Evening Wrap: ASX 200 pares losses, no help from Fortescue plunge, tumbling lithium prices in China

Not fantastic day on the Aussie stock market, most stocks were down – but we didn’t close on the lows, and the really big losses were limited to a few sectors (no prizes for guessing Resources, Energy and Technology!).

Whilst the headline 36-point loss on the S&P/ASX200 was modest, there was plenty going on under the surface – and plenty in the ways of of massive stock-specific moves.

Fortescue (ASX: FMG) plunged over 10% after media reports foretold a massive $1.9 billion block trade being put the market by a major fund manager quitting their position in the iron ore miner / green energy aspirant.

Seems like a big move? It paled into comparison to AI technology company Appen’s (ASX: APX) 55% pop (not a misprint) after it released substantially better than expected quarterly revenue numbers.

In other results-related moves, debt collector Credit Corp (ASX: CCP) rose 13%, while nickel and lithium miner IGO (ASX: IGO) tanked nearly 5%.

On the topic of lithium, easily the harshest declines today were felt by ASX lithium stocks. It feels the whole sector is on a hiding to nothing at the moment in the face of dissolving lithium minerals prices in China.

On that not-so-cheery note…

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 36.4 points lower at 7,953.2, 0.75% from its session low and just 0.46% from its high. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a miserable 81 to 187.

Only two of the 11 major ASX sectors managed to close in the black today, Consumer Discretionary (XDJ) (+0.22%) and Financials (XFJ) (+0.19%) – given they’ve been the two strongest sectors for many months now – this is really no surprise.

The rest of the major sectors escaped with fairly minor losses, except for the serial underperformers Resources (XJR) (-1.8%) and Energy (XEJ) (-0.70%). Again, moves in key commodities like aluminium, copper, iron ore, gold and crude oil have been unkind.

It was the lithium price, however, that did the most damage on a sub-sector level. At the time of writing, the benchmark November 2024 Lithium Carbonate Futures on the Chinese GFEX exchange are down 2.5%, their third consecutive record low close. The prices of lithium hydroxide and spodumene are also lower and probing 2-year lows.

Lithium Carbonate futures on GFEX are tumbling

ASX mining stocks today

ChartWatch

S&P/ASX 200 (XJO)

Demand zone holding for now, but bulls want to get a move on...

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 25 July.

In that update we had landed in the 7839-7911 demand zone with a great big thud – or more specifically, a long black candle that closed on its low.

Fortunately, the demand side did respond over the next couple of candles, pushing the price back up to touch 8,000 on the knocker.

Which brings us to today. It probably felt a great deal worse than what the candle tells us. The downward pointing shadow, that’s more than half of the total daily range, demonstrates continued demand-side activity in 7839-7911.

It could have been better, though – we could have closed at the high. So, there’s still some work to do here to properly reclaim the short term uptrend, and therefore set up an opportunity to make a new record high.

Ideally, we see a close above the newly formed lower peak of 8,000 tomorrow. I don’t think we want to wait any longer – to do so would court emboldening the supply side, and therefore threatening a test / break of the 7861 point of demand.

Personally, I am happy to stay the ST/LT uptrends course for now..

FTSE China A50 Index Futures

Not looking very rosy

Just a quick heads up on this one. Things appear to be going from bad to worse in Chinese equites. It is often said that a country’s stock market is the best barometer of its economy. If this is correct, then things aren’t looking very rosy for the Chinese economy…and make of that what you will for the Aussie economy and local resources stocks…

Economy

Today

• 11:30 AUS Building Approvals June

  • -6.5% vs -2.3% forecast and +5.5% May = a major turnaround!

  • Approvals for detached houses fell 0.5%, to 9,078, but the damage was in semi-detached, row or terrace houses, townhouses and apartments which fell 19.7%, to 3,918

Later this week

Wednesday

• 00:00 USA CB Consumer Confidence July (99.8 forecast vs 100.4 June)

• 00:00 USA JOLTS Job Openings June (8.41M May)

• 11:30

  • AUS Consumer Price Index (CPI) June Quarter (+1.0% q/q forecast and 3.8% p.a. vs +1.0% q/q and 4.0% p.a. March)

  • AUS Retail Sales June (+0.3% forecast vs +0.6% May)

  • CHN Manufacturing PMI July (49.3 forecast vs 49.5 May) & Non-Manufacturing PMI (50.2 forecast vs 50.5 May)

• 12:00 (Tentative) JPN Bank of Japan interest rate decision (no change forecast)

• 19:00 EUR Core CPI Flash Estimate July (+2.8% p.a. forecast vs +2.9% p.a. June)

Thursday

• 00:00 USA Pending Home Sales June (+1.6% forecast vs -2.1% May)

• 04:00 USA Federal Reserve interest rate decision (no change forecast)

• 04:30 USA Chairman Powell Press Conference

• 21:00 UK BOE interest rate decision (forecast -0.25% to 5.0%)

Friday

• 00:00 ISM Manufacturing PMI July (49.0 forecast vs 48.5 previous)

• 11:30 AUS Producer Price Index (PPI) June Quarter (forecast +1.0% q/q vs +0.9% q/q forecast)

• 22:30 USA Non-Farm Employment Change July (+177k forecast vs +206k June); Average Hourly Earnings July (+0.3% m/m forecast vs +0.3% June); Unemployment Rate (4.1% forecast vs 4.1% June)

Latest News

Interesting Movers

Trading higher

• +55.8% Appen (APX) - Q2 FY24 Quarterly Activity Report and Appendix 4C

• +13.9% Credit Corp Group (CCP) - Credit Corp Group FY24 Results Presentation and Annual Report 2024, closed back above long term downtrend ribbon

• +3.5% IDP Education (IEL) - No news, likely pre-earnings positioning

• +3.2% Generation Development Group (GDG) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.1% Resmed Inc (RMD) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.0% Breville Group (BRG) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +2.9% Develop Global (DVP) - No news since 26 July Quarterly Activities Report and Quarterly Appendix 5B Cash Flow Report, bucked the lithium sector trend today!

Trading lower

• -10.2% Fortescue (FMG) - AFR report after yesterday's close indicating an undisclosed institutional shareholder was looking to sell a A$1.9B stake in Fortescue between $18.55-$19.10, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

• -7.3% Brainchip (BRN) - No news since 25 July A$25million Equity Capital Raise, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

• -6.3% Arcadium Lithium (LTM) - No news, sharp drop in lithium prices in China today triggered large sell off in ASX lithium sector, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

• -6.1% Mesoblast (MSB) - No news since 23 July FDA Accepts Mesoblast's BLA Resubmission for Remestemcel-L, customary MSB volatility!

• -5.8% Audinate Group (AD8) - No news, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

• -5.4% Droneshield (DRO) - No news, customary DRO volatility!

• -5.0% Bellevue Gold (BGL) - Application for quotation of securities (as a result of 5 Year Growth Plan and Equity Raising Presentation)

• -4.8% IGO (IGO) - June 2024 Quarterly Activities Report and June 2024 Quarterly Results Presentation, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

• -4.5% Pilbara Minerals (PLS) - No news, ditto lithium sell off, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

• -4.3% Ramsay Health Care (RHC) - Group CEO Transition, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends List regular) 🔎📉

Broker Notes

29METALS (29M)

• Retained at buy at Ord Minnett; Price Target: $0.75

Audinate Group (AD8)

• Retained at neutral at Macquarie; Price Target: $14.40 from $17.90

Aristocrat Leisure (ALL)

• Retained at buy at Jarden; Price Target: $47.10

• Retained at buy at UBS; Price Target: $56.00

AMP (AMP)

• Retained at sell at UBS; Price Target: $0.98

Austin Engineering (ANG)

• Retained at buy at Shaw and Partners; Price Target: $0.78 from $0.75

ANZ Group (ANZ)

• Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $26.20 from $27.80

Aspen Group (APZ)

• Initiated at buy at Bell Potter; Price Target: $2.30

ASX (ASX)

• Retained at sell at UBS; Price Target: $55.00

AUB Group (AUB)

• Retained at buy at UBS; Price Target: $34.50

Avjennings (AVJ)

• Initiated at buy at Bell Potter; Price Target: $0.40

Burgundy Diamond Mines (BDM)

• Retained at buy at Bell Potter; Price Target: $0.28 from $0.35

BHP Group (BHP)

• Retained at buy at Citi; Price Target: $47.50

Bannerman Energy (BMN)

• Retained at buy at Shaw and Partners; Price Target: $7.40

Brazilian Rare Earths (BRE)

• Retained at buy at Ord Minnett; Price Target: $6.10

Bluescope Steel (BSL)

• Retained at buy at Citi; Price Target: $23.70

• Retained at underweight at Morgan Stanley; Price Target: $20.00

Bubs Australia (BUB)

• Retained at hold at Bell Potter; Price Target: $0.15

Car Group (CAR)

• Retained at buy at Citi; Price Target: $39.80

Commonwealth Bank of Australia (CBA)

• Retained at underweight at Morgan Stanley; Price Target: $102.00 from $94.00

Challenger (CGF)

• Retained at buy at UBS; Price Target: $8.00

Computershare (CPU)

• Retained at buy at Citi; Price Target: $30.00

• Retained at buy at UBS; Price Target: $32.00

Deterra Royalties (DRR)

• Upgraded to outperform from hold at CLSA; Price Target: $4.20 from $4.25

• Retained at equal-weight at Morgan Stanley; Price Target: $3.70

• Retained at buy at Ord Minnett; Price Target: $4.80

Fletcher Building (FBU)

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

Fineos Corporation (FCL)

• Retained at outperform at Macquarie; Price Target: $2.22

GQG Partners (GQG)

• Retained at overweight at Morgan Stanley; Price Target: $3.75 from $2.50

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

Hub24 (HUB)

• Retained at neutral at UBS; Price Target: $41.00

Insignia Financial (IFL)

• Retained at sell at UBS; Price Target: $2.30

IGO (IGO)

• Retained at buy at Jarden; Price Target: $8.53

Ikegps Group (IKE)

• Retained at buy at Bell Potter; Price Target: $0.94 from $0.63

Impedimed (IPD)

• Retained at buy at Ord Minnett; Price Target: $0.15 from $0.16

James Hardie Industries (JHX)

• Retained at overweight at Morgan Stanley; Price Target: $58.00

Kogan.Com (KGN)

• Retained at sell at Citi; Price Target: $4.15 from $4.80

• Downgraded to underweight from neutral at Jarden; Price Target: $4.30 from $5.40

• Retained at neutral at UBS; Price Target: $6.00

Lightning Minerals (LAG)

• Retained at neutral at UBS; Price Target: $7.10

Light & Wonder (LNW)

• Retained at buy at Jarden; Price Target: $167.00

Liontown Resources (LTR)

• Retained at buy at Bell Potter; Price Target: $1.90 from $1.85

• Retained at neutral at E&P; Price Target: $1.30

• Retained at underweight at Jarden; Price Target: $1.00

• Retained at underweight at JP Morgan; Price Target: $0.65 from $0.70

• Retained at neutral at Macquarie; Price Target: $1.00

Microba Life Sciences (MAP)

• Retained at buy at Bell Potter; Price Target: $0.35

Magellan Financial Group (MFG)

• Retained at underweight at Morgan Stanley; Price Target: $8.50 from $7.85

• Retained at buy at UBS; Price Target: $10.50

Mineral Resources (MIN)

• Retained at sell at Goldman Sachs; Price Target: $47.00

• Retained at accumulate at Ord Minnett; Price Target: $60.00 from $62.50

Metro Mining (MMI)

• Retained at buy at Shaw and Partners; Price Target: $0.14 from $0.13

Monadelphous Group (MND)

• Retained at buy at Citi; Price Target: $16.20

Medibank Private (MPL)

• Retained at neutral at Goldman Sachs; Price Target: $3.88

• Retained at equal-weight at Morgan Stanley; Price Target: $3.84

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

Monash IVF Group (MVF)

• Retained at outperform at Macquarie; Price Target: $1.55

National Australia Bank (NAB)

• Retained at equal-weight at Morgan Stanley; Price Target: $34.20 from $32.50

Newmont Corporation (NEM)

• Retained at buy at Citi; Price Target: $87.00 from $69.00

NIB (NHF)

• Retained at buy at Goldman Sachs; Price Target: $8.10

• Retained at buy at UBS; Price Target: $8.50

Northern Star Resources (NST)

• Retained at hold at Ord Minnett; Price Target: $13.50 from $14.80

Netwealth Group (NWL)

• Retained at buy at UBS; Price Target: $24.50

Orora (ORA)

• Retained at buy at Goldman Sachs; Price Target: $2.70 from $3.00

• Retained at neutral at UBS; Price Target: $2.16 from $2.56

Pinnacle Investment Management Group (PNI)

• Retained at neutral at UBS; Price Target: $14.50

Perpetual (PPT)

• Downgraded at equal-weight at Morgan Stanley; Price Target: $22.40 from $24.40

• Retained at buy at UBS; Price Target: $25.00

PSC Insurance Group (PSI)

• Retained at neutral at UBS; Price Target: $6.19

Platinum Asset Management (PTM)

• Retained at underweight at Morgan Stanley; Price Target: $0.90 from $1.12

• Retained at neutral at UBS; Price Target: $1.05 from $1.10

Pexa Group (PXA)

• Retained at buy at UBS; Price Target: $16.00

QBE Insurance Group (QBE)

• Retained at buy at UBS; Price Target: $20.50

Qoria (QOR)

• Retained at neutral at Ord Minnett; Price Target: $0.43 from $0.51

Reece (REH)

• Retained at neutral at Citi; Price Target: $26.90 from $28.90

• Retained at underweight at Morgan Stanley; Price Target: $19.00

Rio Tinto (RIO)

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

• Retained at neutral at Macquarie; Price Target: $118.00

Ramelius Resources (RMS)

• Retained at outperform at Macquarie; Price Target: $2.10

• Retained at buy at Ord Minnett; Price Target: $2.25 from $2.30

Regal Partners (RPL)

• Retained at buy at Ord Minnett; Price Target: $4.30 from $4.20

Regis Resources (RRL)

• Retained at buy at Bell Potter; Price Target: $2.15 from $2.70

• Retained at overweight at Morgan Stanley; Price Target: $2.10 from $1.90

Resolute Mining (RSG)

• Retained at outperform at Macquarie; Price Target: $0.75 from $0.70

Reliance Worldwide Corporation (RWC)

• Retained at equal-weight at Morgan Stanley; Price Target: $4.70

South32 (S32)

• Retained at buy at Citi; Price Target: $3.35

Steadfast Group (SDF)

• Retained at buy at UBS; Price Target: $6.70

Sandfire Resources (SFR)

• Retained at neutral at Goldman Sachs; Price Target: $8.50 from $8.70

Stanmore Resources (SMR)

• Retained at buy at Citi; Price Target: $3.95

• Retained at buy at Ord Minnett; Price Target: $4.60 from $4.40

Suncorp Group (SUN)

• Retained at buy at UBS; Price Target: $19.00

Syrah Resources (SYR)

• Retained at overweight at Jarden; Price Target: $0.66 from $0.71

Telix Pharmaceuticals (TLX)

• Retained at buy at Jarden; Price Target: $22.55 from $22.49

Viva Energy Group (VEA)

• Upgraded to positive from neutral at E&P; Price Target: $3.60 from $3.30

• Retained at buy at Jefferies; Price Target: $3.70 from $3.80

• Retained at overweight at JP Morgan; Price Target: $3.80

• Retained at outperform at Macquarie; Price Target: $4.25 from $4.40

• Retained at equal-weight at Morgan Stanley; Price Target: $3.64

• Retained at buy at Ord Minnett; Price Target: $3.90

• Retained at buy at UBS; Price Target: $3.55 from $3.65

Westpac Banking Corporation (WBC)

• Retained at underweight at Morgan Stanley; Price Target: $25.60 from $24.50

Woodside Energy Group (WDS)

• Retained at neutral at Citi; Price Target: $28.00

Scans