Evening Wrap: ASX 200 slips on falling silver, lithium and uranium prices, defence stocks tumble: DRO -8.3% and ELS -17%

The S&P/ASX 200 closed 38.6 points lower, down -0.43%.

The ASX 200 retreated after two days of gains as fresh volatility in precious metals, lithium, and uranium prices sparked renewed selling pressure across the Resources sector.

To put this into perspective, silver is currently trading down 7% to US$78/oz, gold is 0.3% lower at US$4,930/oz, the benchmark lithium futures contract is trading limit down 11% in China, and uranium fell 5% to US$87.50/lb on COMEX overnight.

Financials (XFJ) (+0.8%) was the standout for resilience, pushing back to its highest level since November as Commonwealth Bank of Australia (CBA) (+1.4%) and ANZ Group (ANZ) (+1.4%) led the way.

On the other hand, Resources (XJR) (-3.3%) led the decliners, falling commodity prices showing up in Alcoa Corporation (AAI) (-6.1%), Capstone Copper Corp (CSC) (-7.1%) and Sandfire Resources (SFR) (-5.8%).

In company news, MAAS Group (MGH) slid 26.6% after announcement of the sale of its construction materials division to Heidelberg Materials Australia, while Lynas Rare Earths (LYC) (-7.9%) dived on concerns that new US government policy my cap the upside of certain critical minerals prices. Amcor (AMC) (+6.6%) was among the better large cap performers as it benefited from positive response to its quarterly results.

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

Also, I have detailed technical analysis on the Nasdaq Composite and the S&P/ASX 200 in today's ChartWatch.

Let's dive in!

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Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 38.6 points lower at 8,889.2, 0.19% from its session low and 0.43% from its session high. In the broader-based S&P/ASX 300 (XKO), decliners beat advancers by 148 to 126.

Fund flows: Eventually, they'll find an explanation for what's already in the charts! 📈

Hey, have you noticed just how many headlines there are banging around right now about the plunge in the tech sector… some of them even refer to a “great rotation” out of tech and into other, more mundane sectors. Who would have thunk it!? 🤷

One of the narratives I’ve heard expressed more commonly in the last 24-hours, is that many tech stocks are falling due to fears that AI will undermine their business models, particularly those with software as a service “SaaS” offerings. There was a time when SaaS was all the rage… think Xero (XRO) (%), think Wisetech Global (WTC) (%), think Pro Medicus (PME) (%)…

But also think Adobe (NYSE: ADBE), and Salesforce (NYSE: CRM) — charts below.

Adobe (NASDAQ: ADBE) chart (TOP); Salesforce (NYSE: CRM) chart (bottom).

What do you notice about ADBE’s and CRM’s charts? Do they look familiar? 🤔

They look the same as you know who! If anything, the local tech names look worse — probably because local risk-free rates have moved substantially higher compared to US risk-free rates (= great impact on analysts' discount rates vs ASX tech).

You know that I couldn’t care less about why this is happening — simply that it is happening. More specifically, I only care that the state of the market for tech shares resembles S > D = P ⬇️. ChartWatch has been all over it — many months before the headlines caught up this week.

But I know there are a few of you out there who are clinging to the nostalgic notion that “it’s good to know what’s happening in the fundamentals” — bless your little hearts!

For all of you, the gist of it goes like this:

1. It’s never been easier to develop new software using AI. I’ve seen what the Market Index/Livewire team is up to, and it is completely revolutionising their workflow (stuff that took days and weeks is down to hours — as in we can’t write development tickets fast enough!).

2. Back to SaaS — once the posterchild for “everything you want in a tech business”: Subscription revenue is no longer “bond-like.” Software companies have long been prized by credit investors for predictable, recurring cash flows. AI is threatening that stability by enabling cheaper competitors, pressuring pricing — which raises churn risk and makes forward revenue less certain.

3. That directly weakens debt metrics. Less reliable cash flow means lower interest-coverage ratios, weaker free-cash-flow generation, and higher leverage on a forward basis. For lenders, that increases the probability of covenant breaches, rating downgrades, or refinancing stress. For stock analysts — they’re going to ratchet up the interest rate they use to punitively discount risky future cash flows. It means that investors will likely prefer to pay much less per share for an affected tech business.

4. Private credit is exposed. Many private credit funds have lent heavily to mid-market software firms at floating rates, assuming stable renewals. This is the key factor that’s sparked the sharp falls in US tech stocks over the last 48-hours — and its one to watch as markets absolutely hate credit concerns! As equity prices fall and growth assumptions reset, loans to once-unicorn-tech-hopefuls begin to look riskier — prompting mark-downs, tighter lending conditions, and broader risk-aversion.

The points above are part of a “narrative” = words put together in the right order constituting a plausible reason for investing in a certain way.

You know how much I hate investing on narratives! They’re just words. And as plausible as they might be — they can become defunct faster than you can scroll down your favourite social media platform!

Price on the other hand, is irrefutable. More specifically, D vs S = P. This is not a narrative, this is the most basic tenet of economics. It was when they built the pyramids, it is now, and it will be until AI finally enslaves the human race! 🤖

Hey, until that last bit… I’ll keep watching my charts! 😉

Microsoft (NYSE: MSFT) chart

Today's best blue chip gainers

Today's worst blue chip losers

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ChartWatch

Nasdaq Composite Index

Analysis

Rest assured, ChartWatch is a 🚫 NARRATIVE FREE ZONE 🚫

Let’s start with Wednesday’s candle: S > D = P⬇️

However, the modest downward pointing shadow suggests (like it has been the case all week) there remains some credible buy the dip activity around. Credible, commendable really… but ultimately, still losing the battle.

In the short term at least: there exists excess supply for Comp stocks.

The 22692 point of demand held — just — but it certainly got tickled (Wednesday’s low = 22684).

• Short term trend = ↔️, short term trend ribbon is amber, price is below ribbon. ⚠️

• Long term trend = ⬆️ ✅

• Price action = 📉 = falling peaks/troughs = supply reinforcement and demand removal = sell the rally + fail to buy the dip ⚠️

• Candles: Since the 28-Jan minor peak of 23989, predominantly supply-side in nature = pervasive sell orders ⚠️

• Volatility = elevated (+ supply-side price action = strong supply-side motivation) = ⚠️

• Volume = elevated (+ supply-side price action = supply-side operating with size) = ⚠️

Using a weight of evidence approach, what have we got? 🔍

⚠️✅⚠️⚠️⚠️⚠️ = ⚠️

That’s the “Analysis” and “Accept” component. Now, how do we “Act”?

View

Previously we were at 2/3RP with a halt on adding new risk for the last few days. That downward pointing shadow just saved it for me. I’ll stick with: I require a close below 22692 (now 22684) before I officially move to 1/2RP. However, still on hold for new risk, happy to let risk roll off via “natural attrition” towards 1/2RP. (RP = Risk Position 🪣 — it reflects my personal allowable capital allocation limit for my investments in US stocks. So 1/2RP is 50%, 2/3RP is 67% and FRP is 100%)

Key levels

The next zone of demand is 22684-916. If the Comp closes below that zone, we can assume the supply side is in control. On a close below 21898 the long term uptrend is likely under significant pressure = ⚠️. 23722-24020 is the nearest critical zone of supply — the Comp must close within/above this zone with a strong demand-side candle to confirm the demand-side is unequivocally back in control of the Comp's price. If so, then it would trigger a move to FRP (i.e., Full Risk Position of 100% invested! 🤞).

S&P/ASX 200 (XJO)

Analysis

Little has changed in the technicals post-addition of today’s candle — which isn’t necessarily a bad thing considering the damage taken on the Comp chart.

I remain optimistic that we’ll get a test of 8979 — hey if it can’t go down, it’ll probably go up!

In between 8979, and its opposite demand-side number at 8746, there’s not much else to do but sit and wait. The appropriate portfolio risk adjustments have been in place for a few days now!

View

On Monday I said that I will suspend adding all new long-side risk exposure and let my portfolio risk reduce by “natural attrition” to 1/2RP 🪣. I still believe somewhere between the present 2/3RP and the eventual target 1/2RP is likely the right balance. A strong demand-side candle with close near its high and above 8979 would see me move back to a regular 2/3RP portfolio risk setting.

Key levels

8746-8765 is the closest zone of demand. A close below 8746 would neutralise the present short term uptrend, while a close below 8675 almost certainly end the long term uptrend. 8979 is the next key point of supply.

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Economy

Today

• 11:30 AUS January Goods Trade Balance

  • Result: +3.37 billion vs +3.42 billion forecast and +2.94 billion in December

Later this week

Friday

• 9:30 AUS RBA Gov Bullock Speaks

• Tentative AUS February NAB Quarterly Business Confidence

Saturday

• 07:00 USA January Consumer Credit m/m (9 billion forecast vs 4.2 billion in December)

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Latest News

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Interesting Movers

Trading higher

• +18.3% Solstice Minerals (SLS) – No news since 03-Feb Outstanding High-Grade Cu-Au Intercepts at Nanadie.

• +8.8% Praemium (PPS) – No news, general strength across the broader Financials sector today.

• +8.5% SKS Technologies Group (SKS) – Major Contract Award and FY26 Profit Upgrade.

• +7.0% Treasury Wine Estates (TWE) – Becoming a substantial holder (JPMorgan Chase & Co 5.2%), general strength across the broader Consumer Staples sector today.

• +6.6% Amcor PLC (AMC) – Form 10-Q, general strength across the broader Consumer Staples sector today.

• +6.2% GQG Partners (GQG) – No news, general strength across the broader Financials sector today.

• +6.0% Netwealth Group (NWL) – No news, general strength across the broader Financials sector today.

• +5.9% Premier Investments (PMV) – No news, general strength across the broader Consumer Staples sector today.

• +5.3% Orora (ORA) – Change in substantial holding (Allan Gray 21.2% from 20.1%), general strength across the broader Consumer Staples sector today.

• +5.1% Regal Partners (RPL) – Regal Partners Announces On-Market Share Buy-back Program, general strength across the broader Financials sector today.

Trading lower

• -26.6% (MGH) – CM divestment and strategy update presentation, general weakness across the broader Resources sector today.

• -23.1% Tungsten Mining (TGN) – Watershed - Assessing Accelerated Development Pathways, general weakness across the broader Critical Minerals sector today.

• -18.4% Manuka Resources (MKR) – Draft Panel Decision to Decline Taranaki VTM Application, general weakness across the broader Precious Metals sector today.

• -17.1% Elsight (ELS) – No news since 04-Feb Investor Webinar Presentation, general weakness across the broader Defence sector today.

• -17.0% Sunrise Energy Metals (SRL) – Change in substantial holding (SailingStone Capital Partners 8.0% from 9.1%), general weakness across the broader Critical Minerals sector today.

• -14.3% Dateline Resources (DTR) – No news, general weakness across the broader Critical Minerals sector today.

• -11.4% Galan Lithium (GLN) – No news, general weakness across the broader Lithium sector today.

• -11.2% Polymetals Resources (POL) – No news, general weakness across the broader Silver sector today.

• -10.3% Bannerman Energy (BMN) – No news, general weakness across the broader Uranium sector today.

• -9.8% Neuren Pharmaceuticals (NEU) – Priority Review Voucher program reauthorized by US Congress.

• -9.2% Nexgen Energy (NXG) – No news, general weakness across the broader Uranium sector today.

• -9.0% Paladin Energy (PDN) – No news, general weakness across the broader Uranium sector today.

• -8.9% Boss Energy (BOE) – No news, general weakness across the broader Uranium sector today.

• -8.3% Droneshield (DRO) – No news, general weakness across the broader Defence sector today.

• -8.2% Elevate Uranium (EL8) – Marenica Resource Update Doubles Grade, general weakness across the broader Uranium sector today.

• -8.2% Silver Mines (SVL) – No news, general weakness across the broader Silver sector today.

• -8.1% Peninsula Energy (PEN) – No news, general weakness across the broader Uranium sector today.

• -8.1% BetaShares Crypto Innovators ETF (CRYP) – No news (large falls in major cryptocurrencies over the past 24 hours).

• -8.0% Metals X (MLX) – No news, general weakness across the broader Critical Minerals sector today.

• -7.9% Lynas Rare Earths (LYC) – No news, general weakness across the broader Critical Minerals sector today.

• -7.9% Energy One (EOL) – No news, general weakness across the broader Defence sector today.

• -7.5% BetaShares Global Uranium ETF (URNM) – No news, general weakness across the broader Uranium sector today.

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Broker Moves

Amcor Plc (AMC)

• Retained at outperform at CLSA; Price Target: $80.00

• Retained at overweight at Jarden; Price Target: $75.00 from $80.20

• Retained at overweight at JPMorgan; Price Target: $72.50

• Retained at outperform at Macquarie; Price Target: $86.50 from $87.10

• Retained at buy at Morgans; Price Target: $75.80 from $76.00

• Downgraded to accumulate from buy at Ord Minnett; Price Target: $70.00 from $73.00

• Retained at buy at UBS; Price Target: $91.25

Amotiv (AOV)

• Retained at buy at Citi; Price Target: $12.56

• Retained at outperform at Macquarie; Price Target: $11.66

Eagers Automotive (APE)

• Retained at outperform at Macquarie; Price Target: $29.98

ARB Corporation (ARB)

• Retained at buy at Citi; Price Target: $42.25

• Retained at outperform at Macquarie; Price Target: $35.80

Autosports Group (ASG)

• Retained at outperform at Macquarie; Price Target: $4.85

Aurum Resource (AUE)

• Retained at speculative buy at Canaccord Genuity; Price Target: $1.50

Antipa Minerals (AZY)

• Retained at speculative buy at Canaccord Genuity; Price Target: $1.25

Bapcor (BAP)

• Retained at neutral at Macquarie; Price Target: $2.05

Bega Cheese (BGA)

• Retained at outperform at Macquarie; Price Target: $6.50

BHP Group (BHP)

• Retained at overweight at Morgan Stanley; Price Target: $55.50

Boss Energy (BOE)

• Retained at overweight at Morgan Stanley; Price Target: $2.00 from $2.05

Breville Group (BRG)

• Retained at outperform at Macquarie; Price Target: $39.20

BWP Trust (BWP)

• Retained at buy at UBS; Price Target: $4.11 from $4.10

CAR Group (CAR)

• Retained at buy at Citi; Price Target: $42.55

Centuria Industrial REIT (CIP)

• Retained at buy at UBS; Price Target: $3.78 from $3.95

Collins Foods (CKF)

• Retained at neutral at Macquarie; Price Target: $11.20

Centuria Office REIT (COF)

• Upgraded to hold from sell at Bell Potter; Price Target: $1.05

Coles Group (COL)

• Retained at outperform at Macquarie; Price Target: $24.50

Charter Hall Social Infrastructure REIT (CQE)

• Retained at buy at Moelis Australia; Price Target: $3.55 from $3.39

Charter Hall Retail REIT (CQR)

• Retained at neutral at UBS; Price Target: $4.20 from $4.12

Domino's Pizza Enterprises (DMP)

• Retained at underperform at Macquarie; Price Target: $19.40

Deterra Royalties (DRR)

• Retained at overweight at Morgan Stanley; Price Target: $4.70 from $4.75

Endeavour Group (EDV)

• Retained at underperform at Macquarie; Price Target: $3.40

Fortescue (FMG)

• Retained at underweight at Morgan Stanley; Price Target: $19.00

FleetPartners Group (FPR)

• Retained at outperform at Macquarie; Price Target: $3.36

Goodman Group (GMG)

• Retained at buy at UBS; Price Target: $37.14 from $36.41

Guzman Y Gomez (GYG)

• Retained at outperform at Macquarie; Price Target: $30.00

HUB24 (HUB)

• Retained at neutral at Citi; Price Target: $104.75

• Retained at overweight at Morgan Stanley; Price Target: $126.00 from $123.00

Harvey Norman Holdings (HVN)

• Retained at outperform at Macquarie; Price Target: $7.60

IGO (IGO)

• Retained at underweight at Morgan Stanley; Price Target: $7.50

Inghams Group (ING)

• Retained at underperform at Macquarie; Price Target: $2.20

IODM (IOD)

• Initiated at buy at Shaw and Partners; Price Target: $0.23

JB Hi-Fi (JBH)

• Retained at outperform at Macquarie; Price Target: $112.00

Jumbo Interactive (JIN)

• Retained at hold at Bell Potter; Price Target: $10.80 from $12.80

• Retained at positive at E&P; Price Target: $13.67 from $16.40

• Retained at overweight at JPMorgan; Price Target: $13.00

• Retained at buy at Morgans; Price Target: $14.90 from $15.60

LendLease Group (LLC)

• Retained at buy at Citi; Price Target: $6.30 from $6.70

Lovisa Holdings (LOV)

• Retained at buy at Citi; Price Target: $38.45

Mirvac Group (MGR)

• Retained at neutral at UBS; Price Target: $2.15 from $2.31

McMillan Shakespeare (MMS)

• Retained at outperform at Macquarie; Price Target: $19.69

Megaport (MP1)

• Retained at buy at Citi; Price Target: $16.30

Metcash (MTS)

• Retained at neutral at Macquarie; Price Target: $3.50

Nick Scali (NCK)

• Retained at outperform at Macquarie; Price Target: $29.30

Neuren Pharmaceuticals (NEU)

• Retained at buy at Bell Potter; Price Target: $22.00 from $25.00

Nufarm (NUF)

• Retained at buy at Bell Potter; Price Target: $3.60

Netwealth Group (NWL)

• Retained at buy at Citi; Price Target: $28.90

• Retained at overweight at Morgan Stanley; Price Target: $39.00 from $41.00

NEXTDC (NXT)

• Retained at buy at Citi; Price Target: $18.35

Paladin Energy (PDN)

• Retained at overweight at Morgan Stanley; Price Target: $14.45

Premier Investments (PMV)

• Retained at outperform at Macquarie; Price Target: $16.20

Pinnacle Investment Management Group (PNI)

• Retained at buy at Ord Minnett; Price Target: $21.80 from $22.60

• Retained at neutral at UBS; Price Target: $18.65 from $18.40

REA Group (REA)

• Retained at buy at Citi; Price Target: $222.70

RAM Essential Services Property Fund (REP)

• Retained at buy at UBS; Price Target: $0.71 from $0.70

South32 (S32)

• Retained at overweight at Morgan Stanley; Price Target: $4.75

Scentre Group (SCG)

• Retained at neutral at UBS; Price Target: $4.20 from $4.00

SiteMinder (SDR)

• Retained at buy at Citi; Price Target: $8.40

SEEK (SEK)

• Retained at buy at Citi; Price Target: $29.95

Sandfire Resources (SFR)

• Retained at underweight at Morgan Stanley; Price Target: $16.20 from $16.15

Stockland (SGP)

• Retained at neutral at UBS; Price Target: $5.82 from $6.10

Sigma Healthcare (SIG)

• Retained at neutral at Macquarie; Price Target: $3.00

Smartgroup Corporation (SIQ)

• Retained at outperform at Macquarie; Price Target: $8.99

Sunstone Metals (STM)

• Retained at buy at Shaw and Partners; Price Target: $0.07

Santos (STO)

• Retained at outperform at Macquarie; Price Target: $7.77

Super Retail Group (SUL)

• Retained at neutral at Macquarie; Price Target: $15.70

Temple & Webster Group (TPW)

• Retained at outperform at Macquarie; Price Target: $24.15

Titan Minerals (TTM)

• Retained at speculative buy at Canaccord Genuity; Price Target: $1.95

Treasury Wine Estates (TWE)

• Retained at neutral at Macquarie; Price Target: $5.20

Universal Store Holdings (UNI)

• Retained at outperform at Macquarie; Price Target: $10.20

Vitrafy Life Sciences (VFY)

• Retained at speculative buy at Bell Potter; Price Target: $2.25 from $2.28

Woodside Energy Group (WDS)

• Retained at neutral at Macquarie; Price Target: $25.00

Wesfarmers (WES)

• Retained at outperform at Macquarie; Price Target: $91.00

Whitehaven Coal (WHC)

• Retained at equal-weight at Morgan Stanley; Price Target: $9.80 from $9.55

Woolworths Group (WOW)

• Retained at neutral at Macquarie; Price Target: $28.50

Wisetech Global (WTC)

• Retained at buy at Citi; Price Target: $109.15

Xero (XRO)

• Retained at buy at Citi; Price Target: $144.80 from $210.00

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Scans