Evening Wrap: ASX 200 on a four-day winning streak, tech and iron ore stocks rally

The relief rally continues to a fourth straight day, Australian job vacancies ease in February but remain high, Wisetech closes near an all-time high, the mining sector posts a broad-based rally led by iron ore and uranium stocks and a closer look at stocks hitting 52-week highs.

Let's dive in.

ASX 200 Session Chart

ASX 200 gaps up and holds these levels through to close (Source: Market Index)

Markets

The ASX 200 is on a four-day winning streak, up 2.40%. A few more thoughts in the Market Insights section below.

• Tech led, in-line with Nasdaq outperformance. Notable performers incl: Wisetech (+1.7%) which closed near all-time highs, Xero (+1.9%), Iress (+5.8%), Weebit Nano (+7.2%)

• Materials continued to bounce led by iron ore majors BHP (+2.4%) and Fortescue (+2.1%)

• Financials have been choppy and bounced to a one week high

Economy

Australia’s job vacancies eased to 439,000 in February, down 1% or 7,000 from November.

• This was the third consecutive quarter of declining job vacancies in Australia

• “Job vacancies in February 2023 were still nearly double what they were three years ago, just before the start of the pandemic. There is still a very high demand for labour from employers across Australia and across all industries," said Bjorn Jarvis, ABS head of labour statistics

• WA saw a quarterly decline in job vacancies of 15% while NSW recorded the largest increase, up 9%

Latest news

Market Insights

A few bits and bobs about the market right now.

Relief rally: A new bull market or bear market bounce

This is what makes the market right now so challenging.

Remember last year when then the market would rally for 1-4 days and then nosedive? Followed by some sideways action and maybe another brief rally into another nosedive?

There's so much uncertainty right now, especially post banking crisis along with a potential Fed pause and US earnings season around the corner.

Does this rally have legs to run and present a buyable opportunity for investors? Or is it another one of those bear market bounces?

ASX 200 chart (Source: TradingView)

The VIX: Below 20 and back above

I saw an interesting comment from Susquehanna about how the S&P 500 “VIX is trading below 20 this AM. Trips below 20 have not lasted very long in 2023 and have been accompanied by large VIX call and call spread buying, which we will be on the lookout for this week.”

S&P 500 VIX (Source: TradingView)

A look at 52-week highs

I had a look at which stocks (above $300m market cap) were hitting 52-week highs earlier today. As you can imagine, the stock would have to be pretty tenacious to hit a 52-week high in this kind of market.

Among the 24 stocks, they were a little bit all over the place. Coming from pretty much every sector (minus real estate and energy). From a fundamental perspective, their stories were all over the place.

But when you look at the price charts, they all talk a similar narrative. Most of the names were less volatile, traded above their 200-day moving average and consolidating within a relatively defined price range.

If you want to check out the charts, suss the link above.

Interesting news and movers

Trading higher

• +14.5% Alpha HPA (A4N)

• +8.3% Paladin Energy (PDN)

• +3.7% Zip (ZIP) – Divests Twisto and Payflex

• +3.0% Arafura Rare Earths (ARU)

• Tech sector move: Siteminder (+4.9%), Megaport (+4.3%), Audinate Group (+3.4%), NextDC (+1.8%), Wisetech Global (+1.7%)

• Lithium sector move: Global Lithium (+11.6%), Winsome (+10.6%), Lithium Power International (+8.2%), Patriot Battery Metals (+5.9%)

• Graphite sector move: Renascor (+8.7%), Talga (+4.7%), Syrah (+3.4%)

Trading lower

• -6.7% 29 Metals (29M)

Broker updates

A few Macquarie notes of interest:

Fortescue (FMG): Underperform with $17.50 target price

• “FMG has flagged that first production from its Iron Bridge Magnetite Project has been delayed to the second half of April, citing weather impacts.”

• “The company has reiterated project capital of US$3.9b (US$3.0b FMG share); FY23 shipments guidance has remained unchanged.”

Liontown Resources (LTR): Outperform with $3.00 target price

• “The company is assessing the potential to add DSO sales to the project, which would bring early revenue and presents upside risk to our base case.”

• ‘We note that given the scale and expandability of Kathleen Valley, we believe a premium to valuation could be justified in a change of control transaction.”

Pilbara Minerals (PLS): Outperform with $7.70 target price

• PLS approved its P1000 Project which would boost Pilgangoora production to approximately 1m tonnes of spodumene per annum

• “Lower grade for higher recovery and output and potential downstream integration in addition to POSCO JV present value upside for PLS.”

UBS on copper: 

• “Global investors increased long positions in Freeport, Lundin and KGH this past month, while reducing positions in Teck Resources, Zijin and First Quantum.”

• “China accounts for almost 50% of global copper consumption, where we observe that futures investors (incl. manufacturers, traders, producers, speculators) are Neutral-

   

  positioned now vs Net Short pre-reopening.”

• “The global copper market remains balanced in 2023, according to our estimates.”

• “We estimate copper prices will average US$3.75/lb through 2025E versus spot of ~US$4.05/lb” 

Scans