Evening Wrap: ASX 200 rises on rebound in technology, property and banks, lithium stocks rally continues - we investigate why

Interest rate sensitives lead the Aussie stock market higher today, that is, those stocks that investors tend to snap up when risk-free market yields are falling and dump when risk-free market yields are rising.

Gold stocks were really the only sector that was on the nose, likely as investors reposition themselves ahead of an upcoming deluge of quarterly reports.

Lithium stocks get another special mention tonight on yet another strong performance. We'll investigate why lithium bulls are all a flutter in tonight's edition of ChartWatch.

In theory, without any leads from US market tonight due to a public holiday for Martin Luther King Jr. Day / the inauguration of President-elect Trump – we have a unique opportunity tomorrow to stand on our own two feet and trade higher on our own fundamentals.

Click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all the key upcoming economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on Spodumene 6% and Lithium Carbonate in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 37.0 points higher at 8,347.4, 0.45% from its session low and just 0.11% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a modest 151 to 125.

It was a pretty stock standard interest rate sensitives rally today: strength in Information Technology (XIJ) (+1.1%), Real Estate Investment Trusts (XPJ) (+0.79%), Financials (XFJ) (+0.69%), and Consumer Discretionary (XDJ) (+0.63%).

Each is loving the recent sharp pullback in long-term risk-free market yields over the last few trading sessions. Note though, each had similarly suffered in the weeks prior as those same yields climbed to eye-wateringly high levels.

Australian 10-Year Government Bond Yield chart (click here for full size image). Source: TradingView

If there was an exception today, it was a pretty big on in the Gold (XGD) (-1.6%) sub-index – today’s worst performing sector. To be fair though, the gold price was largely steady on Friday / same today – so we should not confuse the relationship between gold and long term risk-free rates with the ebb and flow of ASX gold stocks’ performance…

As they regularly diverge!

The rest of the major ASX sectors were somewhere in the middle in what was a modest but still-important gain for the benchmark index. Any day we fail to encroach on Thursday’s emphatic demand-side candle is a good day for investors.

S&P-ASX 200 (XJO) chart (click here for full size image)

A lack of downside volatility after a strong rally is usually a good sign that demand remains robust and supply does not wish to capitalise on higher prices. The latter is particularly important because one usually associates a higher price for an asset with greater supply of that asset.

Well, this isn't economics...this is the stock market baby! What they taught you in high school economics doesn't always apply!

In theory, without any leads from US market tonight due to a public holiday for Martin Luther King Jr. Day / the inauguration of President-elect Trump – we have a unique opportunity tomorrow to stand on our own two feet and trade higher on our own fundamentals.

(Read as: Don’t expect anything fantastic from Aussie stocks tomorrow! 😁)

Today's best

Today's worst

Lithium stocks get yet another special mention tonight on yet another strong sector-wide performance. We'll investigate why lithium bulls are all a flutter in tonight's edition of ChartWatch, below 👇.

ChartWatch

Lithium Spodumene 6% FOB Australia S&P Global

All a flutter... (click here for full size image)

This isn’t one I cover regularly in ChartWatch, well, because not much has happened with respect to lithium prices for a very long time. For the better part of the last 18 months – they’ve been cactus 🌵.

But I do mention lithium prices regularly in this Evening Wrap – particularly over the last few Wraps where I’ve noted they’ve been on the rise – Yes believe it! 😱

I have a large lithium following on X/Twitter due to the fact that for over 2 years now, I’ve published daily charts on a few key lithium minerals prices that I manually track. It’s notoriously difficult to get accurate lithium data going back more than the couple of months over what the major data providers publish for free on their websites – so I suspect my charts are quite valuable for followers of the lithium story.

Based upon comments on my recent posts, it seems lithium bulls are all a flutter again over the – granted – promising rally in Spodumene 6% shown above. The chart below of the benchmark May contract for Lithium Carbonate futures on GFEX in China is less inspiring but has garnered just as much attention and excitement (that’s just how lithium bulls roll…I’ve never encountered such an unwaveringly optimistic bunch! 🤔).

I say their optimism is “granted” based on that Spodumene 6% chart given:

• The well established short term uptrend

• Decent price action in terms of rising peaks and rising troughs and since 760 strong extensions versus only shallow pullbacks

• If I squint, the last trough at 825 appears to be supported by the short term uptrend ribbon / short term uptrend ribbon is acting as a zone of dynamic demand

• A major potential excess supply pressure point at 830 has been taken out – that supply is now part of latent demand as prices push higher

There are a couple of buts, well one BIG BUT really:

• The long term downtrend ribbon must still be dealt with, and until we see signs that it is again acting as dynamic demand and NOT as dynamic supply, we must continue to put the word “cautiously” in front of the word “optimistic

I see demand now at 825-830. The short term trend ribbon is also lurking there and in theory should act as a zone of dynamic demand.

Below those two potential excess demand points, I propose the long term downtrend ribbon has done its job and we’re rolling lower again.

It’s back to puddles of lithium bulls' tears from there…😭.

Lithium Carbonate Futures (benchmark month, back-adjusted) GFEX

Rangebound (click here for full size image)

Just a quick note on Lithium Carbonate as it’s far more rangebound. This is a crucial contract as most lithium market metrics are quoted in lithium carbonate equivalent or “LCE”. Lithium carbonate is seen as somewhat of a common denominator in the battery supply chain equation.

We’re far more rangebound here – and the recent recovery in Spodumene 6% is has only translated into a small curl at the end of this chart.

It’s a start, and I do believe as I have called several times on X/Twitter over the last few months a major cyclical low is most likely in.

But! This does not necessarily mean a rally is imminent. Commodities in this part of the commodity price cycle can bump along the bottom for months, and in some cases, years.

We’re still bumping…

I’d feel more confident a new upswing is in place above 90360-91060, but again, I cannot call a new long term uptrend until the long term uptrend ribbon stops acting as dynamic supply and begins to act as dynamic demand.

Economy

Today

• CHN 1-yr & 5-yr Prime Loan Rate

  • No change at 3.10% and 3.6% as forecast

Later this week

Monday

• US Markets closed for Martin Luther King Jr. Day and inauguration of President-elect Trump

Tuesday

• N/a

Wednesday

• N/a

Thursday

• N/a

Friday

• 09:00 AUS Flash Manufacturing PMI & Flash Services PMI January (47.8 and 50.8 respectively in December)

• TBA JPY Bank of Japan Policy Rate (increase to less than 0.50% versus previous less than 0.25%)

• 20:00 EUR Flash Manufacturing PMI & Services PMI for January (45.6 and 51.4 forecast respectively vs 45.1 and 51.6 respectively in December)

Saturday

• 01:45 USA Flash Manufacturing PMI & Services PMI for January (49.4 and 56.8 respectively in December)

Latest News

Interesting Movers

Trading higher

• +20.6% Ioneer (INR) - Rhyolite Ridge Lithium-Boron Project Closes US$996m Loan

• +6.3% Nanosonics (NAN) - No news, closed back above the long-term trend ribbon, very strong candle today 🤔

• +6.3% Tabcorp (TAH) - No news, rise is consistent with prevailing short-term uptrend, long-term trend is transitioning from down to up, recently added to ChartWatch ASX Scans Uptrends list 🔎📈

• +6.2% Iress (IRE) - Iress announces sale of Superannuation business

• +6.1% EBR Systems (EBR) - EBR completes FDA PAI and update on FDA approval timing and WiSE accepted into new TCET reimbursement pathway of CMS, rise is consistent with prevailing short and long-term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +5.9% Predictive Discovery (PDI) - Bankan Gold Project ESIA Approved, also retained at buy at Canaccord Genuity (price target retained at $0.52)

• +5.0% Aeris Environmental (AEL) - No news, rise is consistent with prevailing short and long-term uptrends 🔎📈

• +4.6% Life360 (360) - No news, upgraded to buy from neutral by UBS and price target increased to US$55 from US$52 (for the NASDAQ listing)

• +4.4% Strike Energy (STX) - No news, continued recent strength from stronger energy commodity prices last couple of weeks

• +3.9% Pro Medicus (PME) - No news, rise is consistent with prevailing short and long-term uptrends 🔎📈

• +3.7% Megaport (MP1) - No news, upgraded to buy from hold at Ord Minnett (price target retained at $8.00)

• +3.7% Opthea (OPT) - No news, rise is consistent with prevailing short and long-term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

Trading lower

• -17.9% The Star Entertainment Group (SGR) - Quarterly Activities/Appendix 4C Cash Flow Report, fall is consistent with prevailing short and long-term downtrends, a regular in ChartWatch ASX Scans Downtrends list 🔎📈

• -7.6% Pantoro (PNR) - No news, flagged quarterly results release and company presentation for Wednesday, gold sector generally weaker today…

• -5.7% Karoon Energy (KAR) - Who Dat West exploration well update, repelled by the long-term downtrend ribbon 🔎📉

• -4.3% Droneshield (DRO) - No news, fall is consistent with prevailing short and long-term downtrends, a regular in ChartWatch ASX Scans Downtrends list 🔎📈

• -4.3% Brainchip (BRN) - No news, consistent with recent volatility

• -4.3% Vulcan Energy Resources (VUL) - EGM Shareholder Presentation

• -4.2% Weebit Nano (WBT) - No news, fall is consistent with prevailing short and long-term downtrends, likely to make tomorrow's ChartWatch ASX Scans Downtrends list 🔎📈

• -4.1% Vault Minerals (VAU) - No news, ditto generally weaker gold sector today…

Broker Moves

• Life360 (360)

  • Upgraded to buy from neutral at UBS; Price Target: US$55 from US$52

• The A2 Milk Company (A2M)

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.90

• Adriatic Metals (ADT)

  • Retained at buy at Canaccord Genuity; Price Target: $4.75

• AGL Energy (AGL)

  • Retained at overweight at Morgan Stanley; Price Target: $12.88

• Ampol (ALD)

  • Retained at equal-weight at Morgan Stanley; Price Target: $32.00 from $30.00

• Atlas Arteria (ALX)

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.30

• APA Group (APA)

  • Retained at equal-weight at Morgan Stanley; Price Target: $8.08

• Accent Group (AX1)

  • Retained at buy at UBS; Price Target: $2.50

• Aurizon (AZJ)

  • Retained at neutral at Macquarie; Price Target: $3.52 from $3.57

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.57

• Bellevue Gold (BGL)

  • Retained at buy at UBS; Price Target: $1.55

• BHP Group (BHP)

  • Retained at neutral at UBS; Price Target: $42.00

• Boss Energy (BOE)

  • Retained at buy at Canaccord Genuity; Price Target: $5.75 from $5.85

• Beach Energy (BPT)

  • Retained at underweight at Morgan Stanley; Price Target: $1.46 from $1.30

• Challenger (CGF)

  • Retained at add at Morgans; Price Target: $7.90 from $8.20

• Collins Foods (CKF)

  • Retained at buy at UBS; Price Target: $9.80

• COG Financial Services (COG)

  • Retained at buy at Morgans; Price Target: $1.16 from $1.25

• Computershare (CPU)

  • Downgraded to hold from add at Morgans; Price Target: $34.43

• CSL (CSL)

  • Upgraded to buy from accumulate at Ord Minnett; Price Target: $318.00

• Corporate Travel Management (CTD)

  • Downgraded to hold from buy at Jefferies; Price Target: $14.20

• Clearview Wealth (CVW)

  • Retained at add at Morgans; Price Target: $0.59

• Cleanaway Waste Management (CWY)

  • Retained at overweight at Morgan Stanley; Price Target: $3.23

• De Grey Mining (DEG)

  • Retained at buy at UBS; Price Target: $2.20

• Domino's Pizza Enterprises (DMP)

  • Retained at neutral at UBS; Price Target: $31.50

• Deep Yellow (DYL)

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

• Evolution Mining (EVN)

  • Retained at neutral at UBS; Price Target: $5.40

• Fletcher Building (FBU)

  • Retained at neutral at Goldman Sachs; Price Target: $2.65

• Generation Development Group (GDG)

  • Retained at hold at Morgans; Price Target: $4.01 from $3.51

• Genesis Minerals (GMD)

  • Retained at neutral at UBS; Price Target: $3.00

• Gold Road Resources (GOR)

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

• GQG Partners (GQG)

  • Retained at buy at Ord Minnett; Price Target: $2.80 from $3.00

• Guzman y Gomez (GYG)

  • Retained at neutral at UBS; Price Target: $40.00

• Insurance Australia Group (IAG)

  • Retained at buy at Citi; Price Target: $9.65 from $9.55

  • Retained at hold at Morgans; Price Target: $8.64 from $8.46

• Insignia Financial (IFL)

  • Retained at hold at Ord Minnett; Price Target: $3.70 from $3.25

• JB HI-FI (JBH)

  • Retained at sell at UBS; Price Target: $72.00

• James Hardie Industries (JHX)

  • Retained at buy at Goldman Sachs; Price Target: $59.30 from $57.85

• Karoon Energy (KAR)

  • Retained at equal-weight at Morgan Stanley; Price Target: $1.76

• KMD Brands (KMD)

  • Retained at neutral at UBS; Price Target: $0.55

• Kina Securities (KSL)

  • Retained at add at Morgans; Price Target: $1.45 from $1.28

• Lotus Resources (LOT)

  • Retained at outperform at Macquarie; Price Target: $0.40 from $0.42

• Lovisa (LOV)

  • Retained at sell at UBS; Price Target: $27.00

• Lynas Rare Earths (LYC)

  • Retained at hold at Bell Potter; Price Target: $7.20 from $7.70

  • Retained at sell at Citi; Price Target: $5.50

  • Retained at outperform at CLSA; Price Target: $7.75 from $7.90

  • Retained at neutral at Goldman Sachs; Price Target: $7.40 from $7.70

  • Retained at hold at Jefferies; Price Target: $6.90 from $6.98

  • Retained at underweight at JP Morgan; Price Target: $5.10 from $5.20

  • Retained at neutral at Macquarie; Price Target: $7.20 from $7.30

  • Retained at underweight at Morgan Stanley; Price Target: $5.70

  • Retained at buy at Ord Minnett; Price Target: $7.80

  • Retained at buy at UBS; Price Target: $7.95

• MA Financial Group (MAF)

  • Retained at add at Morgans; Price Target: $6.67

• Megaport (MP1)

  • Retained at buy at Citi; Price Target: $9.00 from $16.05

  • Upgraded to buy from hold at Ord Minnett; Price Target: $8.00

• Medibank Private (MPL)

  • Retained at hold at Morgans; Price Target: $4.10 from $4.14

• Nick Scali (NCK)

  • Retained at buy at Citi; Price Target: $15.31

• Newmont Corporation (NEM)

  • Retained at neutral at UBS; Price Target: $82.00

• NIB (NHF)

  • Retained at neutral at Citi; Price Target: $6.00 from $6.45

  • Retained at add at Morgans; Price Target: $6.10 from $7.31

• Northern Star Resources (NST)

  • Retained at buy at UBS; Price Target: $19.05

• Origin Energy (ORG)

  • Retained at underweight at Morgan Stanley; Price Target: $9.06 from $8.86

• Predictive Discovery (PDI)

  • Retained at buy at Canaccord Genuity; Price Target: $0.52

• Paladin Energy (PDN)

  • Retained at buy at Canaccord Genuity; Price Target: $15.20

  • Retained at neutral at Macquarie; Price Target: $9.10 from $15.00

• Premier Investments (PMV)

  • Retained at neutral at UBS; Price Target: $30.00

• Perseus Mining (PRU)

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

• Pexa Group (PXA)

  • Upgraded to add from hold at Morgans; Price Target: $14.61 from $14.51

• QBE Insurance Group (QBE)

  • Retained at buy at Citi; Price Target: $22.00 from $19.30

  • Retained at add at Morgans; Price Target: $21.74 from $21.37

• QPM Energy (QPM)

  • Initiated at buy at Ord Minnett; Price Target: $0.12

• Qube (QUB)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.90

• Reece (REH)

  • Retained at sell at Goldman Sachs; Price Target: $22.80 from $23.10

• Rio Tinto (RIO)

  • Retained at buy at Ord Minnett; Price Target: $132.00 from $131.00

• Regis Resources (RRL)

  • Retained at neutral at Citi; Price Target: $3.00 from $2.90

  • Retained at sell at UBS; Price Target: $2.10

• Reliance Worldwide Corporation (RWC)

  • Retained at buy at Goldman Sachs; Price Target: $6.05 from $5.93

• Smart Parking (SPZ)

  • Initiated at positive at E&P; Price Target: $1.30

• Santos (STO)

  • Retained at overweight at Morgan Stanley; Price Target: $7.77 from $7.65

• Super Retail Group (SUL)

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

• Suncorp Group (SUN)

  • Retained at neutral at Citi; Price Target: $19.50 from $18.55

  • Retained at add at Morgans; Price Target: $21.01 from $18.92

• Transurban Group (TCL)

  • Retained at equal-weight at Morgan Stanley; Price Target: $13.33

• Tyro Payments (TYR)

  • Retained at add at Morgans; Price Target: $1.51 from $1.63

• Universal Store (UNI)

  • Retained at buy at UBS; Price Target: $9.00

• Viva Energy Group (VEA)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.25 from $3.18

• Ventia Services Group (VNT)

  • Upgraded to outperform from hold at CLSA; Price Target: $3.90 from $4.45

• Woodside Energy Group (WDS)

  • Retained at equal-weight at Morgan Stanley; Price Target: $27.00

• WEB Travel Group (WEB)

  • Retained at buy at Shaw and Partners; Price Target: $6.70 from $6.60

Scans