Evening Wrap: ASX 200 shakes off January jitters as tech and health stocks lead gains

The S&P/ASX 200 closed 69 points higher, up 0.93%.

The ASX 200 followed strong overseas leads to log a modest gain as all sectors but Energy prospered. Healthcare was the best sector, led by a resurgent Resmed (ASX: RMD) which jumped 5.9%, and Information Technology wasn't far behind. Both sectors made important progress in their technical pictures today, and each remains a key sector investors will want to watch closely as 2024 evolves.

Let's dive in.

Markets

ASX 200 Session Chart

That's more like it, hopefully today is the start of a new year resolution for the ASX 200, i.e., not to be so lousy!

The S&P/ASX200 (XJO) finished 69 points higher at 7,520.5, 0.9% from its session low and 0.3% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 217 to 57. This is important because broad-based moves are more likely to be sustainable.

The S&P/ASX 200 Information Technology Sector (XIJ) +2% was the best performing sector today as local tech plays responded to a resounding rally in their US counterparts overnight.

The best of the best in today's ASX recovery

From a sector perspective, the sector has had a shocking start to 2024 as investors unwound overly-optimistic bets about the timing of the first Fed rate cut. Long term interest rates have popped back up as result, and tech stocks are viewed as the sector with the most to lose from higher rates.

A crucial zone of support was held today

Today's rally is an important one in the context of the technical picture for the XIJ. The January correction put it at risk of breaking below my long term uptrend ribbon (dark green zone) and two key support points in the November 9 peak of 1736 and December 8 trough of 1716. Today's bounce, with it's long white candle gives me confidence this zone does represent excess demand, and further confirmation over the next few candles would do a great deal to set the Aussie tech sector up for a potential push towards the August highs.

Also doing well today was the S&P/ASX 200 Health Care Sector (XHJ) +1.9% which was powered by a resurgent Resmed (ASX: RMD). No news, and probably a response to a similar sized gain in its NYSE listing, but it does build upon what is increasingly looking like a promising rally from the 2023 sell-off.

Healthcare stocks showed some, well, healthy gains today!

As you can see from the table above, there were plenty of other winners in the sector though. The sector itself appears to be going from strength to strength from a technical perspective with excellent short and long term trends, great price action, and a clear predominance of white candles. In short, the sector looks healthy!

Economy

• AU Building Approvals for November (forecast to decline 1.8%)

  • Actual +1.6% = Beat / stronger than expected

  • But underlying data not so rosy as shows a 1.7% decline in approvals for detached houses offset a 6.7% jump in approvals for apartments, townhouses, and terraced homes

• AU Retails Sales for November (forecast to rise 1.2%)

  • Actual +2.0% = Beat / stronger than expected

  • Black Friday Sales splurge drove the gain, the biggest monthly jump in 2023

What to watch out for...

Tomorrow:

• AU Consumer Price Index (CPI) Weds 10 Jan at 11:30am, forecast to rise 4.5% p.a. to end of December

Later this week:

• USA Consumer Price Index (CPI) Friday 12 Jan at 12:30am, forecast to rise 3.2% p.a. to end of December

Latest News

Interesting Movers

Trading higher

• +7.7% Alumina (AWC) - Curtailment of Kwinana Alumina Refinery, continuation of short term uptrend

• +7.7% Elders (ELD) - No news, continuation of short term uptrend, long term trend reversal

• +7.4% Ainsworth Game Technology (AGI) - No news since 02-Jan Change in substantial holding, continuation of short and long term uptrends

• +6.7% The Star Entertainment Group (SGR) - No news, rally off base pattern

• +6.7% Latin Resources (LRS) - No news, rally after substantial pullback

• +6.0% Johns Lyng Group (JLG) - Initiated overweight at Morgan Stanley; Price Target: $7.20

• +5.6% Resmed Inc (RMD) - No news, followed similar pop in US listing

• +5.3% Champion Iron (CIA) - No news, continuation of short and long term uptrends after two-day pullback

• +4.6% Tyro Payments (TYR) - No news, bounce after recent sell-off

• +4.3% Adairs (ADH) - No news, continuation of long term uptrend after recent pullback

• +4.3% Collins Foods (CKF) - No news, continuation of long term uptrend after recent pullback

Trading lower

• -6.1% Strike Energy (STX) - No news since 03-Jan Ceasing to be a substantial holder and Walyering Production Update

• -4.4% Carnarvon Energy (CVN) - No news, pullback after recent rally

• -4.1% Opthea (OPT) - No news, pullback after recent rally

• -3.5% Syrah Resources (SYR) - No news, move is in line with prevailing short and long term trends

• -3.1% Weebit Nano (WBT) - No news, move is in line with prevailing short and long term trends

• -2.9% SRG Global (SRG) - No news

• -2.8% Smartpay Holdings (SMP) - No news

• -2.5% Tabcorp Holdings (TAH) - No news, move is in line with prevailing short and long term trends

• -2.5% Vulcan Energy Resources (VUL) - No news, move is in line with prevailing short and long term trends

• -2.5% Cromwell Property Group (CMW) - No news, move is in line with prevailing short and long term trends

• -2.4% Terracom (TER) - No news, move is in line with prevailing short and long term trends

• -2.3% Platinum Asset Management (PTM) - Funds Under Management - December 2023, move is in line with prevailing short and long term trends

Broker Notes

• ASX (ASX) downgraded to neutral from outperform at Macquarie; Price Target: $63.00 from $60.00

• Brickworks (BKW) retained at buy Citi; Price Target: $35.00 from $28.75

• Bubs Australia (BUB) retained at hold Bell Potter; Price Target: $0.14 from $0.21

• Computershare (CPU) retained at outperform Macquarie; Price Target: $28.00

• Clarity Pharmaceuticals (CU6) retained at buy Bell Potter; Price Target: $3.00 from $1.70

• Core Lithium (CXO) retained at sell Citi; Price Target: $0.13 from $0.29

• Gold Road Resources (GOR) retained at buy Bell Potter; Price Target: $2.05 from $2.10

• Johns Lyng Group (JLG) initiated overweight at Morgan Stanley; Price Target: $7.20

• Platinum Asset Management (PTM) retained at sell Citi; Price Target: $1.00

• Siteminder (SDR) retained at buy Citi; Price Target: $5.70

• Silver Lake Resources (SLR) retained at outperform Macquarie; Price Target: $1.50

• Santos (STO) retained at outperform Macquarie; Price Target: $9.60

• Treasury Wine Estates (TWE) retained at neutral Citi; Price Target: $11.80

• Whitehaven Coal (WHC) retained at buy Citi; Price Target: $9.40

Scans