe sector-wide sell off

• +4.6% Generation Development Group (GDG) - December quarter update, rally is consistent with prevailing short and long term uptrends

• +4.6% AUB Group (AUB) - No news 🤔, rally is consistent with prevailing short and long term uptrends

• +4.6% Megaport (MP1) - No news 🤔

• +4.1% South32 (S32) - No news since 22-Jan Quarterly Report December 2023, several brokers reiterated buy rating today

• +4.1% Humm Group (HUM) - No news, resurgent BNPL sector on recent ZIP broker upgrades, price target increases, rally is consistent with prevailing short and long term uptrends

• +4.0% IVE Group (IGL) - No news 🤔, building a base of technical support

• +4.0% Integral Diagnostics (IDX) - No news 🤔

• +3.5% GQG Partners Inc. (GQG) - No news 🤔, rally is consistent with prevailing short and long term uptrends

• +3.5% Grange Resources (GRR) - No news 🤔, rally in iron ore price

• +3.1% Coronado Global Resources Inc. (CRN) - Q4 2023 Quarterly Activities Report

Trading lower

• -6.8% APM Human Services International (APM) - No news since 17-Jan First Half Trading Update, several broker downgrades since, fall is consistent with prevailing short and long term downtrends

• -6.6% Stanmore Resources (SMR) - December 2023 Quarterly Activities Report

• -5.8% IDP Education (IEL) - Canada announces 2-year foreign student cap, potentially 35% reduction in country's study permits

• -5.4% Strike Energy (STX) - No news, broke key short term technical support at $0.44

• -4.7% Genesis Minerals (GMD) - No news, broke key short term technical support at $1.56

• -4.5% Bellevue Gold (BGL) - No news, potentially breaking below long term trend ribbon, fall is consistent with prevailing short term downtrend

• -4.3% Alpha HPA (A4N) - No news, potentially breaking below long term trend ribbon, fall is consistent with prevailing short term downtrend

• -4.2% Immutep (IMM) - No news 🤔

• -4.1% Zip Co (ZIP) - No news since 22-Jan 2Q FY24 Results Update and interim 1H24 Results Update triggered a large gain, taking a breather today!

• -4.0% Karoon Energy (KAR) - CY24 production update and revised guidance, fall is consistent with prevailing short and long term downtrends

• -3.8% Supply Network (SNL) - No news 🤔

• -3.7% Medibank Private (MPL) - No news since 22-Jan AASB 17 Transition Update

• -3.4% Michael Hill International (MHJ) - No news since 19-Jan FY24H1 Trading Update

• -3.3% Monadelphous Group (MND) - No news, broke key short term technical support at $13.99, fall is consistent with prevailing short term downtrend

• -3.2% Liontown Resources (LTR) - No news since 22-Jan Project and Funding Update, several brokers cut price targets today, plus downgraded by Bank of America

Broker Notes

• Australian Finance Group (AFG) downgraded to sell from neutral at Citi; Price Target: $1.50 from $1.55

• Atlas Arteria (ALX) retained at equalweight Morgan Stanley; Price Target: $6.18

• Austin Engineering (ANG) retained at buy Shaw and Partners; Price Target: $0.50 from $0.43

• Appen (APX) retained at underweight Morgan Stanley; Price Target: $0.60

• Aurizon Holdings (AZJ)

  • Retained at neutral Jarden; Price Target: $3.80 from $3.70

  • Retained at underweight Morgan Stanley; Price Target: $3.49

• Baby Bunting Group (BBN)

  • Retained at equalweight Morgan Stanley; Price Target: $1.88

  • Upgraded to neutral from buy at Citi; Price Target: $2.15 from $2.00

• Bannerman Energy (BMN) retained at buy Shaw and Partners; Price Target: $7.04 from $3.20

• Boss Energy (BOE) retained at hold Shaw and Partners; Price Target: $4.75 from $3.60

• Brambles (BXB) retained at overweight Jarden; Price Target: $15.35 from $15.90

• Cooper Energy (COE)

  • Downgraded to neutral from overweight at Jarden; Price Target: $0.15 from $0.20

  • Upgraded to outperform from neutral at Macquarie; Price Target: $0.18

• CSL (CSL) retained at overweight Jarden; Price Target: $316.16

• Cleanaway Waste Management (CWY) retained at neutral Jarden; Price Target: $2.60

• Domain Holdings Australia (DHG) upgraded to neutral from underperforrm at Macquarie; Price Target: $3.49 from $2.87

• Dexus (DXS) downgraded to neutral from outperform at Macquarie; Price Target: $7.36 from $7.78

• Evolution Energy Minerals (EV1) retained at buy Shaw and Partners; Price Target: $0.40 from $0.72

• Homeco Daily Needs Reit (HDN) downgraded to neutral from outperform at Macquarie; Price Target: $1.24 from $1.26

• Lotus Resources (LOT) retained at buy Shaw and Partners; Price Target: $0.72 from $0.53

• Liontown Resources (LTR)

  • Downgraded to neutral from buy at BofA; Price Target: $1.20 from $1.70

  • Upgraded to neutral from sell at Jarden; Price Target: $1.19 from $1.40

  • Retained at neutral Goldman Sachs; Price Target: $1.45 from $1.65

  • Retained at neutral Citi; Price Target: $1.00 from $1.35

• Lynas Rare Earths (LYC)

  • Retained at buy UBS; Price Target: $9.20

  • Retained at buy Goldman Sachs; Price Target: $7.50 from $7.70

  • Retained at neutral Citi; Price Target: $6.70 from $7.20

• National Australia Bank (NAB) retained at equalweight Morgan Stanley; Price Target: $30.30

• National Storage Reit (NSR) retained at underperforrm Morgan Stanley; Price Target: $2.30

• Paladin Energy (PDN) retained at buy Shaw and Partners; Price Target: $1.50 from $1.15

• Peninsula Energy (PEN) retained at buy Shaw and Partners; Price Target: $0.26 from $0.25

• Pilbara Minerals (PLS) upgraded to neutral from sell at Citi; Price Target: $3.60 from $3.90

• Polynovo (PNV) upgraded to market-weight from underweight at Wilsons; Price Target: $1.79 from $1.08

• Qantas Airways (QAN) upgraded to buy from overweight at Jarden; Price Target: $6.90

• Qube Holdings (QUB)

  • Retained at overweight Jarden; Price Target: $3.15

  • Retained at equalweight Morgan Stanley; Price Target: $3.28

• Resimac Group (RMC) downgraded to sell from neutral at Citi; Price Target: $0.95

• South32 (S32)

  • Retained at buy UBS; Price Target: $3.80 from $4.00

  • Retained at buy Goldman Sachs; Price Target: $3.80

  • Retained at overweight Morgan Stanley; Price Target: $3.85

  • Retained at buy Citi; Price Target: $3.60 from $3.70

• Silex Systems (SLX) retained at buy Shaw and Partners; Price Target: $7.60 from $5.80

• Transurban Group (TCL) retained at equalweight Morgan Stanley; Price Target: $13.68

• The Lottery Corporation (TLC) downgraded to neutral from outperform at Macquarie; Price Target: $5.05 from $4.95

• Westpac Banking Corporation (WBC)

  • Upgraded to outperform from neutral at Macquarie; Price Target: $24.00 from $20.50

  • Retained at underweight Morgan Stanley; Price Target: $21.70

• Zip Co (ZIP) retained at neutral Citi; Price Target: $0.78 from $0.51

Scans