Evening Wrap: ASX 200 slumps to four in a row as Kali Metals sparks lithium bulls

Stocks fell Monday, extending January's losses as investors pared back over-optimistic bets on when the first interest rate cut might occur. Bonds are also falling, pushing market rates higher. Tech stocks tend to fare poorly in such an environment, and therefore it was no surprise they were the hardest hit ASX sector today, the Information Technology sector fell 0.8%.

Miners also fared poorly in response to lower base metals prices on Friday, but it was the major iron ore companies, which dragged the Materials sector lower by 0.7%. BHP -0.8%, Rio Tinto (RIO) -0.6% and Fortescue (FMG) -1.5% were mostly to blame here.

Lithium IPO Kali Metals (KM1) was a bright spark, though, trading at nearly double it's listing price at one stage, and uranium majors Boss Energy (BOE) and Paladin Energy (PDN) also bucked the trend after the UK Government announced it is investing in a high-tech nuclear fuel plant.

Let's dive in.

Markets

ASX 200 Session Chart

January jitters, the S&P/200 makes it four down days in a row...

The S&P/ASX200 (XJO) finished 37.6 points lower at 7,451.5, 0.7% from its session high and just 0.1% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a disturbing 80 to 191. Not a great set of market strength and breadth stats!

All 11 ASX sectors were in the red today (even worse!). The S&P/ASX 200 Energy Sector (XEJ) -0.1% was the best performing sector, escaping the broader bloodletting as uranium stocks got a boost from this announcement by the UK Government it intends to invest $300 million pounds in a high-assay low enriched uranium (HALEU) program which would help support the UK's production of nuclear fuels for its fleet of nuclear reactors.

Russia is the dominant player in the production of enriched uranium, which is essential for nuclear power plants. This announcement is an important step towards weaning the UK off its dependence on Russia to fulfil its nuclear power requirements, and uranium bulls will be hoping other countries follow suit.

Strong gains from Boss Energy (ASX: BOE), Paladin Energy (ASX: PDN), and Deep Yellow (ASX: DYL) helped offset losses in traditional energy sector majors Woodside Energy (ASX: WDS) -0.4% and Santos (ASX: STO) -0.7%.

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Three of the top five performers in the energy sector today were uranium stocks!

Economy

No major economic data today...

What to watch out for...

Tomorrow:

• AU Building Approvals for December at 11:30am, forecast to decline 1.8%

• AU Retails Sales for December at 11:30am, forecast to rise 1.2%

Later this week:

• AU Consumer Price Index (CPI) Weds 10 Jan at 11:30am, forecast to rise 4.5% p.a. to end of December

• USA Consumer Price Index (CPI) Friday 12 Jan at 12:30am, forecast to rise 3.2% p.a. to end of December

Latest News

Kali Metals (KM1) kicks off 2024 with a bang!

Kali Metals traded at nearly double its IPO price

Despite pretty much every lithium stock getting dumped at some stage in 2023, the New Year has been kicked off in optimistic style with the ASX's newest lithium play, Kali Metals (ASX: KM1) which floated on the ASX at lunchtime.

Soon after listing, Kali was trading at nearly double its IPO price of 25 cents, before settling at 43 cents by the close, up a very tidy 74%.

The reason for the enthusiasm in an otherwise dour ASX lithium sector? Well Kali Made headlines over the weekend as it was disclosed a several big names had tipped into the float including WA mining royalty MinRes MD Chris Ellison, Multiplex founder Tim Roberts, and Navitas co-founder Rod Jones.

Whilst it's great to see there's still plenty of enthusiasm out there for Kali, the announcement over the break that Core Lithium (ASX: CXO) had suspended mining at its flagship Finniss Project in the NT, and a sharp plunge in spodumene prices last week, present clear challenges for the ASX lithium sector in 2024.

Spodumene prices suffered a sharp fall last week

Interesting Movers

Trading higher

• +8.5% Boss Energy (BOE) - No news since 04-Jan Boss completes upsized & oversubscribed Share Purchase Plan, UK Govt nuclear fuel plant news, bounce of technical support

• +4.4% Nuix (NXL) - No news, move in line with prevailing short and long term uptrends

• +3.8% Qoria (QOR) - No news, bounce off technical support

• +3.8% Arcadium Lithium (LTM) - No news, technical bounce after sharp sell off

• +3.8% De Grey Mining (DEG) - No news, technical bounce after sharp sell off

• +3.6% Red 5 (RED) - December Qtr Positions Red 5 to Achieve Top End of Guidance

• +3.4% Paladin Energy (PDN) - No news, moving towards top of consolidation range

• +2.9% Infomedia (IFM) - No news, technical bounce after sharp sell off

• +2.7% Kogan.Com (KGN) - No news, technical bounce after sharp sell off

• +2.6% Myer Holdings (MYR) - No news

• +2.6% IDP Education (IEL) - No news, technical bounce after sharp sell off

• +2.3% Carnarvon Energy (CVN) - No news, move in line with prevailing short and long term uptrends

Trading lower

• -7.4% Chalice Mining (CHN) - No news, move in line with prevailing short and long term downtrends

• -7.4% Magellan Financial Group (MFG) - No news since 05-Jan Funds Under Management and Performance Fee Update - Dec 2023, Downgraded to sell by Citi

• -6.8% 29METALS (29M) - No news, move in line with prevailing short and long term downtrends

• -6.3% Zip Co. (ZIP) - No news, correction from recent rally

• -6.2% Ainsworth Game Technology (AGI) - No news, pullback after strong rally

• -6.1% Grange Resources (GRR) - No news since 02-Jan Board Update

• -5.0% Syrah Resources (SYR) - Syrah December 2023 Quarterly Results Conference Call

• -4.9% Nanosonics (NAN) - No news since 04-Jan Incorrect Notice Of Initial Substantial Holder, move in line with long term downtrend

Broker Notes

*Just for today's first edition back, all the Broker Notes issued since the last Evening Wrap on 19 December*

• ARB Corp. (ARB) downgraded to hold from buy at Ord Minnett; Price Target: $36.00

• Austal (ASB) upgraded to outperform from neutral at Macquarie; Price Target: $2.10 from $1.95

• Centuria Office Reit (COF) downgraded to neutral from buy at UBS; Price Target: $1.35 from $1.50

• CSR (CSR) initiated neutral at E&P; Price Target: $6.47

• Core Lithium (CXO) downgraded to neutral from outperform at Macquarie; Price Target: $0.32 from $0.60

• Evolution Mining (EVN) retained at outperform Macquarie; Price Target: $4.20 from $3.50

• Global Lithium Resources (GL1) downgraded to neutral from outperform at Macquarie; Price Target: $1.30 from $2.40

• Ingenia Communities Group (INA) upgraded to buy from neutral at UBS; Price Target: $4.76 from $4.35

• Incitec Pivot (IPL) retained at neutral at JPMorgan; Price Target: $3.00

• Karoon Energy (KAR) retained at outperform at Macquarie; Price Target: $2.50

• Lifestyle Communities (LIC) downgraded to neutral from buy at UBS; Price Target: $2.25 from $2.48

• Loyal Lithium (LLL) downgraded to neutral from outperform at Macquarie; Price Target: $0.50 from $1.00

• Liontown Resources (LTR) downgraded to neutral from outperform at Macquarie; Price Target: $1.60 from $2.70

• Macquarie Technology Group (MAQ) upgraded to sector perform from underperform at RBC Capital Markets; Price Target: $66.00 from $60.00

• Mirvac Group (MGR) downgraded to sell from neutral at UBS; Price Target: $16.96 from $17.10

• Monash IVF Group (MVF) retained at outperform Macquarie; Price Target: $1.50

• Origin Energy (ORG)

  • Retained at outperform Macquarie; Price Target: $9.26

  • Retained at overweight Morgan Stanley; Price Target: $8.88

• Pilbara Minerals (PLS)

  • Downgraded to sell from neutral at Citi; Price Target: $3.90

  • Downgraded to underperform from neutral at CICC; Price Target: $3.00

• PEXA Group (PXA)

  • Downgraded to hold from buy at Jefferies; Price Target: $11.45

  • Downgraded to hold from add at Morgans; Price Target: $11.65

• Region Group (RGN) upgraded to buy from neutral at UBS; Price Target: $2.54 from $2.39

• Sigma Healthcare (SIG) downgraded to underperform from neutral at Macquarie; Price Target: $0.88 from $0.80

• Stanmore Resources (SMR) initiated overweight at Barrenjoey; Price Target: $4.30

• Tabcorp Holdings (TAH) retained at neutral Macquarie; Price Target: $0.90 from $1.05

• Vicinity Centres (VCX) downgraded to sell from neutral at UBS; Price Target: $1.79

Scans