Evening Wrap: ASX 200 slides on falling base metals, iron ore, and gold stocks, Droneshield bounces back

The S&P/ASX 200 closed 64.9 points lower, down 0.81%.

It was a disappointing end to a promising week. But, as they say in the classics, nothing goes up in a straight line! 📈

If you're in Resources stocks, particularly base metals and iron ore, it might feel like nothing ever goes up anymore. It was another tough day for the sector as commodity prices sold off overnight.

There were a few small glimmers of light in several retail companies, however, following the second positive trading update within this sector this week – today from Universal Store Holdings (UNI).

Elsewhere, Droneshield (DRO) topped the leaders list – a tidy rebound – but it remains well off it's intraweek high.

For all of this, plus the latest in charts, gainers and losers, broker updates, and scans...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 64.9 points lower at 7,971.6, 0.81% from its session high and 0.61% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 80 to 201.

For the week, the XJO finished up 12.3 points or 0.15% higher, 1.41% from its intraweek high and just 0.61% from its intraweek low.

Only one of the 11 major ASX sectors was up today, Communication Services (XTJ) (+0.04%) but, it hardly registered in the black. Aussie Broadband (ASX: ABB) was the top sector performer, rebounding 5.4% from Monday's post trading update sell-off. Talking about sell-offs earlier in the week, Droneshield (ASX: DRO) also bounced today, adding 13.3% and cutting the loss from Tuesday's $2.72 peak to just 28%.

Doing it tough today was the Gold (XGD) (-2.00%) sub-index. It dipped after gold price retraced from record highs set earlier in the week. Resources (XJR) (+1.6%) more generally were down, following further sharp falls in base metals, iron ore, and other precious metals prices.

Base metals, iron ore, and precious metals prices Thursday

Resources companies on the ASX today

In between the XTJ and the XJR, performances ranged between moderately ho-hum to moderately lousy...

The only bright spark I could find was in a cluster of retail stocks. I note the second positive trading update this week from Universal Store Holdings (ASX: UNI) (the first was from Accent Group (ASX: AX1) yesterday). It's also likely that yesterday's monster jobs report helped sooth nerves the Aussie consumer might be losing steam.

ASX retail stocks today

For the best of the best and worst of the worst across the ASX today, be sure to check out the Interesting Moves section below.

ChartWatch

S&P/ASX 200 (XJO)

Bummer! 😭

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 15 July. –

In that update, we had just broken to new highs, everything was going swimmingly. I noted the old zone of supply between 7839-7911 would likely act as demand going forward.

Unfortunately, it looks like we’re going to test that theory. To be fair, today’s candle shows a modest downward pointing shadow indicating prices at today’s low met with some excess demand.

We need to see the demand-side candles continue from here – so downward pointing shadows and white bodies.

A close below 7839 would indicate the supply-side is indeed back in control.

It’s straight forward from here. Nothing goes up in a straight line and both short and long term trends remain very much intact.

Iron Ore 62% (Front month, back-adjusted) SGX

That sinking feeling...📉

The last time we covered was in ChartWatch in the Evening Wrap on 10 July.

In that update, the price had just reversed from the 114 point of supply, realigning with the long term downtrend. You can see clearly the influence of the dynamic supply of the long term downtrend ribbon.

Unfortunately, not a great deal has changed since that update, the short term downtrend as reestablished, and the price action has reverted to falling peaks and falling troughs. Candles are predominantly supply-side.

101.95 is demand, and beneath that, the major demand zone of 99.20-95.40.

I can’t see any reason why prevailing trends and price action can’t continue. Demand-side candles, and I suggest some pretty serious ones, are required to stop the rot here. Slightly bigger picture, a close above the long term downtrend ribbon / 114-114.30 supply is required.

Economy

Today

• There weren't any major data releases in our time zone today

Later this week

Friday

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

Latest News

Interesting Movers

Trading higher

• +13.3% Droneshield (DRO) - No news, bounced from Tuesday's Response to ASX Price Query induced plunge

• +6.6% Syrah Resources (SYR) - Change of Director's Interest Notices x4

• +6.3% Adairs (ADH) - No news, several ASX retail stocks seeing some love on better than expected Trading Update update from Accent Group (AX1) and Universal Store Holdings (UNI) (see below)

• +5.4% Aussie Broadband (ABB) - No news, bounced from Monday's FY24 Trading Update & FY25 Guidance induced plunge

• +5.3% Universal Store (UNI) - FY24 Trading Update & Guidance, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.1% Capitol Health (CAJ) - CAJ enters into Merger Implementation Deed with IDX, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.6% Electro Optic Systems (EOS) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.1% NRW (NWH) - No news, continued positive response to yesterday's NEWS, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.1% Mesoblast (MSB) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.1% Select Harvests (SHV) - Change in substantial holding from PPT (increase), rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +2.8% Clarity Pharmaceuticals (CU6) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -13.9% Lifestyle Communities (LIC) - FY24 Key Results and Forward Guidance Withdrawn, and likely negative fallout from Response to Media earlier in the week, fall is consistent with prevailing short and long term downtrends (ChartWatch ASX Scans downtrends list regular!) 🔎📉

• -10.8% Carnarvon Energy (CVN) - Continued negative response to yesterday's Dorado Project Update

• -5.3% Bannerman Energy (BMN) - No news, fall is consistent with prevailing short and long term downtrends (ChartWatch ASX Scans downtrends list regular!) 🔎📉

• -5.1% Chalice Mining (CHN) - No news, fall is consistent with prevailing short and long term downtrends (ChartWatch ASX Scans downtrends list regular!) 🔎📉

• -5.0% Zip Co. (ZIP) - No news, pullback from yesterday's big gain on ZIP Completes A$217M Equity Placement at 2.8% Discount

• -5.0% Megaport (MP1) - No news, fall is consistent with prevailing short and long term downtrends (ChartWatch ASX Scans downtrends list regular!) 🔎📉

• -4.8% Strike Energy (STX) - No news, fall is consistent with prevailing short and long term downtrends (ChartWatch ASX Scans downtrends list regular!) 🔎📉

Broker Notes

Life360 (360)

• Retained at buy at Bell Potter; Price Target: $19.00 from $17.75

Audinate Group (AD8)

• Retained at overweight at Morgan Stanley; Price Target: $22.00

AMP (AMP)

• Retained at buy at Citi; Price Target: $1.25

Accent Group (AX1)

• Retained at hold at CLSA; Price Target: $2.10 from $2.00

• Upgraded to overweight from neutral at Jarden; Price Target: $2.28 from $2.05

• Retained at overweight at JP Morgan; Price Target: $2.40 from $2.20

• Retained at overweight at Morgan Stanley; Price Target: $2.45

• Retained at neutral at UBS; Price Target: $2.20 from $2.05

• Upgraded to overweight from marketweight at Wilsons; Price Target: $2.50 from $2.10

Aurizon (AZJ)

• Retained at neutral at Macquarie; Price Target: $3.73

Domino's Pizza Enterprises (DMP)

• Upgraded to buy from neutral at Goldman Sachs; Price Target: $42.20 from $36.30

Duratec (DUR)

• Initiated at buy at Bell Potter; Price Target: $1.52

Evolution Mining (EVN)

• Retained at buy at Canaccord Genuity; Price Target: $4.50 from $4.60

• Retained at buy at Citi; Price Target: $4.40

• Retained at buy at Goldman Sachs; Price Target: $4.15

• Retained at buy at Jefferies; Price Target: $4.70 from $4.20

• Downgraded to neutral from overweight at JP Morgan; Price Target: $3.75 from $4.05

• Retained at outperform at Macquarie; Price Target: $4.40 from $4.10

• Retained at overweight at Morgan Stanley; Price Target: $4.15

• Retained at neutral at UBS; Price Target: $3.70

Flight Centre Travel Group (FLT)

• Upgraded to buy from neutral at UBS; Price Target: $27.80 from $21.30

Fortescue (FMG)

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

Genesis Minerals (GMD)

• Retained at buy at Shaw and Partners; Price Target: $2.75

• Downgraded to neutral from buy at UBS; Price Target: $2.25 from $2.15

Liontown Resources (LTR)

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

Mystate (MYS)

• Downgraded to accumulate from buy at Ord Minnett; Price Target: $4.20 from $3.98

NIB (NHW)

• Retained at buy at UBS; Price Target: $3.50 from $3.30

Qube (QUB)

• Downgraded to overweight from buy at Jarden; Price Target: $4.00 from $3.70

Sandfire Resources (SFR)

• Upgraded to overweight from neutral at Jarden; Price Target: $9.00 from $7.40

Santos (STO)

• Retained at neutral at Citi; Price Target: $8.00

• Retained at positive at E&P; Price Target: $8.30

• Retained at buy at Goldman Sachs; Price Target: $8.70

• Retained at overweight at JP Morgan; Price Target: $8.40

• Retained at outperform at Macquarie; Price Target: $8.95 from $9.00

• Retained at equal-weight at Morgan Stanley; Price Target: $8.00

• Retained at buy at UBS; Price Target: $9.00 from $9.20

Telix Pharmaceuticals (TLX)

• Retained at buy at Bell Potter; Price Target: $22.60 from $19.00

Zip Co. (ZIP)

• Retained at buy at Citi; Price Target: $1.90 from $1.40

Scans