Evening Wrap: ASX 200 slumps on Powell "stocks overvalued" comment, but US Gov's LAC stake proves Trump card for lithium stocks

The S&P/ASX 200 closed 81.4 points lower, down 0.92%.

News overnight that the Trump administration is looking to take a stake of up to 10% in Lithium Americas Corp. (NYSE: LAC) has sent the company’s shares soaring 80%... it's also provided a major boost to ASX lithium stocks, particularly those with US exposure.

Elsewhere, it was a dour session for Aussie shares, as they followed negative leads from US equity markets. Later in the session, worse than expected local inflation data sapped investors will to rebound.

As for those "negative US leads", they were largely due to comments made by Federal Reserve Chair Jerome Powell in a speech last night our time during which he was asked about the role markets play in the Fed’s decision-making and whether officials are comfortable with valuations staying high.

“We do look at overall financial conditions, and we ask ourselves whether our policies are affecting financial conditions in a way that is what we’re trying to achieve,” Powell said. “But you’re right, by many measures, for example, equity prices are fairly highly valued.”

It wasn't quite former Fed chief Alan Greenspan's infamous "irrational exuberance" comment from the 1990's that triggered a mini-pullback in major US indices... but it still smarts!

In economics news, Australian inflation as measured by the Consumer Price Index (CPI) was 3.0% p.a. in the 12-months to August – higher than the 2.9% p.a. economists were expecting, and than the 2.8% p.a. reading logged in July. At 3.0% p.a., Aussie inflation is now back at the top end of the RBA's target range... and this had many starting to factor out further rate cuts this year...😭

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 S&P/ASX 200 in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 81.4 points lower at 8,764.5, 0.93% from its session high and just 0.23% from its low. In the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by a convincing 76 to 186.

Hey, you didn’t think we were going to stand on our own two feet and defy that dip in US markets overnight? Did you? 🤔

No, I didn’t think so... neither did I... Which means that as I look down the list of sector and individual performances on the ASX today, there are few surprises! 🤦

The Gold Sub-Index (XGD) (-0.2%) took a little breather – no biggie – it can’t go up vertically every day now, can it!? There were a few uninspiring performances, for example Genesis Minerals (GMD) (-1.6%), Catalyst Metals (-1.1%), and Ramelius Resources (RMS) (-1.1%) – but no news across those… just pullback after a very strong run kind of stuff…

But I also note that ChartWatch ASX Scans favourites like Felix Gold (FXG) (+18.1%), Barton Gold (BGD) (+10.8%), GBM Resources (GBZ) (+9.5%), and African Gold (A1G) (+6.3%), still managed to log solid gains. We’re talking 9, 13, 4, and 8 Feature Uptrend Charts respectively each (i.e., highest conviction uptrends). FYI, FXG's first Feature was 8-Aug at a close price of $0.20 – it's now $0.62; BGDs’ first Feature was 10-Apr at a close price of $0.40 – it's now $1.23; A1G’s first Feature was 10-Apr at a close price of $0.11 – it's now $0.34; and GBZ’s first Feature was 6-Aug at a closing price of $0.027 – it's now $0.046. Nice 👍!

It was kind of: “Everything else was varying shades of lousy, but not lousy lousy” from there… Banks reversed their strong performance from yesterday with solid falls across the Big 4 (from CBA's -1.4% to WBC's -3.2%), as Financials (XFJ) more broadly lost 1.8%.

Information Technology (XIJ) (-0.9%) largely followed the Nasdaq Composite’s lead, with Xero (XRO) (-1.6%), Wisetech Global (WTC) (-2.1%), and perennial “dog with fleas” as Gordon Gekko would likely describe it, Audinate (AD8) (-0.4%), among sector losses (Note: AD8 = 45 times ChartWatch ASX Scans Feature Downtrend since first Feature on 27-May 2024 at $15.98 – it's now $4.51 🤯).

Audinate (AD8) chart. If only there was a way to figure out if a company was struggling... you know... and if the big fund managers had turned against it... hmmm... if only! 😉

But still no surprises so far… Perhaps the fact that Resources (XJR) (+0.1%) largely dodged the selling today… that’s interesting. A modest gain in majors BHP Group (BHP) (+0.1%) and Fortescue (FMG) (+0.2%) likely drove much of this from a pure index points perspective, but dig a little deeper, and there continues a major resurgence in the small-to-mid end of this sector – today particularly among stocks focussed on lithium and other critical minerals.

The catalyst is almost certainly news overnight that the Trump administration is looking to take a stake of up to 10% in Lithium Americas Corp. (NYSE: LAC). The company’s shares are trading up 80% at the time of writing in after-hours trade on the NYSE as investors cheer news the US government is looking to swap its US$2.3 billion Energy Department loan (granted during the Biden administration) with stock.

Obviously, there’s some positive blowback for local lithium and other critical minerals producers and aspirants, particularly those with US-focussed projects like Ioneer (INR) (+18.5%). But, the rest of the gang got a boost (can I say not as much as I would have expected, though 🤔), with majors Mineral Resources (MIN) (+4.5%), Pilbara Minerals (PLS) (+5.3%), and Liontown Resources (LTR) (+1.7%) all firmer by the close.

Today's best blue chip gainers

Today's worst blue chip losers

ChartWatch

S&P/ASX 200 (XJO)

S&P/ASX 200 chart (click here for full size image)

The Old Tin Pot really didn’t have much to work with today, did it? And therefore, we kinda ended up with exactly the candle that you long suffering readers of ChartWatch, and I, expected: Black and closing pretty much near the low of the session.

The result is another peak just below 8888 – shaping even more now as the go-no-go for this bull market. Growing in similar importance, is 8731-38, which we now find ourselves uncomfortably close to… ⚠️

A close below that zone of demand confirms a new short term downtrend – that’s right, the transition from short term uptrend prior to “that candle” on 3-Sep (i.e., the big black one!), to neutral/equilibrium since – will be complete.

And it will trigger a further adjustment in my personal portfolio risk setting, currently at 2/3RP – to 1/2RP (RP stands for Risk Position – it limits the amount of capital I can invest in a particular market).

Depending on the candle that cracks 8731-38 – because if it’s a real supply-side stinker (i.e., very long black body and or very long upward pointing shadow – both with a close at the session low) – I may go to 1/3RP.

But that hasn’t happened yet, has it?

I’m not pre-empting things, and I’m certainly not predicting things: I am merely being prepared for things…🧐

Oh Old Tin Pot, you didn’t go up when the Comp was soaring… but that won’t matter one bit if should it pull back now, should it? 🤦

Economy

Today

• 11:30 AUS August Consumer Price Index (CPI)

  • 3.0% p.a. vs +2.9% p.a. forecast and July +2.8% p.a.

  • Worse than expected and back at the top of the RBA's target band... not a great result for those who are counting on further rate cuts! 👎

Later this week

Thursday

• 00:00 USA August New Home Sales (651,000 forecast vs July 652,000)

• 22:30 USA August Core Durable Goods (-0.2% m/m vs July +1.0% m/m)

Friday

• 00:00 USA August Existing Home Sales (3.96 million forecast vs July 4.01 million)

• 22:30 USA August Personal Consumption Expenditures (PCE)

  • Price Index: +0.2% m/m vs July +0.3% m/m

  • Personal Income: +0.3% m/m vs July +0.4% m/m

  • Personal Spending: +0.5% m/m vs July +0.5% m/m

Latest News

Interesting Movers

Trading higher

• +22.6% Yandal Resources (YRL) - Arrakis Gold Discovery Extended by 400m, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, added to ChartWatch ASX Scans Uptrends list yesterday 🔎📈

• +19.2% Dreadnought Resources (DRE) - 36% Increase in High-Grade M&I Resource - Star of Mangaroon, rise is consistent with prevailing short term uptrend and long term trend is transitioning from down to up, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +18.5% Ioneer (INR) - Lithium Americas (NYSE: LAC) vs US Govt proposed equity stake news, general strength across the broader Lithium sector today.

• +18.1% Felix Gold (FXG) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +14.3% Anson Resources (ASN) - Definitive Offtake Agreement with LG Energy Solution, general strength across the broader Lithium sector today.

• +13.8% Stakk (SKK) - Continued positive response to 18-Sep Robinhood selects Stakk as vendor for new banking solution, rise is consistent with prevailing short and long term uptrends, a recent regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +13.6% Zenith Minerals (ZNC) - Trading Halt, rise is consistent with prevailing short and long term uptrends.

• +12.7% G50 Corp (G50) - G50 Corp Webinar White Caps Gold and Antimony Discovery, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +12.7% Race Oncology (RAC) - RC220 IND Approval from Korean MFDS, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +11.6% American Rare Earths (ARR) - No news since 23-Sep Test Mining Completed at The Cowboy State Mine, general strength across the broader Critical Minerals sector today.

• +10.8% Barton Gold (BGD) - Tolmer Soil Assays Indicate Extensions & New Targets, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +10.0% Broken Hill Mines (BHM) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +9.6% Nova Minerals (NVA) - No news, general strength across the broader Critical Minerals sector today, rise is consistent with prevailing short and long term uptrends 🔎📈

• +9.5% GBM Resources (GBZ) - No news, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

• +9.4% Almonty Industries (AII) - Drill Program Commences at Sangdong Molybdenum Project, rise is consistent with prevailing short and long term uptrends, one of the most Featured (highest conviction) stocks in ChartWatch ASX Scans Uptrends list 🔎📈

• +9.1% St George Mining (SGQ) - Presentation to RIU Resources Roadshow Melbourne, rise is consistent with prevailing short and long term uptrends, a regular in ChartWatch ASX Scans Uptrends list 🔎📈

Trading lower

• -15.6% West Coast Silver (WCE) – High Grade Intercepts Returned & Drilling to Continue at EH.

• -14.9% Island Pharmaceuticals (ILA) – No news, pulled back in the wake of recent sharp rally.

• -11.6% Amplitude Energy (AEL) – Successful Completion of Institutional Offer.

• -11.2% Lakes Blue Energy (LKO) – Wombat-5 Well, Gippsland Basin, Victoria, Drilling Update.

• -9.8% Decidr Ai Industries (DAI) – No news, pulled back in the wake of recent sharp rally.

• -9.2% Locksley Resources (LKY) – No news, pulled back in the wake of recent sharp rally.

Broker Moves

Aussie Broadband (ABB)

• Retained at buy at Citi; Price Target: $6.15

Aristocrat Leisure (ALL)

• Retained at buy at Citi; Price Target: $71.00

Clover Corporation (CLV)

• Retained at buy at UBS; Price Target: $0.75 from $0.68

Charter Hall Long Wale REIT (CLW)

• Downgraded to neutral from buy at Macquarie; Price Target: $4.70 from $4.40

Golden Horse Minerals (GHM)

• Retained at buy at Shaw and Partners; Price Target: $0.81

Myer Holdings (MYR)

• Retained at overweight at Morgan Stanley; Price Target: $0.77 from $1.00

• Downgraded to hold from accumulate at Ord Minnett; Price Target: $0.67 from $0.86

Perseus Mining (PRU)

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

Platinum Asset Management (PTM)

• Retained at neutral at UBS; Price Target: $0.79 from $0.53

Redox (RDX)

• Retained at overweight at Morgan Stanley; Price Target: $3.50

SiteMinder (SDR)

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

• Retained at buy at Morgans; Price Target: $7.97

Superloop (SLC)

• Retained at buy at Citi; Price Target: $3.75

Santos (STO)

• Retained at buy at Citi; Price Target: $7.50 from $8.70

Talga Group (TLG)

• Retained at speculative buy at Bell Potter; Price Target: $1.00

Telix Pharmaceuticals (TLX)

• Retained at overweight at Morgan Stanley; Price Target: $25.60

• Retained at buy at UBS; Price Target: $31.00 from $36.00

Technology One (TNE)

• Retained at hold at Bell Potter; Price Target: $38.50 from $35.75

Tuas (TUA)

• Retained at buy at Citi; Price Target: $9.95

Vulcan Energy Resources (VUL)

• Retained at speculative buy at Bell Potter; Price Target: $6.25 from $6.10

Scans