Evening Wrap: ASX 200 slides on Woolworths shock trading update, stubbornly high underlying inflation report

The S&P/ASX 200 closed 68.8 points lower, down 0.83%.

On a day where major Health Care, Financials, and Resources stocks fell in unison, the S&P/ASX200 Index was destined to struggle. But it was Woolworths' (WOW) disappointing trading update that perhaps garnered the most attention from nervous investors today – who failed to cheer the Australian inflation rate falling to post-pandemic lows.

(Hint: It might have something to do with stubbornly high underlying inflation...🤔)

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 the NASDAQ and Silver in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 68.8 points lower at 8,180.4, 0.97% from its session high and just 0.16% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 75 to 198.

I usually do the best performing ASX sectors first here, but today I had to start with ignominy that befell the Consumer Staples (XSJ) (-3.6%). Easily the worst performing sector today (by nearly 3 to 1 versus next worst Consumer Discretionary (XDJ) (-1.3%)) – it was hobbled by a very poorly received trading update from major constituent Woolworths Group (ASX: WOW).

Woolies' new CEO Amanda Bardwell was in decks clearing mode as she warned the market company profits for the current half to December 31 would be around five and a half per cent below the same time last year. Higher promotional activity, deeper discounts and general competition for the cash strapped Aussie dollar was to blame.

The news hit the rest of the XSJ, as well as the closely related XDJ, and to be fair was a bit of a pall over the whole market today. But on a day where major Health Care (XHJ) (-1.2%), Financials (XFJ) (-0.90%), and Resources (XJR) (-0.38%) all fell in unison, the XJO was destined to struggle.

The worst performing stocks from the worst performing sectors today

I put to you also that the release of the inflation data at 11:30am likely also didn't help proceedings today. You can see clearly on the above intraday XJO chart how the morning rally was snuffed out from that point. You'll find more analysis on the CPI data and its potential ramifications for interest rates in the Economy section below.

There were some bright spots today, though, Real Estate Investment Trusts (XPJ) (+0.50%) logged a tidy gain on the back of a small decline in market yields overnight and the evergreen (evergold!) Gold (XGD) (+0.08%) sub-index also snuck in with a gain.

The worst performing stocks from the worst performing sectors today

ChartWatch

NASDAQ Composite Index

Nothing interesting to see here, oh - apart from a new all-time high...

Just a super-quick note here because we only covered the Comp in Monday’s ChartWatch Evening Wrap.

In that update, we noted supply exactly where we expected it to be – at the 18671 former all time high. I say “former” because last night’s candle sets a new all time high – to be fair – also as we expected.

If demand-side control is represented by rising trend ribbons (and those ribbons acting as dynamic demand), rising peaks and rising troughs, and predominantly demand-side candles (i.e., those with white bodies and or downward pointing shadows), the Comp is going ✅✅✅ here.

The short term uptrend remains intact as long as the price closes above the short term uptrend ribbon, let’s call it below 18146 which is also lurking down there. Until then, the old ATH is dead – LONG LIVE THE BULL MARKET! 📈🐂

Silver Futures (Front month, back-adjusted) COMEX

Supply becomes demand

The last time we covered silver was in ChartWatch in the Evening Wrap on 24 October.

In that update, I said that I was “watching the old major supply zone of 32.425-33.51 for it to act as an ongoing demand zone”. Also, that we would know it is actually acting as demand if we saw demand-side candles in or above the zone.

The chart above shows that so far, that analysis appears to be spot-on. We did indeed see the telltale signs of excess demand reasserting itself in the expected demand zone in the form of downward pointing candle shadows. Yesterday’s push up with a decent white body appears to have sealed the deal.

It wasn’t an emphatic showing by the demand-side, though, as I note the prevalence of a small upward-pointing shadow. The size of the shadow relative to the rest of the candle is proportional to the amount of doubt held among market participants that higher prices are sustainable.

I suggest today’s candle will be critical in confirming this is indeed the case, and that silver can soon push through the $35.07 point of supply.

Demand remains 32.425-33.51, but I would not like to see the silver price close below the most recently set trough at 33.26. This should not occur in a healthy bull market breakout phase.

Economy

Today

• AUS Consumer Price Index (CPI)

  • Monthly, September: +2.1% p.a. vs +2.3% forecast and +2.7% p.a. in August

  • September Quarter Trimmed Mean: +0.8% q/q and +3.5% p.a. as forecast vs +0.9% q/q (revised up from +0.8%) and +4.0% p.a. in June (revised up from +3.9%)

  • Takeaways: Ignore the headline measures, the RBA is going to focus on the Trimmed Mean – and at +3.5% p.a. it's still to far above the central bank's 2-3% target for comfort. Also, some of the heat was taken out of rents inflation due to Commonwealth Rent Assistance changes. The Aussie economy is still running hot, or at the very least hot enough to prevent the rate of underlying inflation to fall quickly enough to allow the RBA to begin cutting interest rates any time soon.

Later this week

Tuesday

• 00:30 (+0% forecast vs +% previous)

Wednesday

• 23:30 USA Advance GDP September Quarter (+3.0% p.a. vs +3.0% p.a. in June

Thursday

• 11:30 AUS Retail Sales September (+0.3% m/m forecast vs +0.7% August)

• 12:30 CHN Purchasing Managers' Index (PMI) October

  • Manufacturing: 50.5 forecast vs 49.8 in September

  • Non Manufacturing: 50.5 forecast vs 50.0 in September

• 13:00 (Tentative, from) JPN Bank of Japan (BOJ) Policy Rate & Monetary Policy Statement (no change forecast at <0.25%)

• 23:30 USA Core PCE Price Index m/m September (+0.3% m/m and +2.8% p.a. forecast vs +0.1% m/m and +2.8% p.a. in August)

Friday

• 12:45 CHN Caixin Manufacturing PMI October (49.7 forecast vs 49.3 in September)

• 00:30 USA Non Farm Payrolls September

  • Employment change: 111,000 forecast vs 254,000 in August

  • Average hourly earnings: +0.3% m/m forecast vs +0.4% m/m in August

  • Unemployment rate: 4.1% forecast, no change vs August

Saturday

• 01:00 USA ISM Manufacturing PMI September (47.5 forecast vs 47.2 in August)

Latest News

Interesting Movers

Trading higher

• +12.0% Sovereign Metals (SVM) - September 2024 Quarterly Report, rise is consistent with prevailing short and long term uptrends, yet another strong performance from a ChartWatch Daily Scans Uptrends lists regular! 🔎📈

• +10.5% Mader Group (MAD) - No news, rise is consistent with prevailing short term uptrend, closed back above long term trend ribbon 🤔

• +10.1% Firefly Metals (FFM) - Continued positive response to yesterday's Green Bay Resource Increases 42% to 1.2Mt at 2% Copper Eq, rise is consistent with prevailing short and long term uptrends, yet another strong performance from a ChartWatch Daily Scans Uptrends lists regular! 🔎📈

• +6.1% Data#3 (DTL) - Data3 2024 AGM - Chair's Address to Shareholders

• +5.9% Beacon Lighting Group (BLX) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.9% Weebit Nano (WBT) - Weebit Nano Q1 FY25 Activities and Cashflow Report

• +3.4% Adairs (ADH) - No news, rise is consistent with prevailing short and long term uptrends, yet another strong performance from a ChartWatch Daily Scans Uptrends lists regular! 🔎📈

• +3.3% News Corporation (NWS) - No news, rise is consistent with prevailing short and long term uptrends, appeared in today's ChartWatch Daily Scans Uptrends list 🔎📈

• +3.1% Pro Medicus (PME)

  - No news, rise is consistent with prevailing short and long term uptrends, yet another strong performance from a ChartWatch Daily Scans Uptrends lists regular! 🔎📈

Trading lower

• -17.5% Cettire (CTT) - Continued negative response to yesterday's Profitable Q1 growth amid optimisation of operating settings, also downgraded to underperform from sector perform at RBC Capital Markets, fall is consistent with prevailing short and long term downtrends 🔎📉

• -14.6% Calix (CXL) - Calix & PLS Midstream Project Update, fall is consistent with prevailing short and long term downtrends 🔎📉

• -12.8% Terracom (TER) - JMM Sydney Investor Lunch Presentation, fall is consistent with prevailing short and long term downtrends 🔎📉

• -7.8% Novonix (NVX) - Quarterly Activities/Appendix 4C Cash Flow Report, closed back below long term trend ribbon

• -6.1% Woolworths Group (WOW) - First Quarter Sales Results and Trading Update, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch Daily Scans Downtrends lists 🔎📈

• -5.7% Grange Resources (GRR) - GRR - Quarterly Report for 3 months ended 30 September 2024, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch Daily Scans Downtrends lists 🔎📈

• -5.2% Myer (MYR) - Continued negative response to yesterday's Combination of Premier's Apparel Brands with Myer, closed below short term uptrend ribbon

• -5.1% Mayne Pharma Group (MYX) - Mayne Pharma investor education webinar presentation, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch Daily Scans Downtrends lists 🔎📈

• -4.5% Liontown Resources (LTR) - September 2024 Quarter Presentation and September 2024 Quarterly Activities and Cashflow Report

• -4.3% Ansell (ANN) - No news, downgraded to hold from outperform at CLSA, price target cut to $33.75 from $32.20

• -4.1% Universal Store (UNI) - FY25 YTD Trading Update and AGM Chair Address and Chair and CEO Presentation

Broker Notes

• The A2 Milk Company (A2M)

  • Upgraded to hold from sell at Bell Potter; Price Target: $6.10

• Aristocrat Leisure (ALL)

  • Retained at outperform at Macquarie; Price Target: $67.00

• Ansell (ANN)

  • Downgraded to hold from outperform at CLSA; Price Target: $33.75 from $32.20

• Burgundy Diamond Mines (BDM)

  • Retained at buy at Bell Potter; Price Target: $0.22 from $0.26

• Boss Energy (BOE)

  • Retained at outperform at Macquarie; Price Target: $4.60 from $5.00

• Bluescope Steel (BSL)

  • Retained at neutral at Citi; Price Target: $21.50 from $23.00

  • Downgraded to underperform from hold at CLSA; Price Target: $18.00 from $20.00

  • Retained at underperform at Jefferies; Price Target: $18.37 from $18.03

  • Retained at neutral at JP Morgan; Price Target: $21.00 from $22.00

  • Retained at outperform at Macquarie; Price Target: $23.10 from $24.00

  • Upgraded to equal-weight from underweight at Morgan Stanley; Price Target: $22.00 from $18.50

  • Retained at accumulate at Ord Minnett; Price Target: $22.60 from $22.55

  • Retained at outperform at RBC Capital Markets; Price Target: $24.50

• Credit Corp Group (CCP)

  • Retained at add at Morgans; Price Target: $20.65 from $20.50

• Capricorn Metals (CMM)

  • Retained at buy at Bell Potter; Price Target: $7.50 from $7.20

  • Retained at outperform at Macquarie; Price Target: $7.10 from $7.20

• Coronado Global Resources (CRN)

  • Retained at buy at Bell Potter; Price Target: $1.60 from $1.65

  • Retained at buy at Goldman Sachs; Price Target: $1.35 from $1.45

  • Retained at buy at Jefferies; Price Target: $1.45 from $1.50

  • Retained at buy at Morgans; Price Target: $1.40 from $1.85

  • Downgraded to hold from accumulate at Ord Minnett; Price Target: $1.10 from $1.25

  • Retained at buy at UBS; Price Target: $1.60 from $1.65

• CSL (CSL)

  • Retained at accumulate at Ord Minnett; Price Target: $320.00

• Cettire (CTT)

  • Downgraded to underperform from sector perform at RBC Capital Markets; Price Target: $0.90

• Firefly Metals (FFM)

  • Retained at buy at Shaw and Partners; Price Target: $1.90 from $1.40

• Growthpoint Properties Australia (GOZ)

  • Retained at buy at Citi; Price Target: $2.60

• Light & Wonder (LNW)

  • Retained at outperform at Macquarie; Price Target: $169.00

• Liontown Resources (LTR)

  • Retained at neutral at Citi; Price Target: $0.95

• Predictive Discovery (PDM)

  • Retained at buy at Shaw and Partners; Price Target: $16.00 from $16.80

• Percheron Therapeutics (PER)

  • Retained at buy at Morgans; Price Target: $0.24

• Pilbara Minerals (PLS)

  • Retained at neutral at Citi; Price Target: $2.90

• Patriot Battery Metals (PMT)

  • Retained at buy at Shaw and Partners; Price Target: $1.80

• Premier Investments (PMV)

  • Retained at buy at Citi; Price Target: $36.00

  • Retained at overweight at Morgan Stanley; Price Target: $39.50 from $35.75

• Reece (REH)

  • Retained at neutral at Citi; Price Target: $25.85 from $26.80

• Ramelius Resources (RMS)

  • Retained at buy at Argonaut Securities; Price Target: $2.60

  • Retained at buy at Canaccord Genuity; Price Target: $3.25 from $3.20

  • Retained at buy at Euroz Hartleys; Price Target: $2.62 from $2.47

  • Retained at buy at Ord Minnett; Price Target: $2.60 from $2.65

  • Retained at sector perform at RBC Capital Markets; Price Target: $2.80 from $2.60

  • Retained at buy at Shaw and Partners; Price Target: $2.73

• Scentre Group (SCG)

  • Retained at overweight at Morgan Stanley; Price Target: $4.35

• Sandfire Resources (SFR)

  • Retained at buy at Argonaut Securities; Price Target: $13.10

  • Downgraded to hold from buy at Canaccord Genuity; Price Target: $11.25 from $11.00

  • Retained at neutral at Citi; Price Target: $10.50 from $9.20

  • Retained at neutral at JP Morgan; Price Target: $11.20 from $11.10

  • Downgraded to neutral from outperform at Macquarie; Price Target: $10.20 from $10.00

  • Retained at equal-weight at Morgan Stanley; Price Target: $8.25

  • Retained at accumulate at Ord Minnett; Price Target: $10.85 from $10.35

  • Retained at sell at UBS; Price Target: $9.55 from $9.15

• Santana Minerals (SMI)

  • Retained at buy at Shaw and Partners; Price Target: $0.93

• Southern Cross Electrical Engineering (SXE)

  • Retained at buy at Shaw and Partners; Price Target: $2.10

• Southern Cross Gold (SXG)

  • Retained at buy at Shaw and Partners; Price Target: $3.69

• Vicinity Centres (VCX)

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

  • Retained at underweight at Morgan Stanley; Price Target: $2.35

  • Retained at accumulate at Ord Minnett; Price Target: $2.40

• Woolworths Group (WOW)

  • Retained at buy at Citi; Price Target: $38.56

• Zip Co. (ZIP)

  • Downgraded to neutral from buy at Citi; Price Target: $2.90 from $1.90

  • Retained at buy at Ord Minnett; Price Target: $3.60 from $2.45

Scans