Evening Wrap: ASX 200 sags on weaker mining and energy stocks, Qantas, Orica, and A2 Milk Co. stronger

The S&P/ASX 200 closed 36.1 points lower, down 0.42%.

Weaker mining and energy stocks dragged down the ASX 200 today as 10 of the 11 major sector indices found themselves in the red. The major iron ore producers Fortescue (FMG) (-2.8%) and Mineral Resources (MIN) (-2.5%) suffered their second day of heavy falls, and were today joined by major oil and gas producers Woodside Energy Group (WDS) (-2.3%) and Santos (STO) (-2.1%).

Major tech, healthcare, and telecommunication stocks were pretty lousy too, but I'll end this blurb on a positive note by acknowledging strong performances from a few widely-helds like Qantas Airways (QAN) (+2.9%), Orica (ORI) (+2.8%), The A2 Milk Company (A2M) (+1.8%) and Aurizon Holdings (AZJ) (+1.7%).

Be sure to 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 economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on the S&P/ASX 200 in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 36.1 points lower at 8,598.9, 0.85% from its session high and 0.32% from its low. Reflecting the dour performance in the benchmark, in the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by a disappointing 99 to 172.

Fund flows: Trends change, the 3 A's do not! 💪💪💪

It was another bruising encounter for many stocks in the Resources (XJR) (-1.0%) sector as 2025’s strongest area of the Australian stock market appears to be in the midst of a “minor pullback”. The other “low P/E short duration” sector, Energy (XEJ) (-2.2%), wasn’t much chop either!

We’ve noted the strong technical uptrends in the Resources sector (and at times the Energy sector) have often coincided with similar strong weakness and technical downtrends in “high P/E Ratio long duration” sectors like Information Technology (XIJ) (-2.5%), Health Care (XHJ) (-0.8%), and Communication Services (XTJ) (-0.7%).

For those who were savvy enough to take out shorts on selective stocks within those sectors, it would have likely provided some offset against the underperformance of their Resources positions today.

There wasn’t a great deal of joy for Aussie investors Tuesday, with 10 of the 11 major sectors suffering losses — and only the rather broad church and obscure Industrials (XNJ) (+1.0%) logging a gain.

If there is a theme today, it's to never take any trend for granted. Except for Health Care, the other two recent serial laggards of Information Technology and Communication Services have come off massive uptrends that were at one point as good as the present uptrend in Resources. Trends change… the requirement to Analyse, Accept, and Act does not!

Analyse = Define the demand vs supply environment — who is in control of price, the demand- or supply-side? 🔬

Accept = As much as the analysis might irk or disappoint you — or run at odds with your prevailing view of the world — it is the view of the market… and the market is never wrong! 💯

Act = Manage risk. What are the appropriate risk settings given the analysis, where is one’s portfolio now, and what needs to be done to bridge the gap between the two!? 🛡️

Stock Specific: The Turnaround Setup 📈📉

I'll make a point to discuss the Turnaround Setup in tomorrow's ChartWatch *LIVE* Webinar using the charts of Telix Pharmaceuticals (TLX) (-4.6%) and Pro Medicus (PME) (-3.3%) as case studies — two of the most textbook examples of the setup you'll ever likely see.

I'll go through step by step how one could have spotted the telltale signs that the demand-side was losing control of the price of these two well-known and widely held market darlings, and how as the supply-side gained ascendancy, short positions could have been considered.

If you haven't yet registered to attend one of my webinars — tomorrow is the last chance for you to do so in 2025! If you can't make it, you can of course catch the recording which I post to the Market Index YouTube page after each session.

Today's best blue chip gainers

Today's worst blue chip losers

ChartWatch

S&P/ASX 200 (XJO)

Analysis

Well that's another day that makes Friday's "massaging" of the ASX 200, a.k.a. The Old Tin Pot, look very silly indeed! 🤦

Hey – it was worth a crack... as it could have sparked a wider seasonal rally. But US markets haven't really played ball Friday and Monday – and this means we're pretty much back to where we started prior to Friday's stand-out-like-a-sore-thumb long white candle.

It's looking more and more ho-ho-hum as we head into the Christmas-New Year break. I'm tempted to switch off and come back when the real money returns towards the end of January. I wonder... would anyone notice? 🤔

(Analysis? Look at that chart! The trends are rubbish, the price action is rubbish, the candles are rubbish. Who's in control of the OTP's price? Your guess is as good as mine. What does this mean? In choppy markets, trend traders like me get chopped up 🪓🪓🪓. Therefore, the best place for a trend trader to be is on the sidelines... risk settings at maximum... waiting for some clean trends, price action, and candles one way or the other).

View

On Friday after market close I flagged a move from 1/3RP to 1/2RP 🪣 (i.e., my personal allowable capital allocation limit (Risk Position) for my investments in Australian stocks is 50% – up from 33%). Yesterday, I said "I'm not in any major hurry to get there". Today, I propose to pause the transition until I see at least a couple more strong demand-side candles and/or a close above the new point of supply at 8702.

Key levels

8562 is the new closest point of demand. A close below this price would confirm the supply side is back in control of the ASX 200's price. In theory though, the short term and long term trend ribbons may now begin to act as a zone of dynamic demand (presently 8550-8668). The next key zone of supply is the old demand zone at 8731-8738, and it's 8809-8843 above that.

Economy

Today

• AUS December Flash Purchasing Manufacturers Index (PMI)

  • Flash Manufacturing PMI: 52.2 vs 51.6 in November

  • Flash Services PMI: 51.0 vs 52.8 in November

  • Notes: Readings over 50.0 indicate growth, so Australian business activity remains very modestly positive, slightly accelerating in Manufacturing but slightly decelerating in Services.

• AUS December Westpac Consumer Sentiment Survey

  • Index: -9% to 94.5 (103.8 in November – A reading above 100 means optimists outnumber pessimists and November was the first positive reading since the Pandemic reopening.)

  • Notes:

    • The mood towards inflation has become decisively negative, with 78% viewing it as unfavourable. Consumers have extrapolated recent higher inflation readings as having a negative impact on interest rates.

    • The ‘economic outlook, next 12 months’ sub-index dropped 9.7% to 94.6, while the ‘economic outlook, next 5 years’ sub-index dropped 11.7% to 95.7.

    • The ‘time to buy a major item’ sub-index declined 11.4% in December to 98.9.

    • The ‘family finances vs a year ago’ sub-index fell 5% to 80.9.

  • Expert comment: "Aussie consumers are very sensitive to rate expectations, which have been dialled up significantly throughout the month, so it is understandable to see consumer confidence decline in December. With the RBA expected to remain on hold for now (with a bias towards rate hikes), and the labour market likely soften a bit next year, we don’t anticipate further recovery in consumer confidence." —My Bui, CFA

    Economist, AMP

Later this week

Wednesday

• 00:30 USA November Core Retail Sales (+0.2% m/m forecast vs +0.3% m/m in October)

• 00:30 USA November Non-Farm Payroll (Employment)

  • Non-Farm Employment Change: +50,000 forecast vs +119,000 in October

  • Unemployment Rate: 4.5% forecast vs 4.4% in October

  • Average Hourly Earnings: +0.3% m/m forecast vs +0.2% m/m in October

• 09:00 USA December Flash Purchasing Manufacturers Index (PMI)

  • Flash Manufacturing PMI: 52.3 forecast vs 52.2 in November

  • Flash Services PMI: 54.0 forecast vs 54.1 in November

Thursday

• No major economic data releases due Thursday

Friday

• 00:30 USA November Core CPI

Saturday

• 02:00 USA November Existing Home Sales (4.15 million forecast vs 4.10 million in October)

Latest News

Interesting Movers

Trading higher

• +61.1% Radiopharm Theranostics (RAD) – RAD101 interim Phase 2b data - 92% achieve primary endpoint.

• +22.2% Droneshield (DRO) – $49.6m European military contract, general strength across the broader Defence sector today.

• +22.1% 4DMEDICAL (4DX) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +16.6% Electro Optic Systems Holdings (EOS) – Continued positive response to EOS enters US$80m Conditional High Energy Laser Contract, rise is consistent with prevailing short and long term uptrends, added to ChartWatch ASX Scans Uptrends list yesterday 🔎📈

• +15.1% Black Bear Minerals Ltd (BKB) – Black Bear Minerals to Commence U.S. OTCQX Trading.

• +8.0% Elevate Uranium (EL8) – No news since 15-Dec Upgrade Demonstration Pilot Plant Update.

• +7.1% Lake Resources (LKE) – No news, rebounded after yesterday’s sharp sell-off due to Notice of breach of LR 7.1.

• +6.2% Winsome Resources (WR1) – Response to ASX Price Query and WR1 - Li-FT Corporate Presentation, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +6.1% Pmet Resources (PMT) – No news since 15-Dec Multiple New Lithium/Caesium Discoveries in 2025 Drilling, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +4.3% Mayfield Group Holdings (MYG) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +3.2% Elsight (ELS) – No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

Trading lower

• -16.9% Antipa Minerals (AZY) – Minyari Development Project - PFS Workstreams Update, general weakness across the broader Precious Metals sector today.

• -11.3% Lumos Diagnostics Holdings (LDX) – No news, pulled back in the wake of recent sharp rally.

• -9.6% BetaShares Crypto Innovators ETF (CRYP) – No news (heavy falls in major cryptos overnight), fall is consistent with prevailing short term downtrend and long term trend is transitioning from up to down 🔎📉

• -9.5% Marmota (MEU) – No news, general weakness across the broader Precious Metals sector today, pulled back in the wake of recent sharp rally.

• -9.5% Andean Silver (ASL) – No news, general weakness across the broader Precious Metals sector today, pulled back in the wake of recent sharp rally.

• -8.5% Resolution Minerals (RML) – No news since 15-Dec Chief Metallurgist Appointed to Accelerate Production, general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

• -7.5% Locksley Resources (LKY) – Ceasing to be a substantial holder (Tribeca Investment Partners), general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

• -6.6% AIC Mines (A1M) – Jericho Drilling Strengthens Depth Potential, general weakness across the broader Critical Minerals sector today, pulled back in the wake of recent sharp rally.

• -6.5% Meteoric Resources (MEI) – Caldeira Project Rare Earth Pilot Plant Officially Opened, general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

• -6.4% Iperionx (IPX) – No news since 15-Dec IperionX & Carver Pump to Accelerate Production for US Navy, general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and long term trend is transitioning from up to down 🔎📉

• -6.3% European Lithium (EUR) – CRML Announces Final 2024 Drilling Results and Change in substantial holding for CUF, general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

• -6.1% Dateline Resources (DTR) – No news since 15-Dec Drill Results Confirm More Wide Gold Hits at Colosseum, general weakness across the broader Critical Minerals sector today, fall is consistent with prevailing short term downtrend and falling peaks and falling troughs 🔎📉

Broker Moves

Aussie Broadband (ABB)

• Downgraded to neutral from outperform at Macquarie; Price Target: $5.10

ASX (ASX)

• Downgraded to hold from outperform at CLSA; Price Target: $55.70 from $70.30

• Retained at neutral at Jarden; Price Target: $57.45 from $66.70

• Retained at neutral at JPMorgan; Price Target: $61.00 from $65.00

• Retained at underweight at Morgan Stanley; Price Target: $54.05

• Retained at sell at UBS; Price Target: $53.00 from $62.15

Baby Bunting Group (BBN)

• Retained at neutral at Macquarie; Price Target: $3.15

BHP Group (BHP)

• Retained at overweight at Morgan Stanley; Price Target: $48.00

Biome Australia (BIO)

• Retained at buy at Bell Potter; Price Target: $1.00

Boss Energy (BOE)

• Retained at underweight at Morgan Stanley; Price Target: $1.85

Breville Group (BRG)

• Retained at outperform at Macquarie; Price Target: $39.20

Dalrymple Bay Infrastructure (DBI)

• Retained at buy at Citi; Price Target: $5.30 from $5.20

Deterra Royalties (DRR)

• Retained at equal-weight at Morgan Stanley; Price Target: $4.40

Electro Optic Systems Holdings (EOS)

• Retained at buy at Bell Potter; Price Target: $9.00 from $8.10

• Upgraded to buy from speculative buy at Canaccord Genuity; Price Target: $10.00

Fortescue (FMG)

• Retained at overweight at Morgan Stanley; Price Target: $21.20

IGO (IGO)

• Retained at underweight at Morgan Stanley; Price Target: $4.50

Iluka Resources (ILU)

• Retained at overweight at Morgan Stanley; Price Target: $8.60

Karoon Energy (KAR)

• Retained at buy at Citi; Price Target: $2.10 from $2.20

Lovisa Holdings (LOV)

• Retained at outperform at Macquarie; Price Target: $37.30

Lynas Rare Earths (LYC)

• Retained at equal-weight at Morgan Stanley; Price Target: $19.45

Mirvac Group (MGR)

• Retained at outperform at Macquarie; Price Target: $2.70

Medibank Private (MPL)

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

Nick Scali (NCK)

• Retained at outperform at Macquarie; Price Target: $28.20

NIB Holdings (NHF)

• Retained at underperform at Macquarie; Price Target: $5.60

National Storage REIT (NSR)

• Retained at outperform at Macquarie; Price Target: $2.63

• Downgraded to neutral from buy at UBS; Price Target: $2.80 from $2.57

Orica (ORI)

• Retained at outperform at RBC Capital Markets; Price Target: $27.50

Paladin Energy (PDN)

• Retained at overweight at Morgan Stanley; Price Target: $10.40

PLS Group (PLS)

• Retained at overweight at Morgan Stanley; Price Target: $2.85

Premier Investments (PMV)

• Retained at neutral at Macquarie; Price Target: $16.20

Pantoro Gold (PNR)

• Upgraded to buy from hold at Argonaut Securities; Price Target: $7.20 from $6.40

Praemium (PPS)

• Retained at buy at Bell Potter; Price Target: $1.05

• Retained at buy at Canaccord Genuity; Price Target: $1.30

• Retained at buy at Ord Minnett; Price Target: $1.15

Qualitas (QAL)

• Retained at outperform at Macquarie; Price Target: $3.98

Region Group (RGN)

• Retained at neutral at Macquarie; Price Target: $2.47

Rio Tinto (RIO)

• Retained at equal-weight at Morgan Stanley; Price Target: $129.50

Resolute Mining (RSG)

• Retained at buy at Canaccord Genuity; Price Target: $2.30 from $2.00

• Retained at outperform at Macquarie; Price Target: $1.45 from $1.35

South32 (S32)

• Retained at overweight at Morgan Stanley; Price Target: $3.45

Scentre Group (SCG)

• Retained at neutral at Macquarie; Price Target: $4.15

SEEK (SEK)

• Retained at buy at Citi; Price Target: $31.65

• Retained at buy at UBS; Price Target: $31.00

Sandfire Resources (SFR)

• Retained at underweight at Morgan Stanley; Price Target: $11.45

Stockland (SGP)

• Retained at neutral at Macquarie; Price Target: $6.16

Superloop (SLC)

• Retained at outperform at Macquarie; Price Target: $3.30

Super Retail Group (SUL)

• Retained at neutral at Macquarie; Price Target: $17.30

Temple & Webster Group (TPW)

• Retained at outperform at Macquarie; Price Target: $24.15

Titomic (TTT)

• Retained at buy at Bell Potter; Price Target: $0.50

Tuas (TUA)

• Retained at overweight at Morgan Stanley; Price Target: $10.00 from $9.50

Universal Store Holdings (UNI)

• Retained at outperform at Macquarie; Price Target: $10.20

Vicinity Centres (VCX)

• Retained at neutral at Macquarie; Price Target: $2.49

WA1 Resources (WA1)

• Initiated at buy at Goldman Sachs; Price Target: $26.30

Whitehaven Coal (WHC)

• Retained at overweight at Morgan Stanley; Price Target: $8.35

Scans