Market Wraps

Evening Wrap: ASX 200 slides on lack of decisive China policy action as resources and energy stocks pay the price

Tue 08 Oct 24, 5:38pm (AEDT)

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The S&P/ASX 200 closed 28.5 points lower, down 0.35%.

Disappointment over a lack of further decisive policies aimed at stimulating the Chinese economy sunk resources and energy stocks today. On the bright side, this freed up capital to buy back into recently struggling health care, financial, and property names.

Click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all of the key upcoming economic data in tonight's Evening Wrap.

Also, I have detailed technical analysis on Chinese stocks, Iron Ore, and High Grade Copper in today's ChartWatch.

Let's dive in!


Today in Review

Tue 08 Oct 24, 4:58pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 8,176.9 -0.35%
All Ords 8,443.7 -0.42%
Small Ords 3,125.0 -0.64%
All Tech 3,482.6 -0.82%
Emerging Companies 2,294.3 -0.95%
Currency
AUD/USD 0.6728 -0.43%
US Futures
S&P 500 5,743.0 -0.03%
Dow Jones 42,208.0 -0.09%
Nasdaq 19,979.25 -0.07%
Name Value % Chg
Sector
Health Care 44,848.4 +0.75%
Utilities 9,006.0 +0.29%
Financials 8,164.6 +0.14%
Real Estate 4,035.8 +0.01%
Consumer Discretionary 3,768.7 -0.05%
Industrials 7,377.8 -0.09%
Consumer Staples 12,336.6 -0.15%
Communication Services 1,591.5 -0.39%
Energy 9,425.0 -0.95%
Information Technology 2,673.7 -1.07%
Materials 17,549.9 -1.74%

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Markets

XJO Intraday Chart 08 October 2024
ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 28.5 points lower at 8,176.9, 0.57% from its session high and just 0.15% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 89 to 197.

The trend of resources ⬆️/⬇️ versus everything that’s not resources ⬇️/⬆️ continued today. If you think it’s all a bit tedious, you’ll just have to get used to it – because it’s how we do things here on the Aussie share market, i.e., robbing Peter to pay Paul.

Playing the role of Peter today were Resources (XJR) (-1.7%) and Energy (XEJ) (-0.95%) stocks, which suddenly realised the keg at China stimulus party had run dry. A much anticipated speech today from National Development and Reform Commission (NDRC) chairman Zheng Shanjie fell short of delivering another bazooka of measures the market was hanging out for. Instead, he told markets that Beijing was doing “great work” with respect to managing the Chinese economy. 🤔

There were a few relatively piecemeal measures announced, but mainly it was plenty of talk and rhetoric. You can see the impact of the market's disappointment on Chinese stocks and commodities like Iron Ore and Copper in today’s ChartWatch section below (Surely it wasn’t a case of markets growing overly optimistic? No…they wouldn’t do that!)

To be fair on Resources and Energy, Information Technology (XIJ) (-1.1%) was also pretty lousy today, but that was more to do with a risk-off move / associated sell off in tech names in the US overnight.

Company

Last Price

Change $

Change %

1mo %

1yr %

Brainchip (BRN)

$0.260

-$0.02

-7.1%

+62.5%

+44.4%

Chalice Mining (CHN)

$1.510

-$0.09

-5.6%

+55.7%

-33.5%

IGO (IGO)

$5.49

-$0.32

-5.5%

+9.8%

-52.6%

Fortescue (FMG)

$19.27

-$1.08

-5.3%

+19.0%

-7.3%

Liontown Resources (LTR)

$0.835

-$0.045

-5.1%

+34.7%

-71.6%

Champion Iron (CIA)

$6.70

-$0.31

-4.4%

+23.4%

+12.8%

Coronado Global Resources (CRN)

$1.110

-$0.05

-4.3%

+26.9%

-34.9%

Siteminder (SDR)

$6.15

-$0.27

-4.2%

+26.3%

+35.5%

WA1 Resources (WA1)

$14.53

-$0.6

-4.0%

-5.8%

+192.4%

Mineral Resources (MIN)

$51.23

-$2.11

-4.0%

+68.5%

-16.7%

Stanmore Resources (SMR)

$3.07

-$0.12

-3.8%

+16.7%

-11.4%

Pilbara Minerals (PLS)

$3.00

-$0.1

-3.2%

+24.5%

-23.9%

Vulcan Energy Resources (VUL)

$4.46

-$0.14

-3.0%

+24.6%

+64.6%

Perenti (PRN)

$1.015

-$0.03

-2.9%

+3.6%

-1.5%

South32 (S32)

$3.60

-$0.1

-2.7%

+21.2%

+6.8%

Megaport (MP1)

$7.32

-$0.19

-2.5%

-4.7%

-35.8%

Technology One (TNE)

$24.01

-$0.59

-2.4%

+6.6%

+54.5%

BHP Group (BHP)

$43.79

-$1.07

-2.4%

+13.0%

+0.8%

Life360 (360)

$20.00

-$0.45

-2.2%

+7.9%

+150.0%

Strike Energy (STX)

$0.225

-$0.005

-2.2%

+25.0%

-44.4%

The worst stocks from the worst ASX sectors today

One upshot of the sell down in the aforementioned sectors meant that cash was free up to buy back into recently shunned Paul sectors like Health Care (XHJ) (+0.75%), Financials (XFJ) (+0.14%)¸ and Real Estate Investment Trusts (XPJ) (+0.05%) – although gains were only modest.

Elsewhere, gold stocks bounced back with the Gold (XGD) sub-index rising 0.73%. It wasn't due to the gold price, though, which was down overnight and is also down in Asian trade today.

More likely, it was due to positive comments about gold and the ASX gold sector from Citi today. In a dedicated research note, the broker increased its price targets for several gold stocks including sector major Northern Star Resources (ASX: NST) (+1.4%). Citi stated that it remained "bullish" on gold, and that it expects the yellow metal to hit US$3,000 in 2025. The broker also continues to “remain positive” on the ASX gold sector in general, but expressed its preference for Evolution Mining (ASX: EVN) (-0.21%).

Company

Last Price

Change $

Change %

1mo %

1yr %

West African Resources (WAF)

$1.440

+$0.1

+7.5%

+9.9%

+100.0%

Credit Corp Group (CCP)

$16.77

+$0.6

+3.7%

+13.0%

-8.6%

Bellevue Gold (BGL)

$1.320

+$0.035

+2.7%

+15.8%

-1.1%

GQG Partners (GQG)

$2.56

+$0.06

+2.4%

+0.4%

+93.9%

Fisher & Paykel Healthcare Corporation (FPH)

$32.00

+$0.61

+1.9%

-8.4%

+54.0%

Capricorn Metals (CMM)

$5.84

+$0.1

+1.7%

+7.7%

+42.4%

Ora Banda Mining (OBM)

$0.625

+$0.01

+1.6%

+6.8%

+495.2%

Judo Capital (JDO)

$1.690

+$0.025

+1.5%

+2.7%

+78.8%

Resolute Mining (RSG)

$0.695

+$0.01

+1.5%

+8.6%

+107.5%

Ramelius Resources (RMS)

$2.13

+$0.03

+1.4%

-0.9%

+42.5%

Northern Star Resources (NST)

$16.05

+$0.21

+1.3%

+9.6%

+50.6%

CSL (CSL)

$292.52

+$3.73

+1.3%

-2.6%

+17.3%

Emerald Resources (EMR)

$3.77

+$0.04

+1.1%

+1.1%

+47.3%

Zip Co. (ZIP)

$2.72

+$0.02

+0.7%

+25.3%

+926.4%

Telix Pharmaceuticals (TLX)

$20.63

+$0.14

+0.7%

+17.6%

+87.9%

Cochlear (COH)

$293.43

+$1.92

+0.7%

+0.7%

+14.9%

Goodman Group (GMG)

$36.82

+$0.23

+0.6%

+10.1%

+69.1%

Netwealth Group (NWL)

$25.75

+$0.15

+0.6%

+15.9%

+78.7%

Gold Road Resources (GOR)

$1.735

+$0.01

+0.6%

+13.4%

+5.5%

Mirvac Group (MGR)

$2.20

+$0.01

+0.5%

0%

+6.3%

The best stocks from the best ASX sectors today.

ChartWatch

FTSE China A50 Index Futures

FTSE China A50 Shares chart 8 October 2024
All or nothing...(click here for full size image)

The last time we covered FTSE China A50 Index Futures was in ChartWatch in the Evening Wrap on 10 September.

In that update, it was doing its usual swan dive routine on the back of poor economic data including more bad news on Chinese property prices. Little did we know at that time the A50 was just a few trading sessions away from one of the most stunning turnarounds in recent financial markets memory.

It’s ancient history now that on 25 Sep, the PBOC announced sweeping monetary policy stimulus measures. That announcement was followed shortly thereafter by the promise of even further measures to come from Beijing.

If the usual saying for markets is “Up by the staircase and down by the elevator shaft”, then I’m not sure how you would describe the chart above! Today’s candle is a fly in the ointment, however, with a long black body and upward pointing shadow somewhat offset by a long by any other day’s standard downward pointing shadow (at the time of writing).

I suggest we’ve reached a degree of equilibrium here. Supply has caught up to demand. At the very best, we’re probably in for a period of choppy sideways consolidation. At the worst, particularly if the candle should close near the low of the session, I suggest we’re probably prone to some degree of pullback.

Bringing it back home, it makes sense that even a period of increased choppy sideways price action in Chinese stocks might correspond with a slightly tougher time of it for local resources stocks than they’ve been accustomed to since Sep 25.

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

Iron Ore 62- (Front month, back-adjusted) SGX chart 8 October 2024
Trouble with the trend...(click here for full size image)

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 7 October.

Just a super quick update here because we only did this one yesterday. I am just noting a contract rollover has gone through and this means all prices/levels have been back-adjusted. I’ve also cleaned up some of the historical demand zones to correct for missing a previous back-adjust! Importantly, that correction is far back enough that it hasn’t had any major impact on our analysis here over the last few weeks.

The analysis is largely ditto from yesterday, but just noting today’s supply-side candle with its upper shadow into the key 113.70-114.30 supply zone. It is clear there is some very active and very credible excess supply there.

103-05-105.90 and the long term trend ribbon remain the key points of demand, with the short term trend ribbon bringing up the rear. A close below 103.05 would severely jeopardise the current short term uptrend.

Alternatively, it is clear now that only an emphatic demand-side candle, closing above 114.30 and near its session high can seal the deal on sparking the next leg up here…if that’s the case before we next cover iron ore…then 122.60-125.20 is the next key supply zone along.

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

High Grade Copper Futures (Front month, back-adjusted) COMEX chart 8 October 2024
Excess supply lies above...(click here for full size image)

The last time we covered high grade copper was in ChartWatch in the Evening Wrap on 30 September.

In that last update, we were noting a live candle spike to and reversal from the key 4.762-4.768 supply zone. That move created a long upward pointing shadow – the classic manifestation of excess supply.

I noted at the time: “Should that shadow stick, then consolidation of the recent uptrend is the most likely scenario here. I note in this case 4.39 is demand, but the short term uptrend ribbon will likely offer dynamic demand prior to that.

It did stick. We did consolidate. We are now beginning to pullback and probe demand above 4.39.

The short term uptrend ribbon has caught up nicely since our last update to likely offer dynamic demand prior to the copper price reaching 4.39, it’s kicking in around 4.395-4.45. Watch for demand-side candles here (i.e., white bodies and or downward pointing shadows) to confirm excess demand does actually exist where we expect it should exist.

If instead you observe supply-side candle in what should in theory should be a demand zone, well, that should be pretty self-explanatory. In this scenario, the long term uptrend ribbon is the next area of dynamic demand, but I note there’s a few static points of demand in the mx between 4.274-4.322.

Similar to iron ore and its critical overhead supply zone – copper has made a bed for itself here – it therefore must close emphatically above 4.768 to continue this trend. It doesn’t want to get stuck beneath it for too long…


Economy

Today

  • AUS Westpac Consumer Sentiment October

    • +6.2% vs -0.5% in September

  • ANZ Job Ads September

    • +1.6% vs -1.8% (revised up from -2.1% previously) in August

  • NAB Business Confidence September

    • -2 vs -5 (revised down from -4 previously) in August

Later this week

Wednesday

  • N/a

Thursday

  • 05:00 USA Federal Reserve September FOMC Meeting minutes

  • 23:30 USA Core CPI September (+0.2% m/m for 3.1% p.a. forecast vs +0.3% m/m for 3.2% p.a. in August)

Friday

  • 23:30 USA Core PPI September (+0.2% m/m for 2.5% p.a. forecast vs +0.3% m/m for 2.5% p.a. in August)

Saturday

  • 01:00 USA Prelim UoM Consumer Sentiment September (70.5 forecast vs 70.1 August)


Latest News


Interesting Movers

Trading higher

  • +7.5% West African Resources (WAF) - WAF Confirms Status of Mining Permits in Burkina Faso, recouped less than half of yesterday's tumble on concerns around mining permits at its African operations.

  • +4.5% SRG Global (SRG) - No news, rise is consistent with prevailing short and long term uptrends (which is why it has been a ChartWatch Daily Scans Uptrends list regular) 🔎📈

  • +3.8% Select Harvests (SHV) - No news.

  • +3.7% Credit Corp Group (CCP) - No news.

  • +3.2% Vault Minerals (VAU) - No news, generally strong ASX gold sector today

  • +3.1% Macmahon (MAH) - No news, rise is consistent with prevailing long term uptrend 🔎📈

  • +2.7% Dalrymple Bay Infrastructure/Notes (DBI) - No news, rise is consistent with prevailing short and long term uptrends (which is why it has been a ChartWatch Daily Scans Uptrends list regular) 🔎📈

  • +2.4% GQG Partners (GQG) - Bounced back after negative response to yesterday's FUM as at 30 September 2024, retained at buy by both Goldman Sachs and Ord Minnett today

  • +2.0% Light & Wonder (LNW) - No news, retained at buy at Bell Potter, price target increased to $165 from $161

Trading lower

  • -7.1% Brainchip (BRN) - No news, but there wasn't any news behind yesterday's even bigger gain either! 🤔

  • -5.6% Chalice Mining (CHN) - No news, generally softer ASX resources sector on disappointment over key China policy maker speech today, also (possibly as a result of that), sharply lower Chinese stock prices as well as lower prices of commodities in Asian trade

  • -5.5% IGO (IGO) - Ditto China markets reopening disappointment, Bell Potter retained a sell rating on the stock and cut its price target to $4.00 from $4.60, fall is consistent with prevailing long term downtrend 🔎📉

  • -5.3% Fortescue (FMG) - Ditto China markets reopening disappointment, iron ore price down sharply in Singapore, fall is consistent with prevailing long term downtrend 🔎📉

  • -5.3% The Star Entertainment Group (SGR) - Ceasing to be a substantial holder, fall is consistent with prevailing long term downtrend 🔎📉

  • -5.1% Liontown Resources (LTR) - Ditto China markets reopening disappointment, Bell Potter cut price target to $1.50 from $1.90, fall is consistent with prevailing long term downtrend 🔎📉

  • -4.4% Champion Iron (CIA) - Ditto China markets reopening disappointment, iron ore price down sharply in Singapore, fall is consistent with prevailing long term downtrend 🔎📉

  • -4.3% Coronado Global Resources (CRN) - Ditto China markets reopening disappointment, fall is consistent with prevailing long term downtrend 🔎📉

  • -4.0% Mineral Resources (MIN) - Ditto China markets reopening disappointment, iron ore price down sharply in Singapore, fall is consistent with prevailing long term downtrend 🔎📉


Broker Notes

  • Life360 (360)

    • Retained at buy at Bell Potter; Price Target: $22.50 from $20.50

  • Ampol (ALD)

    • Downgraded to neutral from buy at Bank of America; Price Target: $34.00 from $36.90

  • ARB Corporation (ARB)

    • Retained at buy at Ord Minnett; Price Target: $46.00

  • ASX (ASX)

    • Retained at neutral at Macquarie; Price Target: $64.00 from $61.00

  • Cooper Energy (COE)

    • Retained at outperform at Macquarie; Price Target: $0.31 from $0.30

  • Dexus Convenience Retail Reit (DXC)

    • Retained at buy at Bell Potter; Price Target: $3.30 from $3.10

  • Elanor Commercial Property Fund (ECF)

    • Retained at hold at Ord Minnett; Price Target: $0.64 from $0.67

  • Evolution Mining (EVN)

    • Retained at buy at Citi; Price Target: $5.10 from $5.40

    • Downgraded to neutral from buy at Goldman Sachs; Price Target: $4.55

  • Fletcher Building (FBU)

    • Retained at neutral at UBS; Price Target: NZ$3.25 from NZ$3.45

  • Genusplus Group (GNP)

    • Retained at buy at Bell Potter; Price Target: $2.90 from $2.70

  • GQG Partners (GQG)

    • Retained at buy at Goldman Sachs; Price Target: $3.00 from $3.05

    • Retained at buy at Ord Minnett; Price Target: $3.35 from $3.30

  • Green Technology Metals (GT1)

    • Retained at buy at Bell Potter; Price Target: $0.14 from $0.19

  • HMC Capital (HMC)

    • Initiated at buy at Goldman Sachs; Price Target: $8.94

  • IGO (IGO)

    • Retained at sell at Bell Potter; Price Target: $4.00 from $4.60

  • Lake Resources (LKE)

    • Retained at hold at Bell Potter; Price Target: $0.05 from $0.12

  • Light & Wonder (LNW)

    • Retained at buy at Bell Potter; Price Target: $165.00 from $161.00

  • Arcadium Lithium (LTM)

    • Downgraded to hold from buy at Bell Potter; Price Target: $6.55 from $6.25

    • Retained at buy at Citi; Price Target: $6.50

    • Retained at outperform at Macquarie; Price Target: $5.30

    • Retained at outperform at RBC Capital Markets; Price Target: $4.05 from $3.10

  • Liontown Resources (LTR)

    • Retained at buy at Bell Potter; Price Target: $1.50 from $1.90

  • Mineral Resources (MIN)

    • Retained at buy at Bell Potter; Price Target: $62.00 from $66.00

  • Newmont Corporation (NEM)

    • Retained at buy at Citi; Price Target: $95.00

  • Northern Star Resources (NST)

    • Retained at buy at Citi; Price Target: $18.30 from $16.70

  • NRW (NWH)

    • Retained at buy at Citi; Price Target: $4.05

  • Pilbara Minerals (PLS)

    • Retained at hold at Bell Potter; Price Target: $3.00 from $3.15

  • Pro Medicus (PME)

    • Retained at buy at Goldman Sachs; Price Target: $193.00

  • Patriot Battery Metals (PMT)

    • Retained at buy at Bell Potter; Price Target: $0.75 from $0.90

  • Perseus Mining (PRU)

    • Retained at neutral at Citi; Price Target: $3.10 from $3.00

  • Rio Tinto (RIO)

    • Retained at overweight at Morgan Stanley; Price Target: $135.50

    • Retained at neutral at UBS; Price Target: $125.00

  • Regis Resources (RRL)

    • Retained at neutral at Citi; Price Target: $2.20 from $1.85

    • Downgraded to sell from neutral at Goldman Sachs; Price Target: $1.95

  • Select Harvests (SHV)

    • Upgraded to accumulate from hold at Ord Minnett; Price Target: $4.60 from $4.35

  • Santana Minerals (SMI)

    • Retained at buy at Shaw and Partners; Price Target: $2.86

  • Technology One (TNE)

    • Downgraded to neutral from buy at Goldman Sachs; Price Target: $24.05 from $19.70

  • Urbanise.Com (UBS)

    • Initiated at buy at UBS; Price Target: $2.10

  • Xero (XRO)

    • Retained at buy at Citi; Price Target: $158.20


Scans

Top Gainers

Code Company Last % Chg
RIM Rimfire Pacific M... $0.055 +37.50%
OCN Oceana Lithium Ltd $0.039 +30.00%
IAM Income Asset Mana... $0.079 +29.51%
PTR Petratherm Ltd $0.058 +26.09%
RR1 Reach Resources Ltd $0.015 +25.00%
View all top gainers

Top Fallers

Code Company Last % Chg
EXR Elixir Energy Ltd $0.068 -58.79%
IR1 Iris Metals Ltd $0.195 -15.22%
CAN Cann Group Ltd $0.051 -15.00%
KOB Koba Resources Ltd $0.115 -14.82%
ANX ANAX Metals Ltd $0.018 -14.29%
View all top fallers

52 Week Highs

Code Company Last % Chg
PTR Petratherm Ltd $0.058 +26.09%
EXT Excite Technology... $0.013 +18.18%
SNS Sensen Networks Ltd $0.056 +12.00%
KP2 Kore Potash Plc $0.06 +9.09%
HRN Horizon Gold Ltd $0.40 +8.11%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
PVW PVW Resources Ltd $0.02 -9.09%
RMI Resource Mining C... $0.011 -8.33%
CAZ Cazaly Resources Ltd $0.013 -7.14%
TMS Tennant Minerals Ltd $0.013 -7.14%
BUX Buxton Resources Ltd $0.056 -6.67%
View all 52 week lows

Near Highs

Code Company Last % Chg
IHD Ishares S&P/ASX D... $14.42 -0.69%
AYLD Global X S&P/ASX ... $10.59 +0.76%
BILL Ishares Core Cash... $100.81 +0.03%
HVN Harvey Norman Hol... $4.88 +1.04%
GLDN Ishares Physical ... $31.30 +0.94%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
SPK Spark New Zealand... $2.78 -2.46%
SMP Smartpay Holdings... $0.895 -1.65%
FHE Frontier Energy Ltd $0.14 +7.69%
SGR The Star Entertai... $0.27 -5.26%
AESG Ishares Global Ag... $97.22 -0.25%
View all RSI oversold

Written By

Carl Capolingua

Content Editor

Carl has over 30-years investing experience, helping investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl has a passion for technical analysis and has taught his unique brand of price-action trend following to thousands of Aussie investors.

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