What to watch for with ASX iron ore stocks BHP, RIO, FMG and CIA after latest China stimulus news
Tue 10 Dec 24, 3:53pm (AEDT)
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Market Wraps
/Evening Wrap: ASX 200 slips as investors dump Tech, Telcos, Banks and Pro Medicus to snap up surging Resources and Energy stocks
Market Wraps
Evening Wrap: ASX 200 slips as investors dump Tech, Telcos, Banks and Pro Medicus to snap up surging Resources and Energy stocks
Tue 10 Dec 24, 6:12pm (AEDT)
Stocks in article
The S&P/ASX 200 closed 30.0 points lower, down 0.36%.
Yesterday’s aftermarket announcement by China’s Politburo that it was considering a range of fiscal and monetary policy measures aimed at combatting many of the country's most damaging economic issues – from property, to consumption, to global competitiveness and trade – stoked massive gains in Resources and Energy stocks today.
But, the money to buy these had to come from somewhere else. This meant that previously highflying sectors like Information Technology, Communications Services, Consumer Discretionary, and Healthcare suffered. One stock in particular bore the brunt of the selling was the ASX's biggest 2024 superstar – Pro Medicus (PME).
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 Iron Ore and Copper in today's ChartWatch.
Let's dive in!
Today in Review
Tue 10 Dec 24, 5:21pm (AEDT)
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Markets
ASX 200 Session Chart
The S&P/ASX 200 (XJO) finished 30.0 points lower at 8,393.0, 0.65% from its session high and 0.39% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by nearly 2 to 1 for a second day in a row (today: 95 to 180).
It was a trend follower’s nightmare today 😱.
You know that I’ve been happily following the strong downtrends in ASX Resources (XJR) (+3.1%) and Energy (XEJ) (+1.3%) stocks – firmly entrenched for most of 2024 – whilst at the same time riding strong uptrends in Information Technology (XIJ) (-4.0%), Financials (XFJ) (-1.7%), Communication Services (XTJ) (-0.58%), and Consumer Discretionary (XDJ) (-0.98%).
I should add in that one of the greatest Tech trends this year (possibly in the history of the ASX!) has been in market darling Pro Medicus (ASX: PME) (-9.0%), technically a Health Care (XHJ) (-0.74%) stock.
You can see from the above session percentage moves that following those trends came a cropper today – as trends can often to when impacted upon by news. New information, that is. Stuff the market hadn’t considered prior, but now that it has, and it reframes the investing landscape.
That news was yesterday’s aftermarket announcement by China’s Politburo that it was considering a range of fiscal and monetary policy measures aimed at combatting many of the country's most damaging economic issues – from property, to consumption, to global competitiveness and trade.
As I noted in an article I published today on the topic, no actual specifics were disclosed. But, the constructive tone and sometimes forceful language within the message, was taken as a major positive for China-economy focussed stocks. Hence today’s performance in Resources and Energy.
But as is usually the case for our tiny and insignificant on a world scale market – the money to buy these stocks had to come from somewhere else.
And where better to draw those funds from than from the very stocks that the big fund managers had diverted their Resources and Energy investing dollars to all year? The market giveth. The market taketh away.
We are now at an interesting juncture as we roll towards the year-end. Have we commenced a new trend today that will extend into next year, and similarly, have we ended the trends of the alternative high-flyers?
Or is this just another blip in the prevailing uptrends of Tech, Telcos, Discretionary and Pro Medicus…and just another false dawn for beaten down Resources and Energy?
Time, and fortunately for those who persevere with these Evening Wraps, the charts, will tell!
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
Firefly Metals (FFM) | $1.145 | +$0.135 | +13.4% | -5.0% | +112.0% |
Develop Global (DVP) | $2.46 | +$0.25 | +11.3% | +11.3% | -15.2% |
Mineral Resources (MIN) | $37.16 | +$2.97 | +8.7% | +0.6% | -38.8% |
Vulcan Energy Resources (VUL) | $6.64 | +$0.49 | +8.0% | +27.9% | +207.4% |
Pilbara Minerals (PLS) | $2.29 | +$0.14 | +6.5% | -22.6% | -36.0% |
Fortescue (FMG) | $20.45 | +$1.2 | +6.2% | +12.9% | -19.7% |
Iluka Resources (ILU) | $5.13 | +$0.29 | +6.0% | -4.5% | -25.9% |
Metals Acquisition (MAC) | $20.25 | +$1.07 | +5.6% | +2.8% | 0% |
Regis Resources (RRL) | $2.85 | +$0.15 | +5.6% | +11.3% | +49.2% |
Sandfire Resources (SFR) | $10.67 | +$0.55 | +5.4% | +3.7% | +65.9% |
Karoon Energy (KAR) | $1.385 | +$0.07 | +5.3% | +0.7% | -28.1% |
Champion Iron (CIA) | $6.31 | +$0.31 | +5.2% | +11.9% | -17.7% |
Evolution Mining (EVN) | $5.29 | +$0.25 | +5.0% | +8.6% | +44.9% |
Capstone Copper Corp. (CSC) | $10.59 | +$0.49 | +4.9% | -6.0% | 0% |
Rio Tinto (RIO) | $125.28 | +$5.79 | +4.8% | +4.9% | -1.9% |
WA1 Resources (WA1) | $14.52 | +$0.66 | +4.8% | +11.8% | +76.4% |
Emerald Resources (EMR) | $3.82 | +$0.16 | +4.4% | -3.0% | +41.0% |
Vault Minerals (VAU) | $0.365 | +$0.015 | +4.3% | +2.8% | +1.4% |
Botanix Pharmaceuticals (BOT) | $0.375 | +$0.015 | +4.2% | +11.9% | +127.3% |
Treasury Wine Estates (TWE) | $11.95 | +$0.46 | +4.0% | +8.5% | +15.3% |
Deterra Royalties (DRR) | $4.00 | +$0.15 | +3.9% | +12.4% | -20.0% |
Gold Road Resources (GOR) | $2.18 | +$0.08 | +3.8% | +19.5% | +12.7% |
Westgold Resources (WGX) | $3.02 | +$0.11 | +3.8% | +4.9% | +41.1% |
Whitehaven Coal (WHC) | $6.55 | +$0.22 | +3.5% | -4.0% | -8.5% |
Nickel Industries (NIC) | $0.905 | +$0.03 | +3.4% | +0.6% | +27.5% |
Today’s best performing ASX stocks
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
Pro Medicus (PME) | $244.33 | -$24.04 | -9.0% | +21.7% | +174.0% |
Perpetual (PPT) | $20.07 | -$1.84 | -8.4% | -2.1% | -20.8% |
Tuas (TUA) | $5.94 | -$0.48 | -7.5% | +14.7% | +125.0% |
Unibail-Rodamco-Westfield (URW) | $6.00 | -$0.4 | -6.3% | +0.3% | +15.2% |
Hub24 (HUB) | $71.10 | -$4.59 | -6.1% | -1.4% | +109.2% |
Pinnacle Investment Management (PNI) | $22.74 | -$1.42 | -5.9% | +8.3% | +145.8% |
HMC Capital (HMC) | $11.61 | -$0.67 | -5.5% | +7.5% | +134.1% |
Megaport (MP1) | $7.43 | -$0.42 | -5.4% | -3.4% | -26.7% |
Regis Healthcare (REG) | $6.43 | -$0.36 | -5.3% | -1.4% | +115.1% |
Star Entertainment (SGR) | $0.180 | -$0.01 | -5.3% | -18.2% | -68.4% |
Life360 (360) | $22.77 | -$1.26 | -5.2% | -4.9% | +224.4% |
Zip Co. (ZIP) | $2.94 | -$0.16 | -5.2% | -12.2% | +600.0% |
Iperionx (IPX) | $4.41 | -$0.23 | -5.0% | +6.3% | +229.1% |
Nanosonics (NAN) | $3.14 | -$0.16 | -4.8% | -4.3% | -28.6% |
Dicker Data (DDR) | $8.39 | -$0.39 | -4.4% | -6.6% | -30.9% |
Xero (XRO) | $170.99 | -$7.82 | -4.4% | +7.1% | +65.0% |
Wisetech Global (WTC) | $125.60 | -$5.72 | -4.4% | -3.3% | +82.2% |
Audinate Group (AD8) | $7.75 | -$0.35 | -4.3% | -18.1% | -47.7% |
Nuix (NXL) | $6.43 | -$0.29 | -4.3% | -16.3% | +257.2% |
Light & Wonder (LNW) | $146.50 | -$6.51 | -4.3% | -6.9% | +13.1% |
Cromwell Property Group (CMW) | $0.355 | -$0.015 | -4.1% | -9.0% | -19.3% |
Hansen Technologies (HSN) | $5.37 | -$0.22 | -3.9% | +1.9% | +4.7% |
Credit Corp Group (CCP) | $16.64 | -$0.66 | -3.8% | -9.7% | +24.8% |
Droneshield (DRO) | $0.635 | -$0.025 | -3.8% | -22.1% | +101.6% |
WEB Travel Group (WEB) | $4.59 | -$0.18 | -3.8% | +9.8% | -21.7% |
Today’s worst performing ASX stocks
ChartWatch
Iron Ore 62% (Front month, back-adjusted) SGX
Has the seasonal rally begun?
The last time we covered iron ore was in ChartWatch in the Evening Wrap on 6 November.
In that update, I repeated my hunch from an earlier update (29 November) that the legendary December seasonal iron ore rally had begun.
Hey, I’m not saying that it’s going to be a monster like other years, simply there are some tentative signs that at least the short term trend is swinging higher.
It’s official, anyway, because the short term trend ribbon is again green. Also confirming my suspicions, the price action has clawed its way back above the long term trend ribbon and yesterday’s strong demand-side candle sets a trough at/in the ribbon.
This demonstrates the long term trend ribbon has switched from acting as a zone of dynamic supply to acting as a zone of dynamic demand. This is the key requirement in transitioning from long term downtrend to long term uptrend.
Today’s candle may confirm that the 105.40 point of supply has also been eclipsed. 108.15 is next, but ultimately only a close above the critical 112.8-114.10 supply zone can confirm that a December rally of any substance and consequence is afoot.
A close below the 102.25 point of demand kyboshes my theories, and likely puts the iron ore price back into a short and long term set of downtrends that could challenge the 95 point of demand.
High Grade Copper Futures (Front month, back-adjusted) COMEX
Just a blip
The last time we covered copper was in ChartWatch in the Evening Wrap on 5 November.
In that update, we noted a blip of demand-side activity in the form of a push out of the 4.0615-4.1115 demand-zone with a higher trough, a downward pointing shadow (2 Dec candle), and a modest but unconvincing follow-through candle on 3 Dec.
The general feeling was that said price action increased the possibility that an intermediate low was forming, and that the copper price might be able to tackle the overhead supply zones of the long term trend ribbon.
Since then, copper has had a little luck in the form of yesterday’s China stimulus news. That news sparked a decent demand-side candle in Monday’s session that has closed the copper price back above the dynamic supply of the short term downtrend ribbon. That’s a plus.
We’re still candle dependant from here, but the technicals remain consistent with my thesis that at least an intermediate low is now in. How much of a rally ensues will depend on the price action at the long term trend ribbon which kicks in around 4.334. A strong demand-side candle there would likely facilitate a challenge of the key 4.5625-4.5685 supply zone.
There’s no point looking any further out than that…
Alternatively, there is a standing bear-case scenario that involves supply-side candles (i.e., those with black-bodies and or upward pointing shadows) at the long term trend ribbon followed by a close below the 4.0615-4.445 demand zone. In this scenario, copper bulls shed plenty of tears and the price will likely then probe the likes of 3.963 and 3.8225.
Economy
Today
AUS RBA Interest rate decision – No change at 4.35% as forecast
RBA statement key points:
Added the statement: "The Board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain." – arguably dovish.
Added the statement: "While underlying inflation is still high, other recent data on economic activity have been mixed, but on balance softer than expected in November." – again, arguably dovish. Acknowledged here the weaker than expected September quarter GDP figures, noting it is "the slowest pace of growth since the early 1990s"
Added the statement: "Wage pressures have eased more than expected in the November SMP." – again, arguably dovish.
Replaced "But there are uncertainties" with "Some of the upside risks to inflation appear to have eased and while the level of aggregate demand still appears to be above the economy’s supply capacity, that gap continues to close." – again, arguably dovish.
RBA Governor Michelle Bullock press conference key points:
“We remain on the narrow path back to returning inflation within the target band, without wrecking the economy.”
“Some indicators softening in line with our forecasts, that said, on balance, some data is a little softer than expected. This has given the Board some confidence that inflationary pressures are declining, but risks remain.”
Which data? “The national accounts data weren’t as strong as expected, the Wages Price Index came a little bit lower than what we thought it might be, inflation data were broadly in-line. It’s not only slowing as we’d like, it’s slowing a little-bit more and that’s positive for inflationary pressures…it’s giving us confidence we’re coming on our narrow forecast path.”
“Some of those risks to upside inflation have eased. We have noticed [the weaker data] and we do need to take a bit of a signal from that, but upside risks remain.”
“We need to see more progress on inflation coming down.”
Watching closely: Unemployment climbing sharply, consumption in light of improving real incomes
“The Board wants to convey that our opinions are evolving as the data evolves, we have seen some weaker data. That gives us a little bit more confidence in the future. We’ve got to be aware that things may move in either direction.”
“The Board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain.”
Conclusions: A substantial dovish tilt in my opinion, enough to deliver a positive surprise to markets – order of magnitude – to bring forward first rate cut expectations from current April to February. My tip remains May, though, due to this Board being extremely measured and cautious (after the March quarter inflation data).
Later this week
Wednesday
There are no major economic data releases scheduled for this day
Thursday
12:30 USA Core CPI November (+0.3% m/m forecast vs +0.3% m/m previous)
11:30 AUD Employment Change & Unemployment Rate November
Change: +26,000 forecast vs +15,900 in October
U-Rate: 4.2% forecast vs 4.1% in October
Friday
00:15 EUR ECB interest rate decision (3.15% forecast vs 3.40% previous)
00:30 USA Core PPI (+0.3% m/m forecast vs +0.2% m/m previous)
Latest News
Interesting Movers
Trading higher
+13.4% Firefly Metals (FFM) - FireFly drills its best hole yet - 86.3m at 3.7% CuEq, but also a generally stronger ASX Resources sector on the back of a positive response to yesterday's China stimulus news - read more about it here.
+11.4% Brainchip (BRN) - US$1.8 million contract with Air Force Research Laboratory
+11.3% Develop Global (DVP) - Completion of A$100m Loan Facility with Trafigura, ditto ASX Resources vs China stimulus news…Retained at buy at Canaccord Genuity with a price target of $4.70
+10.3% Latin Resources (LRS) - No news, leveraged to the PLS rally, ditto ASX Resources vs China stimulus news…
+8.7% Mineral Resources (MIN) - No news, ditto ASX Resources vs China stimulus news…
+8.0% Vulcan Energy Resources (VUL) - No news, ditto ASX Resources vs China stimulus news…
+6.7% Wildcat Resources (WC8) - No news, ditto ASX Resources vs China stimulus news…
+6.5% Pilbara Minerals (PLS) - No news, ditto ASX Resources vs China stimulus news…
+6.2% Fortescue (FMG) - No news, ditto ASX Resources vs China stimulus news…
+6.0% Iluka Resources (ILU) - No news, ditto ASX Resources vs China stimulus news…
+5.6% Metals Acquisition (MAC) - No news, ditto ASX Resources vs China stimulus news…Retained at outperform at Macquarie with a price target of $7.10
+5.6% Regis Resources (RRL) - No news, ditto ASX Resources vs China stimulus news…
+5.6% Piedmont Lithium (PLL) - No news, ditto ASX Resources vs China stimulus news…
+5.4% Sandfire Resources (SFR) - No news, ditto ASX Resources vs China stimulus news…
+5.3% Karoon Energy (KAR) - No news, ditto ASX Resources vs China stimulus news…
+5.2% Champion Iron (CIA) - No news, ditto ASX Resources vs China stimulus news…
+5.0% Evolution Mining (EVN) - No news, ditto ASX Resources vs China stimulus news…
+4.9% Capstone Copper Corp. (CSC) - N, ditto ASX Resources vs China stimulus news…
+4.8% Rio Tinto (RIO) - No news, ditto ASX Resources vs China stimulus news…
+4.8% WA1 Resources (WA1) - No news, ditto ASX Resources vs China stimulus news…
Trading lower
-19.1% Silver Mines (SVL) - Placement to Raise $25 Million, fall is consistent with prevailing short and long term downtrends 🔎📉
-9.0% Pro Medicus (PME) - No news, not everything on the ASX can go up at the same time…So if Resources rally…Then the cash must come from somewhere else! Where better to draw that cash from than where Resources' cash was probably being diverted to all year!?
-8.4% Perpetual (PPT) - Update on Scheme with KKR, closed below short and long term uptrend ribbons, what a Perpetual disappointer! 🤦♂️
-7.5% Tuas (TUA) - No news, ditto not everything on the ASX can go up at the same time…
-6.5% Lotus Resources (LOT) - No news, couldn't even go up today! Fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch ASX Scans Downtrends lists 🔎📉
-6.3% Unibail-Rodamco-Westfield (URW) - No news, ditto not everything on the ASX can go up at the same time…
-6.1% Hub24 (HUB) - No news, ditto not everything on the ASX can go up at the same time…
-5.9% Pinnacle Investment Management Group (PNI) - No news, ditto not everything on the ASX can go up at the same time…
-5.5% HMC Capital (HMC) - No news, ditto not everything on the ASX can go up at the same time…
-5.4% Megaport (MP1) - No news, ditto not everything on the ASX can go up at the same time…Even worse because it's not like this one has rocketed this year…Indeed, fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch ASX Scans Downtrends lists 🔎📉
-5.3% Regis Healthcare (REG) - No news, ditto not everything on the ASX can go up at the same time…
-5.3% The Star Entertainment Group (SGR) - A dud is a dud regardless of which sectors the big funds are rotating between! Fall is consistent with prevailing short and long term downtrends, a regular in ChartWatch ASX Scans Downtrends lists 🔎📉
-5.2% Life360 (360) - No news, ditto not everything on the ASX can go up at the same time…
-5.2% Zip Co. (ZIP) - No news, ditto not everything on the ASX can go up at the same time…
-5.0% Iperionx (IPX) - No news, ditto not everything on the ASX can go up at the same time…
Broker Notes
Acrow (ACF)
Retained at buy at Shaw and Partners; Price Target: $1.30.
Ampol (ALD)
Retained at buy at Ord Minnett; Price Target: $34.50 from $36.50.
ANZ Group (ANZ)
Retained at underweight at Morgan Stanley; Price Target: $27.80.
Retained at hold at Ord Minnett; Price Target: $27.50.
ARB Corporation (ARB)
Retained at buy at Citi; Price Target: $50.00.
Beach Energy (BPT)
Downgraded to sell from hold at Canaccord Genuity; Price Target: $1.20 from $1.25.
Bluescope Steel (BSL)
Retained at outperform at Macquarie; Price Target: $24.90 from $23.10.
Coles Group (COL)
Retained at neutral at Goldman Sachs; Price Target: $18.50.
Retained at accumulate at Ord Minnett; Price Target: $19.50.
Develop Global (DVP)
Retained at buy at Canaccord Genuity; Price Target: $4.70.
EVT (EVT)
Retained at buy at Citi; Price Target: $12.73.
Firefly Metals (FFM)
Retained at buy at Canaccord Genuity; Price Target: $1.95.
Gold Road Resources (GOR)
Upgraded to sector perform from underperform at RBC Capital Markets; Price Target: $2.30.
GQG Partners (GQG)
Retained at buy at Goldman Sachs; Price Target: $2.80 from $3.00.
Retained at outperform at Macquarie; Price Target: $3.00 from $3.15.
Retained at buy at Ord Minnett; Price Target: $3.00 from $3.35.
Iluka Resources (ILU)
Retained at outperform at Macquarie; Price Target: $7.10.
Newmont Corporation (NEM)
Retained at buy at Ord Minnett; Price Target: $77.50.
Pantoro (PNR)
Initiated at buy at Moelis Australia; Price Target: $0.14.
Polymetals Resources (POL)
Initiated at buy at Ord Minnett; Price Target: $1.30.
Perpetual (PPT)
Retained at buy at Citi; Price Target: $22.50.
Platinum Asset Management (PTM)
Retained at sell at Goldman Sachs; Price Target: $0.85 from $0.95.
Rio Tinto (RIO)
Retained at neutral at UBS; Price Target: $124.00.
Reckon (RKN)
Initiated at buy at Moelis Australia; Price Target: $0.67.
Regal Partners (RPL)
Downgraded to sell from hold at Bell Potter; Price Target: $0.75 from $1.21.
Retained at hold at CLSA; Price Target: $0.76 from $1.10.
Retained at sell at Goldman Sachs; Price Target: $0.85.
Retained at underweight at JP Morgan; Price Target: $0.90.
Sonic Healthcare (SHL)
Retained at neutral at Citi; Price Target: $28.00 from $27.00.
Retained at outperform at CLSA; Price Target: $30.50.
Retained at neutral at Jarden; Price Target: $29.04 from $28.06.
Retained at neutral at JP Morgan; Price Target: $28.50 from $25.40.
Retained at lighten at Ord Minnett; Price Target: $23.85.
Retained at sector perform at RBC Capital Markets; Price Target: $32.00 from $29.00.
Southern Cross Gold (SXG)
Retained at buy at Shaw and Partners; Price Target: $3.69.
Telstra Group (TLS)
Upgraded to buy from hold at Jefferies; Price Target: $4.50 from $4.30.
Treasury Wine Estates (TWE)
Retained at buy at Citi; Price Target: $12.97.
Woolworths Group (WOW)
Retained at buy at Goldman Sachs; Price Target: $36.20.
Retained at overweight at Jarden; Price Target: $36.70 from $37.30.
Retained at hold at Jefferies; Price Target: $30.00.
Retained at neutral at JP Morgan; Price Target: $31.30 from $31.70.
Retained at hold at Ord Minnett; Price Target: $32.00.
Retained at neutral at UBS; Price Target: $30.00 from $31.25.
Scans
Carl has over 30-year's 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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