Evening Wrap: ASX 200 slides as local tech stocks crumble on NASDAQ plunge, defensives prosper, uranium stocks dive

There's an old saying that when the US stock market sneezes, the Aussie share market catches a cold.

Well, US tech stocks sneezed (um, sneezed and keeled over) last night, so you can guess what happened to Aussie tech stocks today.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 21.4 points lower at 8,036.5, 0.42% from its session high and just 0.13% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 88 to 184.

Moves on the ASX today were generally simple to explain. As usual, we pretty much just reflect what happened in the USA overnight (with some wiggle room around Resources and Energy stocks that usually follow commodity prices).

What happened in the USA overnight? Tech got belted. More specifically, high PE-risk on got belted. Otherwise, low PE-risk off faired reasonably well (see ChartWatch for analysis of the high PE NASDAQ Composite Index versus the low PE Russell 2000).

What happened on the ASX today? High PE-risk on stuff like Information Technology (XIJ) (-3.4%) and Communication Services (XTJ) (-1.2%) got belted. Otherwise, low PE-risk off stuff like Utilities (XUJ) (+0.35%), Health Care (XHJ) (+0.28%) sector, Gold (XGD) (+0.26%), and Consumer Staples (XSJ) (+0.20%) fared reasonably well.

See. Ditto!

S&P/ASX 200 Information Technology Sector Index (XIJ) chart

ASX Tech stocks today

Energy (XEJ) (-0.29%) and Resources (XJR) (-0.36%) weren’t great, and you guessed it, largely tracked modest losses in most commodities Wednesday.

So, all is as it should be in the world.

Interesting bits (outside of some terrible losses in Tech)? Uranium (definitely not Tech) also got belted, again. There’s that.

Domino’s Pizza (ASX: DMP) (only a bit of Tech) also got belted. Surprise bad news there (that is, if you're incapable of reading a chart!).

I can’t think of anything else…I lost interest pretty quickly today 🤦‍♂️.

ASX Uranium stocks today

ChartWatch

High Grade Copper Futures (Front month, back-adjusted) COMEX

Needs to hold 4.32

The last time we covered high grade copper was in ChartWatch in the Evening Wrap on 5 July.

In that last update, it had made a strong reversal just above the dynamic demand of the long term uptrend ribbon. It was touching a point of supply at 4.59 with 4.70 the next key level beyond that.

As you can see from the above chart, 4.70 proved to be too great of a supply-side challenge, and the copper price has fallen away steadily from there with predominantly supply-side candles (i.e., black bodies and or upward pointing shadows).

The short term trend ribbon is again showing a short term downtrend is in place.

It’s pretty simple from here, 4.32 really must hold – it’s now also the top of the long term uptrend ribbon. A close below 4.32 will make it hard to continue to argue a long term uptrend.

Ideally, the next low occurs above 4.32 to show some semblance of building demand, and it should occur with emphatic demand-side candles. Anything less may consign copper to the too hard basket for many momentum traders and this likely means sideways at best.

NASDAQ Composite Index

A major shot across the bow by the supply-side

The last time we covered the Comp was in ChartWatch in the Evening Wrap on 3 July.

In that last update, it was a picture of excess demand and there wasn’t anything to suggest the mega-cap tech rally couldn’t continue. A rather forceful suggestion eventually occurred with the formation of a long black candle on 11 July. This marked the beginning of a rig rotation from large cap to small cap stocks in the US.

As you will see in the RUT chart below, which we discussed a couple of days ago as the main beneficiary of the Comp’s demise, it has done very well since 11 July.

I suggest last night's gap and fall is possibly the clearest supply side showing since this last phase of the Comp's bull market began in October last year.

It is significant. It should not be ignored.

The price is interacting with the dynamic demand of the short term uptrend ribbon. The old point of supply at 17937 should in theory also act as a point of demand going forward.

If we see a quick and substantial demand-side response from here, deeper falls may be avoided. This means we really must see long white-bodied candles and or long downward pointing shadows tonight or tomorrow night. To wait any longer than this, or to not see strong demand-side candles in the next couple of session – courts deeper falls.

The long term uptrend is exemplary here – so we should put any impending pullback into context. A close below the short term trend ribbon would be met with likely demand between 17494-17937 and then at 17032.

Russell 2000 Index (RUT)

Super solid, thanks to the Comp's demise

The Comp's loss is the Russell's gain. Read this article see learn about why the big rotation in US stocks isn't necessarily a bad thing for Aussie stocks.

Last night's candle was decidedly supply-side in nature, but far from as severe as that which occurred on the Comp.

The short term trend is very much intact here, albeit banging into some stiff supply at the 4 Jan 2022 historical point of supply.

I'm happy to stay the course on the RUT. The old supply zone of 2115-2139 should now act as demand. I expect the short term uptrend ribbon is going to catch up to coincide with it shortly.

As long as the RUT continues to close above that zone, the short term uptrend remains intact.

Economy

Today

11:30 AUS Employment Change & Unemployment Rate June

• Jobs +50.2k vs +20.2k forecast and +39.7k in May = Massive beat!

• UR 4.1% vs 4.1% forecast and 4.0% in May

• Participation 69.9% vs 69.8% in May

• +32.8k full time positions = employer confidence

• Data shows a very strong Aussie jobs market (and stronger than expected economy in general) and this strength is drawing in those who have previously been on the sidelines

• Tie this in with the worse than expected May CPI and you have a reasonable case for an August rate hike! All eyes now on June Quarter CPI due 31 July

Later this week

Thursday

• 22:15 EUR ECB Main Financing Rate (forecast no change at 4.25%)

Friday

• 00:00 CB Leading Index June (-0.3% forecast vs -0.5% in May)

Latest News

Interesting Movers

Trading higher

• +11.2% Zip Co. (ZIP) - Ha! Something did go up today! ZIP Completes A$217M Equity Placement at 2.8% Discount, rise is consistent with prevailing short and long term uptrends 🔎📈

• +10.2% Accent Group (AX1) - And here also! Trading Update, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +5.2% Select Harvests (SHV) - No news, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +3.9% Fenix Resources (FEX) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.7% Clarity Pharmaceuticals (CU6) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.7% Liontown Resources (LTR) - Appendix 3Y - Adrienne Parker (on market purchase)

• +2.8% Evolution Mining (EVN) - Exceptional Results from Step-Out Drilling at Ernest Henry and June 2024 Quarterly Report, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -9.1% Core Lithium (CXO) - No news, possible continued negative response to yesterday's Quarterly Activities and Cashflow Report, or just the fact that today's fall is consistent with prevailing short and long term downtrends 🔎📉

• -8.2% Domino's Pizza Enterprises (DMP) - Business Update and FY25 Outlook, fall is consistent with prevailing short and long term downtrends (I've run this as a Feature Chart in my ChartWatch ASX Scans downtrends list 7 times in the last couple of months) 🔎📉

• -6.3% Wisetech Global (WTC) - No news, likely tagged by big NASDAQ sell off Wednesday

• -6.1% Neuren Pharmaceuticals (NEU) - Ditto for WTC

• -5.9% Latin Resources (LRS) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -5.8% Deep Yellow (DYL) - No news, ASX uranium falls continued into second day on another dip in the uranium price

• -5.5% Droneshield (DRO) - No news, continues to battle fallout from Tuesday's NEWS

• -5.3% GQG Partners (GQG) - Ditto likely NASDAQ sell off casualty

• -5.0% Appen (APX) - Ditto likely NASDAQ sell off casualty

• -4.6% Polynovo (PNV) - Ditto likely NASDAQ sell off casualty

• -4.6% Lotus Resources (LOT) - Ditto ASX uranium sector

• -4.6% Nextdc (NXT) - Ditto likely NASDAQ sell off casualty

• -4.4% Nexgen Energy (NXG) - Ditto ASX uranium sector

• -4.2% Paladin Energy (PDN) - Ditto ASX uranium sector

• -4.1% REA Group (REA) - Ditto likely NASDAQ sell off casualty

Broker Notes

Auckland International Airport (AIA)

• Retained at buy at Citi; Price Target: NZ$9.20

• Upgraded to neutral from underweight at Craigs Investment Partners; Price Target: NZ$7.70 from NZ$7.00

• Downgraded to neutral from overweight at Jarden; Price Target: NZ$8.13 from NZ$8.58

• Retained at outperform at Macquarie; Price Target: NZ$9.22

Aristocrat Leisure (ALL)

• Retained at neutral at Goldman Sachs; Price Target: $55.30

BHP Group (BHP)

• Retained at buy at Citi; Price Target: $47.50 from $48.50

• Retained at hold at CLSA; Price Target: $44.00 from $45.00

• Retained at buy at Goldman Sachs; Price Target: $48.40

• Retained at buy at Jefferies; Price Target: $53.00

• Retained at overweight at JP Morgan; Price Target: $52.00

• Retained at neutral at Macquarie; Price Target: $43.00

• Retained at equal-weight at Morgan Stanley; Price Target: $46.30 from $46.65

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

• Retained at neutral at UBS; Price Target: $43.00 from $44.00

Corporate Travel Management (CTD)

• Downgraded to hold from accumulate at Ord Minnett; Price Target: $13.16 from $14.91

Core Lithium (CXO)

• Retained at neutral at Macquarie; Price Target: $0.10

Domino's Pizza Enterprises (DMP)

• Downgraded to neutral from positive at E&P; Price Target: $43.78

• Retained at neutral at Goldman Sachs; Price Target: $36.30

• Retained at buy at Jarden; Price Target: $44.00 from $48.00

• Retained at buy at Jefferies; Price Target: $46.00 from $48.00

• Retained at neutral at Macquarie; Price Target: $37.00 from $41.00

• Retained at overweight at Morgan Stanley; Price Target: $45.00 from $47.00

• Retained at neutral at UBS; Price Target: $36.50 from $39.00

Fortescue (FMG)

• Retained at underperform at Macquarie; Price Target: $14.50 from $12.50

• Retained at sell at UBS; Price Target: $18.90

GPT Group (GPT)

• Retained at equal-weight at Morgan Stanley; Price Target: $4.70

Imdex (IMD)

• Retained at neutral at Citi; Price Target: $2.00

Jumbo Interactive (JIN)

• Initiated at underweight at JP Morgan; Price Target: $14.50

• Retained at overweight at Morgan Stanley; Price Target: $20.80

Light & Wonder (LNW)

• Retained at buy at Goldman Sachs; Price Target: $190.00

Liontown Resources (LTR)

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

Mirvac Group (MGR)

• Retained at equal-weight at Morgan Stanley; Price Target: $2.35

Mount Gibson Iron (MGX)

• Retained at outperform at Macquarie; Price Target: $0.48 from $0.50

Newmont Corporation (NEM)

• Retained at outperform at Macquarie; Price Target: $81.00 from $83.00

• Retained at accumulate at Ord Minnett; Price Target: $80.00

Praemium (PPS)

• Downgraded to hold from buy at Ord Minnett; Price Target: $0.50 from $0.55

PYC Therapeutics (PYC)

• Retained at buy at Bell Potter; Price Target: $0.17

REA Group (REA)

• Retained at lighten at Ord Minnett; Price Target: $185.00

Rio Tinto (RIO)

• Retained at buy at Ord Minnett; Price Target: $133.00

Stockland (SGP)

• Retained at overweight at Morgan Stanley; Price Target: $5.30

The Lottery Corporation (TLC)

• Retained at neutral at Goldman Sachs; Price Target: $5.60

Telix Pharmaceuticals (TLX)

• Retained at buy at UBS; Price Target: $26.00

Zip Co. (ZIP)

• Retained at buy at Citi; Price Target: $1.40

• Upgraded to outperform from sector perform at RBC Capital Markets; Price Target: $1.90 from $1.10

• Retained at buy at UBS; Price Target: $1.90 from $1.55

Scans