Evening Wrap: ASX 200 notches new record ahead of critical risk events abroad, interest rate sensitives lead pack

We did it! 🥳 Another record high for the S&P/ASX 200 – both in absolute terms at today's peak of 8,150.2, as well as today's record high close of 8,140.9.

But, don't get too excited...the good times might not last long! There are at least two major risk events on the horizon that could violently shove stock prices one way or the other.

The first is the FOMC meeting early Thursday morning our time – will the Fed cut by 0.25%, 0.50%, or not at all? The market would tolerate 0.25% with a hint that more is to come, it would likely cheer 0.50%, and it would implode in the event of nothing.

There's about a dozen other permutations depending on Chairman Jerome Powell's commentary in the all important post-meeting press conference.

Then, if we survive that, we'll have to get past a Bank of Japan (BOJ) meeting on Friday. Bank of Who? What's that got to do with my four bank and three resource stocks?

Plenty. As in, the last time they met at the end of July, it kinda mini-crashed bond, stock, and currency markets.

As always, click or scroll through for the usual reporting of the major stock-specific moves of the day, the broker responses to them, detailed technical analysis on the ASX 200 and in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 19.3 points lower at 8,140.9, 0.24% from its session low and 0.12% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 145 to 134.

As has been the template for the last couple of weeks, the interest rate sensitives led the way. Market yields, guided by the US 2-year T-Bond yield, continue to ebb and this is helping the pricing of longer duration assets like Information Technology (XIJ) (+1.1%) and Real Estate Investment Trusts (XPJ) (+0.74%). Also benefitting, are those sectors that do well in a lower interest rate environment, like Consumer Discretionary (XDJ) (+0.28%).

US 2-Year T-Note Yield %

It was a quiet session. As in, really quiet. Volumes were scant, a tiny fraction of average. If there were stragglers, they didn’t straggle by much, and really only the Gold (XGD) (-0.93%) sub-index took on very much damage.

Newmont (ASX: NEM) (-1.6%) and Evolution Mining (ASX: EVN) (-0.67%) likely accounted for most of that damage – but the Aussie gold sector is notorious for failing to capitalise on higher gold prices (they can't blame the gold price this time because it was flat overnight)…

ChartWatch

S&P/ASX 200 (XJO)

As good as it gets before two of the biggest event risks of the year!

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 12 September.

In that update, I noted we were within striking distance of a new record close, and that the XJO’s price action had set a very nice base from which to push to the next level – wherever that may be.

Today’s candle isn’t exactly an emphatic one. It’s modest in size, but it’s white, and the close is near enough to the high to demonstrate a state of demand-side control. Basically, it was as good a candle as we could possibly expect given the major event risks later this week.

This chart is a clean slate technically. Double green on the trends. Dynamic demand at both trend ribbons. Rising peaks and rising troughs, and a predominance of demand-side candles. I.e., there’s nothing in this chart that worries me = There’s nothing that’s telling me the present state of demand-side control cannot continue.

Obviously, it’s all a little moot…as the real test is going to be Thursday’s and Friday’s candles. I'm going to peg those as two of the most important candles since the pandemic broke back in 2020. Order of magnitude – that's how I feel about the current situation.

For now…it’s steady as she goes.

High Grade Copper Futures (Front month, back-adjusted) COMEX

What if??? No...neutral for now!

The last time we covered high grade copper was in ChartWatch in the Evening Wrap on 3 September.

In that update, I noted the price action was rolling over at the dynamic supply of the long term trend ribbon. There was only a modest follow through to the downside, because since then, we have observed excess demand return around the 3.989 static point of demand.

That last trough at 4.042, being higher than 3.989, demonstrates a degree of building demand in the system. Add to this, the candles since then have been pretty decent demand-side showings. Not terrible.

On the other hand, we are seeing upside momentum once again capped at the combination of the long term trend ribbon and 4.322 static point of supply.

So, sideways is my general feeling here: Neutral short and long term trend ribbons, stunted price action, and about 50-50 on the candles over the last 6 weeks or so.

Still…4.042 > 3.989 + 4.322 > 4.929…there’s a smidge of excess demand there 🤔.

A close above the long term uptrend ribbon would be interesting here – particularly if it occurs with an emphatic long white candle. Then, and we’re looking quite a bit down the track here…If the price action were to subsequently show the long term trend ribbon is again acting as dynamic demand – we could see a trend change back to uptrend.

Too far ahead! Sticking with neutral for now.

Economy

Today

• There weren't any major data releases in our time zone today

Later this week

Tuesday

• 22:30 USA Core Retail Sales August (+0.2% forecast vs +0.4% July)

Wednesday

• 00:00 USA NAHB Housing Market Index September (41 forecast vs 39 August)

• 22:30 USA Building Permits & Housing Starts August (1.41 million & 131 million forecast 1.40 million & 1.24 million in July)

Thursday

• 04:00 USA FOMC Meeting & Statement

  • Federal Funds Rate (+5.25% forecast vs +5.50% previous = first 0.25% cut in cycle!)

• 04:30 USA FOMC Press Conference

• 11:30 AUS Employment Change August (+25,800 vs +58,200 July)

• 21:00 UK Bank of England (BOE) Official Bank Rate (no change at 5.0% forecast)

Friday

• 11:00 CHN Peoples Bank of China (PBOC) 1 & 5-year Loan Prime Rate (no change at 3.35% and 3.85% forecast)

• TBA Bank of Japan (BOJ) Policy Rate (no change at 0.25% forecast)

Latest News

Interesting Movers

Trading higher

• +12.6% Platinum Asset Management (PTM) - Non-binding indicative proposal from Regal Partners Limited

• +7.0% Appen (APX) - No news, consistent with recent volatility, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

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

• +6.2% WA1 Resources (WA1) - WA1 and Tjamu Tjamu Sign Negotiation Protocol

• +4.7% Centuria Capital Group (CNI) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.8% Telix Pharmaceuticals (TLX) - No news, undid most of yesterday's dip - perhaps yesterday was due to a motivated fund selling a basket of strongly performing healthcare stocks (see PME)? Rise is consistent with prevailing long term uptrend 🔎📈

• +3.6% Pro Medicus (PME) - No news, undid most of yesterday's dip - perhaps yesterday was due to a motivated fund selling a basket of strongly performing healthcare stocks (see TLX)? Rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.6% GQG Partners (GQG) - No news, likely some rub from M&A activity in the sector - see PTM, bounced off long term uptrend ribbon, rise is consistent with prevailing long term uptrend 🔎📈

• +3.6% Ansell (ANN) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.3% Chalice Mining (CHN) - Gonneville Approved as Strategic Project by WA Government

• +2.7% West African Resources (WAF) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -9.2% Spartan Resources (SPR) - No news

• -4.6% Cettire (CTT) - No news, fall is consistent with prevailing long term downtrend 🔎📉

• -4.2% Ora Banda Mining (OBM) - No news

• -3.0% Core Lithium (CXO) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -3.0% Liontown Resources (LTR) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -2.9% Boss Energy (BOE) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -2.4% Botanix Pharmaceuticals (BOT) - Botanix Webinar - Presentation

• -1.5% Nufarm (NUF) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

Broker Notes

• Alcoa Corporation (AAI)

  • Retained at accumulate at UBS; Price Target: $58.00

• Auckland International Airport (AIA)

  • Retained at hold at CLSA; Price Target: $6.50 from $7.20

• Aristocrat Leisure (ALL)

  • Retained at buy at Citi; Price Target: $59.00

• Australian Vanadium (AVL)

  • Retained at buy at Shaw and Partners; Price Target: $0.08

• BHP Group (BHP)

  • Retained at buy at Citi; Price Target: $46.00

• Brambles (BXB)

  • Retained at neutral at Citi; Price Target: $18.50 from $17.35

• Catapult Group International (CAT)

  • Retained at hold at Bell Potter; Price Target: $2.35 from $1.75

• Cooper Energy (COE)

  • Initiated at overweight at Wilsons; Price Target: $0.24

• Firefly Metals (FFM)

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

• Generation Development Group (GDG)

  • Initiated at buy at Jefferies; Price Target: $3.49

• Immutep (IMM)

  • Retained at buy at Bell Potter; Price Target: $0.70 from $0.75

• Mineral Resources (MIN)

  • Retained at overweight at Morgan Stanley; Price Target: $70.00

  • Retained at accumulate at Ord Minnett; Price Target: $58.00 from $56.50

• Origin Energy (ORG)

  • Retained at buy at UBS; Price Target: $11.65 from $11.70

• Readytech (RDY)

  • Retained at buy at Shaw and Partners; Price Target: $4.80

• REA Group (REA)

  • Retained at buy at Citi; Price Target: $230.00

• Red 5 (RED)

  • Initiated at overweight at Jarden; Price Target: $0.40

• Rio Tinto (RIO)

  • Retained at neutral at Citi; Price Target: $123.00

• South32 (S32)

  • Retained at buy at Citi; Price Target: $3.25

• Santos (STO)

  • Retained at buy at UBS; Price Target: $8.70 from $8.80

• Woodside Energy Group (WDS)

  • Retained at neutral at UBS; Price Target: $28.10 from $30.70

• Wisetech Global (WTC)

  • Retained at overweight at Morgan Stanley; Price Target: $120.00

Scans