Evening Wrap: ASX 200 on pause ahead of Federal Budget, critical minerals and consumer stocks pop on hopes goodies are coming their way

The S&P/ASX 200 closed 23.2 points lower, down -0.30%.

Investors hit the PAUSE button ahead of the release of the Federal Budget this evening.

Consumer discretionary rose on the back of a big jump in GUD Holdings (+12.2%) – it received plenty of love from the big brokers following its investor day presentation and FY24 guidance update (see Broker Moves).

Industrials and property were the worst performing sectors as several companies are taking a beating after worse than expected FY24 profit guidance updates.

As always, there's plenty going on under the surface of the mining sector – today, some nice pops in several critical minerals miners and developers. Investors are likely making some modest bets on some goodies for these companies in tonight's budget.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 23.2 points lower at 7,726.8, 0.16% from its session low and 0.30% from its high. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 114 to 158.

Only 2 of the major ASX sectors managed to close in the black today, Consumer Discretionary (XDJ) (+0.73%) and Health Care (XHJ) (+0.21%).

GUD Holdings (ASX: GUD) (+12.2%) led the Consumer Discretionary sector after it enjoyed several glowing reviews from the major brokers following its investor day yesterday, plus an FY24 guidance update.

As you will see in the Interesting Moves section below, several critical minerals stocks also popped nicely today. I'd suggest both here, and in consumer stocks, investors are likely making some modest bets that some goodies are on the way in tonight's Federal Budget.

Nice gains in Consumer Discretionary today

There were several sectors doing it tough today, with Industrials (XNJ) (-0.88%) and Real Estate Investment Trusts (XPJ) (-0.88%) equal worst performers.

Nothing really major to report in either, but I note Seven Group Holdings (ASX: SVW) (-3.0%) and ailing Fletcher Building (ASX: FBU) (-4.2%) dragged on industrials. The latter still taking a beating after yesterday's a profit downgrade, and today, accompanying broker price target cuts (several quite severe - see Broker Moves).

ChartWatch

Nickel - LME Official Cash

For nickel bulls, anything is a bonus from here…

Nickel has been awful for so long now, many of you probably can’t recall a time when mines weren’t being shut down! But trends change, and the London Metals Exchange (LME) nickel chart is doing its best impersonation of a chart that’s trying to change its long term trend.

Based upon my technical analysis model, to establish a new long term uptrend, the price of an asset must:

Challenge the long term downtrend ribbon with a short term uptrend (light green ribbon), rising peaks and rising troughs, and a predominance of white candles (no candles for LME metals – only a PM fix).

The short term uptrend ribbon should be acting as dynamic demand

The long term downtrend ribbon must switch to neutral (i.e., from dark pink to orange)

The price action should show at least one rising trough in the trend ribbon, but preferably above the trend ribbon – to demonstrate it has shifted from offering dynamic supply to offering dynamic demand

Nickel was doing everything right until the peak at 19180. Since then, we’re back to falling peaks (but still rising troughs).

Importantly, the short term uptrend ribbon is doing its job and is acting as dynamic demand. Therefore, I’m remain comfortable nickel is indeed in the process of establishing a new long term uptrend.

As long as the price continues to close above the short term uptrend ribbon, that is. A close below the short term uptrend ribbon nullifies this fledgling rally, whereas a close below the long term trend ribbon and 17625 reestablishes the long term downtrend. Mines stay closed if this happens.

How far can nickel run if it does keep pushing higher? The next key points of supply are at 19685 and 20900. For nickel bulls, anything is a bonus from here…

Lithium Carbonate Futures GFEX

Lithium bulls are getting that sick feeling again 🤢

You think nickel's had a hard time?

"I'll call your nickel and raise you my lithium!" retort battle weary lithium bulls.

The July contract in this GFEX lithium carbonate futures chart hasn't been around all that long, and so it doesn't even nearly speak to the horror that has befallen the lithium market. We're talking +80% falls across the board since the November 2022 peak.

And looking at the recent price action, as well as today's black candle, it appears it could get worse.

Note, the last candle above is is still live at the time of writing, so it could get better by the close (I doubt it!). If it doesn't, it will go a long way to wiping out demand in the 105800-106100 zone.

A close below 105800 decisively kills any hope of a V-shaped rally in lithium minerals prices (if there were any still lingering, that is), and paves the way for the probing of lower points of demand, starting with 92700.

White candles and or downward pointing shadows are required immediately to signal the demand side still has any control of the price, ideally closing above 110000 for good measure – and preferably with a nice burst of volume to boot.

We want to see the demand-side really stamp their authority on proceedings.

I'll let you stare long and hard at the chart above and decide just how likely this last scenario is...🤔

Economy

Today

• No major macroeconomic data releases in our time zone today

Later this week

Tuesday

• 22:30 USA Producer Price Index (PPI) April

  • Headline PPI +0.2% and 1.8% p.a. forecast vs +0.2% and +2.1% p.a. March

  • Core PPI +0.2% and 2.2% p.a. forecast vs +0.2% and +2.8% p.a. March

Wednesday

• 00:00 USA Federal Reserve Chairman Jerome Powell speech

• 11:30 AUS Wage Price Index q/q (+1% forecast vs +1% previous)

• 22:30 USA Consumer Price Index (CPI) April

  • Headline CPI +0.4% and 3.4% p.a. forecast vs +0.4% and +3.4% p.a. March

  • Core CPI +0.3% and 3.6% p.a. forecast vs +0.4% +3.5% p.a. March

Thursday

• 11:30 AUS Employment change and unemployment rate April (+25.3k forecast vs -6.6k March; UR 3.9% forecast vs 3.8% March)

Friday

• 12:00 CHN 'Data Dump' (Industrial Production, Retail Sales, Fixed Asset Investment, Unemployment Rate)

Latest News

Interesting Movers

Trading higher

• +12.8% Piedmont Lithium Inc (PLL) - New High-Grade Zones Discovered at North American Lithium

• +12.2% Sayona Mining (SYA) - New High-Grade Zones Discovered at North American Lithium

• +12.2% G.U.D. Holdings (GUD) - GUD Trading Update FY24 Guidance

• +10.3% Core Lithium (CXO) - No news, no reason for it with lithium futures down in China today, possibly some of SYA's short covering rubbing off here, or Budget good vibrations? Go figure! 🤔

• +9.0% Avita Medical Inc (AVH) - AVITA Medical Reports First Quarter Financial Results

• +6.9% Alumina (AWC) - No news, tracked a similar move in NYSE counterpart on Monday, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.6% Chalice Mining (CHN) - No news, possibly Budget related (kind things to be said about producing/processing our own battery minerals), persistent short term uptrend intact, but still facing substantial long term downtrend challenges

• +6.0% Neuren Pharmaceuticals (NEU) - No news, bouncing off long term uptrend ribbon 🔎📈

• +4.7% Healius (HLS) - Healius Refinances Debt Facilities to March 2027

• +4.2% Silex Systems (SLX) - Release of Shares from Voluntary Escrow, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.4% WA1 Resources (WA1) - No news, possibly Budget good vibrations, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.0% Clinuvel Pharmaceuticals (CUV) - Becoming a substantial holder

Trading lower

• -7.0% Pantoro (PNR) - Successful A$100M Equity Raising and Scotia Underground Development Underway

• -5.8% Mayne Pharma Group (MYX) - MYX presentation at Citizens JMP Life Sciences Conference

• -5.7% Omni Bridgeway (OBL) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.8% Meteoric Resources (MEI) - 150% Increase in Soberbo Mining Licence Mineral Resource

• -4.2% Fletcher Building (FBU) - Continued negative response to yesterday's Fletcher Building Market Update, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.2% Fleetpartners Group (FPR) - Continued negative response to yesterday's Half Yearly Report and Accounts, fall is consistent with prevailing short and long term downtrends 🔎📉

Broker Notes

• Australian Clinical Labs (ACL)

  • Retained at accumulate at Ord Minnett; Price Target: $3.50

• Aristocrat Leisure (ALL)

  • Retained at outperform at Macquarie; Price Target: $48.50

• ALS (ALS)

  • Upgraded to add from hold at Morgans; Price Target: $15.00 from $13.70

• Bellevue Gold (BGL)

  • Retained at neutral at Macquarie; Price Target: $2.00

• Boss Energy (BOE)

  • Retained at outperform at Macquarie; Price Target: $6.00

• Credit Corp Group (CCP)

  • Upgraded to outperform from neutral at Macquarie; Price Target: $18.32

• Charter Hall Group (CHC)

  • Retained at overweight at Morgan Stanley; Price Target: $14.99

• Chalice Mining (CHN)

  • Retained at outperform at Macquarie; Price Target: $2.00

• Capricorn Metals (CMM)

  • Retained at underperform at Macquarie; Price Target: $4.70

• Dicker Data (DDR)

  • Retained at overweight at Morgan Stanley; Price Target: $13.00

• Evolution Mining (EVN)

  • Retained at neutral at Macquarie; Price Target: $4.00

• Fletcher Building (FBU)

  • Retained at neutral at Goldman Sachs; Price Target: $3.05 from $3.70

  • Retained at underperform at Macquarie; Price Target: $2.56 from $3.23

  • Retained at equal-weight at Morgan Stanley; Price Target: $2.84 from $3.67

• Fortescue (FMG)

  • Retained at underperform at Macquarie; Price Target: $13.50

• Fleetpartners Group (FPR)

  • Retained at buy at Citi; Price Target: $4.20

  • Downgraded to neutral from outperform at Macquarie; Price Target: $3.60 from $3.01

  • Retained at overweight at Morgan Stanley; Price Target: $3.90 from $3.20

• Genesis Minerals (GMD)

  • Retained at outperform at Macquarie; Price Target: $2.00

• G.U.D. Holdings (GUD)

  • Retained at buy at Canaccord Genuity; Price Target: $14.60 from $15.15

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

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

  • Retained at outperform at Macquarie; Price Target: $12.65 from $12.85

  • Retained at buy at UBS; Price Target: $12.80

  • Retained at overweight at Wilsons; Price Target: $13.06 from $13.29

• Healius (HLS)

  • Retained at buy at Ord Minnett; Price Target: $3.00

• IDP Education (IEL)

  • Downgraded to neutral from buy at UBS; Price Target: $17.65 from $25.30

• IGO (IGO)

  • Retained at neutral at Macquarie; Price Target: $7.60

• Iluka Resources (ILU)

  • Retained at neutral at Macquarie; Price Target: $7.00

• Lendlease Group (LLC)

  • Retained at neutral at Citi; Price Target: $6.90

  • Retained at buy at Ord Minnett; Price Target: $13.00 from $13.30

• Arcadium Lithium (LTM)

  • Retained at outperform at Macquarie; Price Target: $9.40

• Liontown Resources (LTR)

  • Retained at neutral at Macquarie; Price Target: $1.30

• Mineral Resources (MIN)

  • Retained at outperform at Macquarie; Price Target: $78.00

• Nine Entertainment Co. Holdings (NEC)

  • Retained at buy at Goldman Sachs; Price Target: $2.10

• Neuren Pharmaceuticals (NEU)

  • Initiated at overweight at JP Morgan; Price Target: $23.60

• Northern Star Resources (NST)

  • Retained at outperform at Macquarie; Price Target: $17.00

• Nufarm (NUF)

  • Retained at buy at Citi; Price Target: $5.80

  • Retained at buy at Citi; Price Target: $5.80

• News Corporation (NWS)

  • Retained at overweight at Morgan Stanley; Price Target: $31.00 from $29.50

• Paladin Energy (PDN)

  • Retained at outperform at Macquarie; Price Target: $15.00

• Pilbara Minerals (PLS)

  • Retained at outperform at Macquarie; Price Target: $4.20

• Patriot Battery Metals (PMT)

  • Retained at outperform at Macquarie; Price Target: $2.00

• Pinnacle Investment Management Group (PNI)

  • Retained at buy at Ord Minnett; Price Target: $16.00 from $13.00

• Platinum Asset Management (PTM)

  • Retained at buy at Bell Potter; Price Target: $1.10 from $1.20

• QBE Insurance Group (QBE)

  • Retained at buy at UBS; Price Target: $21.00 from $20.00

• Sandfire Resources (SFR)

  • Retained at outperform at Macquarie; Price Target: $10.50

• Sonic Healthcare (SHL)

  • Retained at accumulate at Ord Minnett; Price Target: $32.00

• Super Retail Group (SUL)

  • Retained at neutral at Macquarie; Price Target: $13.80 from $16.00

• Southern Cross Media Group (SXL)

  • Retained at accumulate at Ord Minnett; Price Target: $1.20 ​

Scans