Evening Wrap: ASX 200 shrugs off weaker miners as energy stocks pop on higher crude oil price

Aussie stocks took another modest but confident step towards record territory today led by energy and property names. Energy is getting a boost from higher crude oil prices over the weekend as traders weigh the potential of the possibility of a growing military conflict in the Middle East.

Technology stocks fared the worst, likely in response to a poor revenue outlook from US tech heavyweight Intel on Friday. Intel stock plummeted nearly 12%, and there more earnings on tap this week from the likes of Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN) and Meta (FB). Aussie tech investors appear to be de-risking themselves in advance!

Mining stocks couldn't sustain their strong close to last week, also finding themselves near the bottom of the sector performance table, as key iron ore and copper stocks fell on weaker commodity prices.

Let's dive in!

Markets

ASX 200 Session Chart

A steady and solid, albeit modest, performance from the ASX 200 today

The S&P/ASX200 (XJO) finished 23.0 points higher at 7,578.4, 0.45% from its session low and just 0.07% from its high. It's now just 0.7% away from its all-time record high of 7633.

In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 166 to 105.

The S&P/ASX 200 Energy Sector (XEJ) +1.8% was easily the best performing sector as investors sought to mitigate the risks of a rising crude oil price on the back of increasing tensions in the Middle East.

Sector heavyweights Woodside Energy Group (ASX: WDS) +2.3% and Santos (ASX: STO) +1.7% did most of the heavy lifting, but they were well supported by other oil and gas stocks, and interestingly, coal stocks like Whitehaven Coal (ASX: WHC) and Yancoal Australia (ASX: YAL) (I say "interesting" because thermal coal prices are still trending lower).

Energy stocks got boost from a rise in the crude oil price last week

West Texas light crude oil futures chart is starting to show some promise

The big question is: Does this rally in ASX Energy stocks have any legs? To answer this question, let's turn our attention to the West Texas light crude oil futures chart, above.

Last week's rally has dispensed with the 76.10 point of supply which should now act as a point of demand. The price has also closed above dynamic resistance from the long term trend ribbon (which also switched to neutral from down). Both are positive developments.

The short term trend ribbon is about to switch to designating an uptrend, the price action is higher peaks and higher troughs, and the candles are predominantly demand-side (i.e., white bodies and or downward pointing shadows) since the last trough set on 17 January. Basically, there's growing evidence excess demand has returned to the system.

There are several important overhead supply points still to contend with. 80.15 is the closest, and given it coincides with a double top (i.e., in addition to the 30 November peak at 79.85) it has increased importance. A close above this level would be particularly positive and allow for higher retracements of the 28 September to 13 December decline.

In summary, while the light crude price continues to close above 76.10 I see no reason to doubt the newly found upward price momentum.

Funnily enough, (or not so funny if you're a long suffering investors in ASX energy stocks!), the XEJ looks much like the crude oil chart. No doubt it's fortunes will remain directly tied to the ebb and flow of the crude oil price, but I note an impressive close today above the 11023 peak set on 15 January.

The short term trend is up (light green trend ribbon), and the index has again closed above the long term trend ribbon which appears close to turning higher again. I suggest as long as the XEJ continues to close above the last trough at 10527 set on 18 January, there remains excess demand for ASX energy stocks in the short term.

The ASX energy sector index looks much like the crude oil chart, funnily enough

Economy

No major economic data releases today!

What to watch out for...

Later this week:

• Tue: From 11:30 AU Retail sales for December, consensus -1.9% vs November +2.0%

• Wed:

  • 02:00 US Conference Board Consumer Confidence for January, consensus 113.9 vs December 110.7;

  • 02:00 JOLTS Job openings for December, consensus 8.73 million vs November 8.79 million

  • 11:30 AU Consumer Price Index December Quarter, consensus +0.8% & 3.7% p.a. vs September +1.2% & 4.3% p.a.

  • 12:30 China Manufacturing PMI for January, consensus 49.2 vs December 49.0 & Non-manufacturing PMI, consensus 50.6 vs December 50.4

• Thu: 06:00 US FOMC Cash Rate, statement, press conference, consensus no change 5.25%-5.50%

• Fri: 02:00 ISM Manufacturing PMI for January, consensus 47.0 vs December 47.4

• Sat: 00:30 US Non-farm payrolls, average hourly earnings, and unemployment rate for January, consensus +177,000, +0.3%, 3.8% vs December +216,000, +0.4%, 3.7%

Latest News

Interesting Movers

Trading higher

• +13.3% Kingsgate Consolidated (KCN) - No news since 23-Jan Quarterly Activities/Appendix 5B Cash Flow Report

• +13.1% Adriatic Metals (ADT) - No news since 24-Jan Vares Project Production Guidance & Update

• +11.4% Develop Global (DVP) - December Quarterly Activities Report

• +5.9% Bapcor (BAP) - 1H24 Trading Update

• +5.4% Bellevue Gold (BGL) - Quarterly Activities Report

• +4.6% Emerald Resources (EMR) - No news, rise is consistent with prevailing short and long term uptrends

• +4.5% GQG Partners Inc. (GQG) - No news, rise is consistent with prevailing short and long term uptrends

• +4.3% Select Harvests (SHV) - No news 🤔

• +4.0% Alumina (AWC) - No news, rise is consistent with prevailing short term uptrends, long term uptrend turning up, closed above 1.155 resistance

• +3.9% Tuas (TUA) - No news, rise is consistent with prevailing short and long term uptrends

• +3.8% Liontown Resources (LTR) - No news, small bounce compared with massive falls last few months

• +3.8% Supply Network (SNL) - No news, bouncing off long term uptrend ribbon

• +3.8% Life360 Inc. (360) - No news, trying to re-establish short term and long term uptrends, closed above 7.69 resistance and back above long term uptrend ribbon

• +3.7% Megaport (MP1) - No news, trying to re-establish short term and long term uptrends, close back above long term uptrend ribbon

Trading lower

• -22.0% Calix (CXL) - Leilac-2 to relocate as HM end clinker production at Hanover, fall is consistent with prevailing short and long term downtrends

• -18.4% Gold Road Resources (GOR) - Quarterly Activities Report - December 2023, fall is consistent with prevailing short and long term downtrends

• -6.8% Chrysos Corporation (C79) - Continues negative reaction to 24 Jan Chrysos Quarterly Presentation Q2 FY24

• -6.5% Arcadium Lithium (LTM) - No news, fall is consistent with prevailing short and long term downtrends

• -6.0% G8 Education (GEM) - No news, fall is consistent with prevailing short and long term downtrends

• -5.5% Objective Corporation (OCL) - Downgraded to neutral from buy at Goldman Sachs; Price target dropped to $13.80 from $14.55

• -4.8% Bannerman Energy (BMN) - No news since 24-Jan Quarterly Activities Report, generally weaker ASX uranium sector today

• -4.6% The Star Entertainment Group (SGR) - No news, fall is consistent with prevailing short and long term downtrends

• -4.5% Boss Energy (BOE) - Downgraded to hold from buy at Bell Potter; Price target increased though, to $6.41 from $5.69

• -4.0% Michael Hill International (MHJ) - No news, fall is consistent with prevailing short and long term downtrends

• -3.9% Deep Yellow (DYL) - No news, generally weaker ASX uranium sector today

• -3.8% Chalice Mining (CHN) - No news, fall is consistent with prevailing short and long term downtrends

• -3.8% 29METALS (29M) - No news, fall is consistent with prevailing short and long term downtrends

Broker Notes

• Adbri (ABC) retained at underperform at Macquarie; Price Target: $2.20

• Bapcor (BAP) retained at underweight at Morgan Stanley; Price Target: $5.30

• Bendigo and Adelaide Bank (BEN) retained at sell at Citi; Price Target: $8.85

• Brickworks (BKW) retained at neutral at Macquarie; Price Target: $25.15

• Boral (BLD) retained at outperform at Macquarie; Price Target: $6.00 from $5.60

• Boss Energy (BOE) downgraded to hold from buy at Bell Potter; Price Target: $6.41 from $5.69

• Bank of Queensland (BOQ) retained at sell at Citi; Price Target: $5.20

• Beach Energy (BPT)

  • Retained at buy at Bell Potter; Price Target: $1.90 from $2.00

  • Retained at neutral at Citi; Price Target: $1.60

  • Retained at sector perform at Goldman Sachs; Price Target: $1.64 from $1.65

• Coles Group (COL) retained at neutral at UBS; Price Target: $16.25

• CSR (CSR) retained at neutral at Macquarie; Price Target: $6.60 from $5.50

• Dicker Data (DDR) downgraded to sector perform from neutral at Goldman Sachs; Price Target: $10.20

• Domino's Pizza Enterprises (DMP)

  • Downgraded to underperform from neutral at BofA; Price Target: $25.70 from $53.00

  • Retained at accumulate at Ord Minnett; Price Target: $61.00 from $68.00

• Fortescue (FMG)

  • Retained at sector perform at Bell Potter; Price Target: $21.51 from $21.39

  • Retained at sell at UBS; Price Target: $24.60 from $24.40

  • Retained at sell at Goldman Sachs; Price Target: $19.80 from $19.30

  • Retained at sell at Ord Minnett; Price Target: $17.30

• Fleetpartners Group (FPR) retained at buy at Citi; Price Target: $3.60

• GPT Group (GPT) retained at equalweight at Morgan Stanley; Price Target: $4.60 from $4.25

• GWA Group (GWA) retained at outperform at Macquarie; Price Target: $2.50 from $2.20

• Insignia Financial (IFL) retained at neutral at Citi; Price Target: $2.15

• James Hardie Industries (JHX) retained at outperform at Macquarie; Price Target: $65.80 from $58.40

• Mineral Resources (MIN)

  • Retained at buy at Bell Potter; Price Target: $75.00 from $90.00

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

  • Retained at equalweight at Morgan Stanley; Price Target: $63.00 from $66.50

  • Retained at buy at Citi; Price Target: $71.00 from $72.00

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

• Medibank Private (MPL) retained at neutral at Macquarie; Price Target: $3.65

• NIB Holdings (NHF) retained at neutral at Macquarie; Price Target: $7.70

• Objective Corporation (OCL) downgraded to neutral from buy at Goldman Sachs; Price Target: $13.80 from $14.55

• Paladin Energy (PDN)

  • Upgraded to buy from hold at Bell Potter; Price Target: $1.60 from $1.31

  • Upgraded at buy at Citi; Price Target: $1.45 from $1.05

  • Retained at buy at Shaw and Partners; Price Target: $1.50

• Reece (REH) retained at outperform at Macquarie; Price Target: $16.50 from $15.40

• Resimac Group (RMC) retained at hold at Bell Potter; Price Target: $1.19 from $1.09

• ResMed (RMD)

  • Downgraded to outperform from buy at CLSA; Price Target: $31.25 from $29.50

  • Retained at buy at Citi; Price Target: $34.00 from $29.00

  • Retained at buy at Goldman Sachs; Price Target: $33.50 from $32.00

  • Retained at accumulate at Ord Minnett; Price Target: $39.00

• RMA Global (RMY) retained at buy at Bell Potter; Price Target: $0.14 from $0.13

• Regis Resources (RRL)

  • Retained at buy at Bell Potter; Price Target: $2.60 from $2.37

  • Downgraded to sell from neutral at UBS; Price Target: $1.90 from $1.86

  • Retained at sector perform at Citi; Price Target: $1.25 from $1.20

  • Retained at neutral at Goldman Sachs; Price Target: $2.15 from $2.25

• Reliance Worldwide Corporation (RWC) retained at outperform at Macquarie; Price Target: $4.70 from $4.05

• Santos (STO) retained at accumulate at Ord Minnett; Price Target: $12.30

• Woodside Energy Group (WDS)

  • Upgraded to add from hold at Morgans; Price Target: $34.30 from $33.50

  • Retained at neutral at UBS; Price Target: $32.60 from $32.90

  • Retained at buy at Ord Minnett; Price Target: $45.00

• Webjet (WEB) initiated buy at Shaw and Partners; Price Target: $8.50

• Woolworths Group (WOW) retained at buy at UBS; Price Target: $42.00

Scans