Evening Wrap: ASX 200 smashes through 8,000 on rising tech, consumer, and property stocks

It was a strong performance from Aussie stocks today, its third in a row, and enough to close the S&P/ASX200 above the psychological 8,000 mark for the first time.

Interest rates remain the key driver, with key benchmark yields tumbling Friday and helping the likes of Information Technology, Consumer Discretionary, and Real Estate.

Metals and Energy stocks also prospered today, modestly, but this is perhaps a bonus considering falls in key commodities markets.

The spotlight on earnings is growing, with several big moves on FY24 guidance (Aussie Broadband (ABB) tanked vs Nanosonics (NAN) popped). Elsewhere, Lifestyle Communities (LIC) was battered on some very bad press.

For all of these big moves...and the rest...

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 58.3 points higher at 8,017.6, % from its session high/low and just % from its high/low. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 157 to 102.

All 11 of the major ASX sectors were higher today, but look at the top of the sector performance list, there was a clear trend favouring the interest rate sensitives of Information Technology (XIJ) (+1.4%), Consumer Discretionary (XDJ) (+1.4%) and Real Estate Investment Trusts (XPJ) (+1.1%) .

It was good to see Tech rebound from the great rotation we witnessed at the end of last week, and the trends in its chart remain very much intact.

Trends in the Tech sector remain intact

Perhaps the surprise package (given how tough we keep hearing Aussie retail is doing it at the moment) is Consumer Discretionary. Not coincidently, I cover the technicals for the XJO and a key benchmark global interest rate in today’s ChartWatch – and once you check out those charts it will become clear how much of the XJO’s recent record breaking run resembles the XDJ chart, as well as the XDJ chart resembles the opposite of market yields.

Much of the XJO’s record breaking run can be attributed to the Consumer Discretionary sector.

Resources (XJR) (+0.52%) and Energy (XEJ) (+0.67%) weren’t terrible today, particularly when you consider rather dour performances in key metals and energy markets on Friday. Encouraging…for now!

The best of the Resources and Energy sectors today

ChartWatch

S&P/ASX 200 (XJO)

A super interesting chart

For some reason I keep thinking about those old Swan Brewery ad's from the 80's..."They said you'd never make it, but finally you came through"...🎶

Well, we finally made it! An 8-handle (sips beer).

And a pretty decent close above the 8,000 mark today. Honestly, I thought we might flame out after we started coming off around midday. It's not unusual for the XJO to disappoint / snatch defeat from the jaws of victory!

The fact we closed reasonably near the highs suggests the big fund managers didn't possess a sell the rally / sell in to strength mentality today.

Don’t forget, if you want to offload a whole heap of stock – potentially because you think the market is overvalued / something bad is about to happen / you’ll be able to buy back at a lower price – you want to do so when everyone else is buying.

This is how you get the most stock out at the best prices.

It didn’t happen today. If anything, there remained a good deal of excess demand in the system. Excess demand doesn’t occur when the big funds think stocks are expensive – it occurs when they think stocks are still cheap.

Ordinarily here, I’d discuss overhead points of supply. I can’t. There aren’t any.

As for demand, the old supply zone between 7839-7911 should in theory act as support. I think it can / will. I also think there’s likely to be plenty of demand at the short term uptrend ribbon and basically anywhere between here and the long term uptrend ribbon.

As always, you’ll know something’s wrong when you see the fingerprints of excess supply – black-bodied candles and or upward pointing shadows (the kind I partially expected today).

(P.S. Don't skip over the next chart just because it's not copper / gold / silver / iron ore / uranium! It's vital to understanding where this thing is going next! 🧐)

US 2-Year T-Note Yield %

Big drop here...what does it all mean Basil? 🤔

Just a quick note here, because I only just covered the chart of the US 10-year T-Note on Friday. In that note, I said something along the lines of..."blah the price of money...blah all important...blah market yields falling equals good for stocks...blah".

The 2-year note is more of a proxy for short term US interest rates than the 10-year note. Makes sense.

Today I'm pointing out the big break lower in this chart on Thursday and Friday. The market is properly pricing in lower US rates, and sooner rather than later.

In Friday's update, I told you that rates down equals stocks up – it's certainly the theme for the moment.

But what I didn't tell you, was that there is an inflection point where lower rates stops being good for stocks. This is the point where market yields are falling not because of central bank cuts being a good thing and helping stocks, but because the US economy is on the brink of a recession and that's bad for stocks.

I don't know where that inflection point is – it's not a line or level in the chart above (or on the chart of the 10 year). It will be based on market sentiment...but you will see it in the charts of stock indices when black candles here translate to black candles there too!

You know I keep saying this: The charts of the key benchmark yields are far more important than any stock chart you're looking at right now / or ever!

Economy

Today

• CNY Data Dump

  • GDP June Quarter: +4.7% p.a. vs +5.1% p.a. forecast and +5.3% p.a. in March quarter

  • Industrial Production June: +5.3% p.a. vs +4.9% p.a. forecast and +5.6% p.a. in May

  • Fixed Asset Investment ytd June: +3.9% vs +3.9% forecast and +4.0% previous corresponding period

  • Retail Sales June +2.0% p.a. vs +3.3% p.a. forecast and +3.7% p.a. May

  • Unemployment Rate 5.0% vs 5.0% forecast and 5.0% May

Later this week

Tuesday

• 02:00 USA Federal Reserve Chairman Jerome Powell Speaks

• 22:30 USA Core Retail Sales June (+0.1% forecast vs -0.1% in May)

Wednesday

• 22:30 USA Building Permits June (1.4m forecast vs 1.4m in May)

• 23:15 USA Industrial Production June (+0.4% forecast vs +0.9% in May)

Thursday

• 11:30 AUS Employment Change & Unemployment Rate June

  • Jobs +20.2k forecast vs +39.7k in May

  • UR 4.1% forecast vs 4.0% in May

• 22:15 EUR ECB Main Financing Rate (forecast no change at 4.25%)

Friday

• 00:00 CB Leading Index June (-0.3% forecast vs -0.5% in May)

Latest News

Interesting Movers

Trading higher

• +11.1% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans uptrends lists!) 🔎📈

• +9.1% Core Lithium (CXO) - Bounce continues, rally since Production and Financial Position Update continues (definitely not a regular in my ChartWatch ASX scans uptrends lists!)

• +6.0% Iperionx (IPX) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.1% Nanosonics (NAN) - H2 FY24 Trading Update

• +4.8% Charter Hall Group (CHC) - No news, generally stronger ASX Real Estate Sector on falling market yields (see ChartWatch)

• +4.3% Spartan Resources (SPR) - No news, rise is consistent with prevailing short and long term uptrends (has been a regular in my ChartWatch ASX Scans uptrends lists!) 🔎📈

• +3.7% Bravura Solutions (BVS) - Release Date for FY24 Results and Guidance Update

• +3.5% Mirvac Group (MGR) - No news, generally stronger ASX Real Estate Sector on falling market yields (see ChartWatch)

Trading lower

• -18.1% Lifestyle Communities (LIC) - Response to Media, fall is consistent with prevailing short and long term downtrends (has been a regular in my ChartWatch ASX Scans downtrends lists!) 🔎📉

• -14.0% Aussie Broadband (ABB) - FY24 Trading Update & FY25 Guidance, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down (has been a regular in my ChartWatch ASX Scans downtrends lists!) 🔎📉

• -9.9% Immutep (IMM) - No news, has been extremely volatile since 27 June Positive topline results from ph2b in head & neck cancer

• -7.1% Zip Co. (ZIP) - No news, potentially buy the rumour sell the fact with respect to Altium Limited to be removed from the S&P/ASX 200 Index

• -5.0% Adriatic Metals (ADT) - No news, fall is consistent with prevailing short term downtrend, long term trend is transitioning from up to down (has been a regular in my ChartWatch ASX Scans downtrends lists!) 🔎📉

Broker Notes

Alligator Energy (AGE)

• Retained at buy at Bell Potter; Price Target: $0.10

AGL Energy (AGL)

• Initiated at neutral at Goldman Sachs; Price Target: $10.35

Auckland International Airport (AIA)

• Retained at outperform at Macquarie; Price Target: NS$9.22 from NZ$9.56

ANZ Group (ANZ)

• Retained at underperform at Macquarie; Price Target: $27.00

ASX (ASX)

• Retained at sell at Goldman Sachs; Price Target: $59.50 from $55.45

BHP Group (BHP)

• Retained at neutral at UBS; Price Target: $44.00

Boss Energy (BOE)

• Retained at buy at Bell Potter; Price Target: $5.90

Beach Energy (BPT)

• Retained at sell at Citi; Price Target: $1.40

Commonwealth Bank of Australia (CBA)

• Retained at underperform at Macquarie; Price Target: $95.00

Chalice Mining (CHN)

• Retained at buy at Bell Potter; Price Target: $5.15

Compumedics (CMP)

• Retained at hold at Bell Potter; Price Target: $1.30

Coronado Global Resources (CRN)

• Retained at buy at UBS; Price Target: $1.95

Corporate Travel Management (CTD)

• Retained at neutral at Macquarie; Price Target: $14.40 from $16.90

Coventry Group (CYG)

• Retained at buy at Bell Potter; Price Target: $2.00 from $1.90

Delta Lithium (DLI)

• Retained at buy at Bell Potter; Price Target: $0.75

DUG Technology (DUG)

• Retained at buy at Shaw and Partners; Price Target: $3.45

Deep Yellow (DYL)

• Retained at buy at Bell Potter; Price Target: $1.90

Flight Centre Travel Group (FLT)

• Retained at outperform at Macquarie; Price Target: $26.80 from $23.35

Fortescue (FMG)

• Retained at sell at UBS; Price Target: $18.90

Helloworld Travel (HLO)

• Retained at buy at Shaw and Partners; Price Target: $3.80

IGO (IGO)

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

Imdex (IMD)

• Retained at neutral at Citi; Price Target: $2.00

Incitec Pivot (IPL)

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

Karoon Energy (KAR)

• Retained at buy at Citi; Price Target: $2.75

Lotus Resources (LOT)

• Retained at buy at Bell Potter; Price Target: $0.60

Liontown Resources (LTR)

• Retained at buy at UBS; Price Target: $1.00

Lynas Rare Earths (LYC)

• Retained at sell at Citi; Price Target: $5.30

Meteoric Resources (MEI)

• Retained at buy at Bell Potter; Price Target: $0.40

Mineral Resources (MIN)

• Retained at sell at UBS; Price Target: $54.00

Medibank Private (MPL)

• Retained at neutral at Citi; Price Target: $3.80

• Retained at neutral at Macquarie; Price Target: $3.70

Macquarie Group (MQG)

• Retained at sell at Citi; Price Target: $176.00

National Australia Bank (NAB)

• Retained at underperform at Macquarie; Price Target: $32.50

NIB (NHF)

• Retained at buy at Citi; Price Target: $8.60

• Retained at neutral at Macquarie; Price Target: $7.50

Origin Energy (ORG)

• Retained at buy at Citi; Price Target: $12.00

• Initiated at buy at Goldman Sachs; Price Target: $11.35

Paladin Energy (PDN)

• Retained at buy at Bell Potter; Price Target: $15.70

Pilbara Minerals (PLS)

• Retained at sell at UBS; Price Target: $2.60

Patriot Battery Metals (PMT)

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

Rio Tinto (RIO)

• Retained at neutral at UBS; Price Target: $125.00

South32 (S32)

• Retained at buy at UBS; Price Target: $4.20

Santos (STO)

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

Strike Energy (STX)

• Retained at buy at Bell Potter; Price Target: $0.31

Southern Cross Gold (SXG)

• Retained at hold at Bell Potter; Price Target: $2.05

WA1 Resources (WA1)

• Retained at buy at Bell Potter; Price Target: $28.00

Westpac Banking Corporation (WBC)

• Retained at underperform at Macquarie; Price Target: $26.00

Woodside Energy Group (WDS)

• Upgraded to neutral from sell at Citi; Price Target: $28.00 from $24.00

Webjet (WEB)

• Retained at neutral at Macquarie; Price Target: $9.95 from $9.43

Whitehaven Coal (WHC)

• Retained at buy at UBS; Price Target: $9.65

Scans