Evening Wrap: ASX 200 sees strong relief rally as healthcare, telco and tech stocks gain, energy and gold tank

The Aussie market bounced back nicely today as investors factored out the range of outcomes that add up to worse than whatever's actually happened since Israel's missile strike on Iran.

War is good for some sectors, but it's not so good for others. Today, less war equalled gains for Healthcare, Telco, and Tech stocks, but it also equalled losses for Energy and Gold stocks as events conspired to forced their respective commodities lower.

It's going to be a crucial week in terms of price action as well as economic data. In the first instance, can markets reverse recent losses and prove these are nothing more than a routine correction?

In the second instance, is inflation getting better or worse, because investors are growing impatient about the timing of already-factored in interest rate cuts. We have key Australian and US inflation data are on tap this week...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 81.9 points higher at 7,649.2 , 1.08% from its session low and 0.38% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 240 to 46.

The Health Care (XHJ) (+2.0%) sector was the best performing sector today on strong gains in sector heavyweights CSL (ASX: CSL) (+2.2%) and Cochlear (ASX: COH) (2.3%). Possibly for fund managers today, it was a case of, "I want to buy something, but given circumstances, I'd better make it as defensive as possible..."

Healthcare stocks saw, um...healthy returns today!?

Also doing well today were the Communication Services (XTJ) (+1.7%) and Information Technology (XIJ) (+1.5%) sectors, there's plenty of overlap between the two, so it's no surprise when they move in lock-step. Most likely going on here is a factoring in of a bounce in US tech stocks when they open this evening in New York. At the time of writing, Nasdaq 100 e-mini futures are trading 0.71% higher.

Just one of the 11 major ASX sectors was in the red today. The Energy (XEJ) (-1.5%) sector dipped on the back of a reversal in key crude oil contracts on Friday. Oil prices remain depressed in Asian trade at the time of writing.

Not officially a major ASX index, but rather a sub-index, the Gold (XGD) (-1.5%) sub-index was also hit hard today. Unlike crude oil prices, gold prices were firm on Friday, but futures are dipping around 1.5% to US$2,377/oz on COMEX at the time of writing.

For both of these losing sectors, the major driving force was a "not as bad as it could have been outcome" in the wake of Israel's missile strike on Iran. Clearly, war is good for some sectors, not so good for others!

Gold and energy stocks lost considerable momentum today.

ChartWatch

S&P/ASX 200 (XJO)

Long term uptrend ribbon holds 🤞

In Friday’s Evening Wrap, we pondered the possibility the long term uptrend ribbon would act as a zone of dynamic support. Today’s candle so far confirms this potentiality – a white candle erasing nearly all of Friday’s losses.

But it could have been better. That pesky little upward pointing shadow on today’s candle speaks of nagging supply at higher prices. It’s symptomatic of a market that has a new sell the rally mentality.

Until the demand side can convince the supply side it’s better to hang on for more than it is to sell into strength, the short term downtrend will prevail.

Today’s higher high and higher low on a session-by-session basis solidifies Friday’s trough of 7492 as a new point of demand. I think it’s actually pretty simple from here – while we keep closing above 7492, we’re probably OK. Below it, then things could get very nasty (7322 is the next key point of demand below).

Ideally, we see a continuation of white candles, preferably with high closes to imply demand is back, the dip is being bought, and this last little dip we’ve experienced is just a necessary pullback within a healthy long term uptrend.

Key points of supply include the short term trend ribbon (around 7715) and 7741. We want to see white candles at both of these – not black ones!

There's more ChartWatch here: Where's the low in US stocks? Plus potential key reversals in Crude Oil and Thermal Coal.

Economy

Today

• CHINA 1-year and 5-year Prime Rate

  • Both unchanged, in line with expectations at 3.45% and 3.95% respectively

Later this week

Tuesday

• 09:00 AUS Flash Manufacturing PMI (47.3 previous) & Flash Services PMI (54.4 previous)

• 18:00 EUR Flash Manufacturing PMI (46.5 forecast vs 47.3 previous) & Flash Services PMI (51.8 forecast vs 51.5 previous)

• 23:45 USA Flash Manufacturing PMI (52.0 forecast vs 51.9 previous) & Flash Services PMI (52.0 forecast vs 51.7 previous)

Wednesday

• 11:30 AUS Consumer Price Index (CPI) March quarter (+0.8% & +3.4% p.a. forecast vs +0.6% & 3.4% p.a. December quarter)

• 11:30 AUS CPI Trimmed Mean March quarter (+0.9% & +3.8% p.a. vs +0.8% December quarter & +4.1% p.a.)

• 23:30 USA Core Durable Goods Orders March (+0.3% forecast vs +0.3% February)

Thursday

• 22:30 USA Advance GDP March quarter (+2.5% p.a. forecast vs +3.4% p.a. December quarter)

Friday

• 00:00 USA Pending Home Sales March (+0.9% forecast vs +1.6% February)

• 12:00 (tentative) JPN Bank of Japan Policy Rate, Monetary Policy Statement, Outlook Report, Press Conference (forecast no change 0%-0.1%)

• 22:30 USA Core PCE Price Index March (+0.3% forecast & +2.7% p.a. vs +0.3% & 2.8% p.a. February)

Latest News

Interesting Movers

Trading higher

• +123.8% Base Resources (BSE) - Proposed combination with Energy Fuels

• +19.7% Imugene (IMU) - No news, broadly stronger healthcare sector today

• +9.4% Jupiter Mines (JMS) - No news, continued strength in base metals prices, rise is consistent with prevailing short and long term uptrends 🔎📈

• +8.0% 29METALS (29M) - Offtake Finance and Insurance Claim Update

• +7.9% Develop Global (DVP) - No news 🤔

• +7.8% Zip Co (ZIP) - No news, bounce after sharp sell-off following 16 April 3Q FY24 results update

• +6.3% Metals X (MLX) - No news, continued strength tin prices, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.6% South32 (S32) - Quarterly Report - March 2024, continued strength tin prices, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.6% Aurelia Metals (AMI) - No news, continued strength copper prices, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -16.1% Droneshield (DRO) - Completion of Upsized Underwritten $100m Placement

• -6.9% Bellevue Gold (BGL) - No news, generally weaker gold sector today on lower gold price in Asian trade

• -6.1% Cettire (CTT) - No news, fall is consistent with prevailing short term downtrend, falling peaks and falling troughs, closed below long term downtrend ribbon 🔎📉

• -4.8% Clarity Pharmaceuticals (CU6) - No news, fall is consistent with prevailing falling peaks and falling troughs, closed below short term downtrend ribbon 🔎📉

• -4.5% Resolute Mining (RSG) - No news, generally weaker gold sector today on lower gold price in Asian trade

• -3.8% Westgold Resources (WGX) - No news, generally weaker gold sector today on lower gold price in Asian trade

• -3.7% Kingsgate Consolidated (KCN) - No news, generally weaker gold sector today on lower gold price in Asian trade

• -3.5% Regis Resources (RRL) - No news, generally weaker gold sector today on lower gold price in Asian trade

• -3.0% Perseus Mining (PRU) - No news, generally weaker gold sector today on lower gold price in Asian trade

Broker Notes

• ANZ Group (ANZ) downgraded to sell from neutral at Citi; Price Target: $26.00

• BHP Group (BHP) retained at buy at Citi; Price Target: $48.00

• Breville Group (BRG) upgraded to positive from neutral at E&P; Price Target: $26.81 from $26.02

• Commonwealth Bank of Australia (CBA) retained at sell at Citi; Price Target: $82.00

• Capricorn Metals (CMM) retained at buy at Bell Potter; Price Target: $6.50 from $6.15

• Environmental Group (The) (EGL) retained at buy at Bell Potter; Price Target: $0.33 from $0.32

• Goodman Group (GMG) downgraded to neutral from overweight at Barrenjoey; Price Target: $30.00 from $28.00

• Gold Road Resources (GOR)

  • Retained at buy at Bell Potter; Price Target: $2.10 from $1.85

  • Retained at buy at Goldman Sachs; Price Target: $1.95 from $2.00

• Healthco Healthcare and Wellness REIT (HCW) retained at buy at Bell Potter; Price Target: $1.50 from $1.70

• Ikegps Group (IKE) retained at buy at Bell Potter; Price Target: $0.63

• Iluka Resources (ILU)

  • Retained at neutral at Citi; Price Target: $7.80 from $7.70

  • Retained at buy at Goldman Sachs; Price Target: $9.90

  • Retained at equal-weight at Morgan Stanley; Price Target: $7.20

  • Retained at neutral at UBS; Price Target: $7.70 from $7.50

• Karoon Energy (KAR)

  • Retained at buy at Citi; Price Target: $2.75

  • Retained at overweight at Morgan Stanley; Price Target: $2.60

  • Downgraded to sector perform from outperform at RBC Capital Markets; Price Target: $2.25 from $2.30

• Lovisa Holdings (LOV) initiated at buy at Jefferies; Price Target: $39.00

• MMA Offshore (MRM) retained at hold at Bell Potter; Price Target: $2.60

• National Australia Bank (NAB) retained at sell at Citi; Price Target: $25.75

• Netwealth Group (NWL) downgraded to sell from neutral at Citi; Price Target: $18.65 from $18.35

• Orora (ORA) upgraded to positive from neutral at E&P; Price Target: $2.50 from $2.61

• Pilbara Minerals (PLS)

  • Retained at hold at Bell Potter; Price Target: $3.60 from $3.55

  • Retained at sell at Citi; Price Target: $3.60

  • Downgraded to underperform from outperform at CLSA; Price Target: $3.90 from $4.00

  • Retained at sell at Goldman Sachs; Price Target: $2.80 from $2.90

  • Downgraded to underweight from neutral at JP Morgan; Price Target: $3.10 from $3.25

  • Retained at underweight at Morgan Stanley; Price Target: $3.30

  • Downgraded to hold from accumulate at Morgans; Price Target: $4.10 from $4.30

  • Retained at sell at UBS; Price Target: $2.70 from $2.65

• Resmed Inc (RMD)

  • Retained at buy at Citi; Price Target: $34.00

  • Retained at overweight at Morgans; Price Target: $31.80

• Vulcan Steel (VSL) downgraded to neutral from buy at UBS; Price Target: $7.90 from $8.10

• Westpac Banking Corporation (WBC) downgraded to sell from neutral at Citi; Price Target: $22.25

• Woodside Energy Group (WDS)

  • Retained at underweight at Barrenjoey; Price Target: $28.50 from $28.28

  • Retained at neutral at Jarden; Price Target: $29.25 from $30.00

  • Retained at overweight at JP Morgan; Price Target: $35.00 from $34.80

  • Retained at overweight at Morgan Stanley; Price Target: $35.00

  • Retained at outperform at RBC Capital Markets; Price Target: $35.00

  • Retained at neutral at UBS; Price Target: $30.80

• Whitehaven Coal (WHC)

  • Retained at hold at Bell Potter; Price Target: $7.70 from $7.55

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

  • Retained at overweight at Morgan Stanley; Price Target: $8.50

  • Upgraded to add from hold at Morgans; Price Target: $8.90 from $7.75

  • Retained at buy at UBS; Price Target: $8.85 from $8.70

Scans