Evening Wrap: ASX 200 sneaks gain as gold, iron ore and energy stocks rebound, CSL rally loses steam

The ASX 200 edged higher to close out a down week as overseas fund managers unwound short positions in beaten-up mining and energy stocks, drawing capital away from the defensives that had led all week. Still, some defensive winners hung on, like consumer staples and real estate.

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!

The S&P/ASX 200 (XJO) finished 15.5 points higher at 8,764.2, 0.64% from its session low and just 0.12% from its high. As usual, however, the headline move didn’t match the underlying market strength – with advancers lagging decliners by 137 to 143 in the broader-based S&P/ASX 300 (XKO).

For the week, the XJO finished down 64.5 points or 0.73% lower, 1% from its intraweek high and 0.6% from its intraweek low. Weekly shenanigans chart below 🥱!

Old Tin Pot weekly shenanigans chart

The Gold Sub-Index (XGD) (+2.3%) was the week's final twist — the sector that has bled for five of the last six sessions caught a bid as a softer-than-expected US PCE inflation reading overnight eased expectations for further Fed rate rises, dragging the US dollar lower and providing gold with some relief.

COMEX gold futures pared overnight gains by 0.2% to US$4,039.60/oz in Asian trade, while COMEX silver futures pulled back 1.5% to US$57.49/oz.

Still, it was likely that modest overnight rebound in gold above US$4,000 that was the catalyst for overseas buying to bolster the likes of Perseus Mining (PRU) (+3.6%), Northern Star Resources (NST) (+3.4%), Evolution Mining (EVN) (+2.9%), and Newmont (NEM) (+1.5%).

Gold Futures (Front month, back-adjusted) COMEX

Materials (XMJ) (+0.8%) and Energy (XEJ) (+0.5%) were the other key beneficiaries of likely overseas fund-driven short-covering and bargain-hunting. Iron ore stocks led Materials — SGX iron ore futures rose 1.3% to US$99/t in a partial recovery that helped sustain buying momentum.

Rio Tinto (RIO) (+2.2%) — which Bloomberg separately reported is in talks with Vitol to establish a freight joint venture — and BHP (BHP) (+0.8%) — which is reshaping its leadership structure ahead of incoming CEO Brandon Craig — both advanced. Fortescue (FMG) (+0.7%) and Nickel Industries (NIC) (+1.1%) also gained.

Within Energy, the rally was likely also driven by overnight commodity price gains and not the relatively soggier Asian performance. ICE Brent crude futures fell 1.6% today to US$74.30/bbl — yet stocks broadly rallied. Santos (STO) (+1.4%), Whitehaven Coal (WHC) (+1.1%), and Woodside Energy (WDS) (+0.8%) all firmed.

Utilities (XUJ) (+1.0%) was the defensive standout and arguably captured two themes at once. Most utilities benefit from the lower benchmark bond yields that accompanied today's PCE relief — and Origin Energy (ORG) (+0.9%), whose substantial LNG production profile gives it meaningful energy sector overlap, also caught some of the energy recovery bid. APA Group (APA) (+1.3%) also advanced.

Consumer Staples (XSJ) (+0.8%) continued to attract flows regardless of the day's dominant mining and energy theme. A sector that finds buyers both when the market is fearful and when commodity stocks rally? How unusual! Coles (COL) (+1.5%) — now up nearly 15% for the month — The A2 Milk Company (A2M) (+1.3%), and Woolworths (WOW) (+0.8%) all firmed.

Real Estate (XPJ) (+0.4%) and Consumer Discretionary (XDJ) (+0.4%) also advanced, both catching the same tailwind from modestly lower benchmark bond yields. Stockland (SGP) (+2.4%), Scentre Group (SCG) (+1.6%), and Charter Hall (CHC) (+1.0%) were the Real Estate movers.

Within Consumer Discretionary, Temple & Webster (TPW) (+2.0%), Web Travel (WEB) (+1.7%), Myer (MYR) (+1.6%), and Wesfarmers (WES) (+1.4%) all gained as the moderating domestic rate outlook and lower petrol prices continue to support consumer spending confidence.

Health Care (XHJ) (-1.3%) gave back some of the extraordinary gains it has accumulated over the past fortnight as flows rotated toward the recovering mining and energy names. The pattern is clear: when risk appetite improves, healthcare is going to be less attractive. CSL (CSL) (-2.4%) and Telix Pharmaceuticals (TLX) (-2.2%) bore the brunt, though the sector split internally as Pro Medicus (PME) (+1.9%) and Ramsay Health Care (RHC) (+0.8%) managed gains.

KOSPI (South Korea) chart

Information Technology (XIJ) (-1.2%) tracked weakness across Asian technology markets — South Korea's KOSPI fell 7% on renewed pressure from an Apple selloff and reports that OpenAI may delay its IPO, casting a shadow over the AI investment thesis. Data centre and AI-adjacent names were the hardest hit locally: NextDC (NXT) (-4.5%), Macquarie Technology (MAQ) (-4.1%), Weebit Nano (WBT) (-4.1%), and Megaport (MP1) (-3.3%).

Financials (XFJ) (-0.2%) were near flat but dragged by the lingering fallout from Thursday's Judo Capital collapse. HUB24 (HUB) (-4.8%) and Judo Capital (JDO) (-3.8%) — the latter extending its multi-day slide after Thursday's record 40% plunge on a profit warning — were the primary drags. The major banks split: ANZ (ANZ) (+0.5%), NAB (NAB) (+0.2%), and Westpac (WBC) (+0.2%) edged higher while Commonwealth Bank (CBA) (-0.4%) slipped.

Lithium Carbonate Futures (Benchmark month, back-adjusted) GFEX

In other commodities moves, Australian spodumene concentrate in China fell 3.8% to US$2,180/t and NdPr rare earth prices in China dropped 2.4% to CNY 727,500/t — both in the Asian session. Lithium stocks tumbled again as the running correction from May's peak tipped past 30% at its intraday trough — Elevra Lithium (ELV) (-8.9%), Core Lithium (CXO) (-7.3%), Pilbara Minerals (PLS) (-6.3%), Liontown Resources (LTR) (-5.7%), and IGO (IGO) (-4.3%) were all sharply lower.

Uranium stocks pointedly failed to join the energy recovery, extending their streak of weak sessions — Boss Energy (BOE) (-4.7%), Paladin Energy (PDN) (-4.0%), NexGen Energy (NXG) (-3.7%), and Bannerman Energy (BMN) (-2.8%) all fell.

Analysis

Interesting candle on Thursday!

Yes, it was black. Yes, it was in keeping with our analysis that the Comp is equilibrium at best, supply side controlled in the short term at worse.

But note the modest downward pointing shadow.

Note also roughly where it kicked in – 24980.

So, net-net, it’s very much par for the current course. The supply side still looks like it’s having a greater impact on the Comp’s price than the demand side, but there likely does remain a robust amount of demand lurking in the system strategically looking to BTD.

It will need to do a better job, however, to foster greater confidence that the long term uptrend is about to resume. For that, we’d need:

• At least one big white candle – a standout on OTR, preferably with a close smack bang on the session high

• A close back above the short term trend ribbon

• A higher trough to 24980

Until then, there’s really very little I need to do… I feel that at 1/2RP – with a bet each way – I’m perfectly placed here.

View

I am 1/2RP on the Comp ⚖️ (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

26789-27191 is the key zone of supply. 24980 is the key point of demand. The short term uptrend ribbon (presently 25875-26102) could now begin to act as a zone of dynamic excess supply.

Analysis

It’s inevitable that after I make any adjustment to my OTP portfolio risk, I regret it the next day.

100%-freakn-inevitable! 🤣

But that’s just ex-post regret doing its thing.

Net-net, there was little movement in the OTP’s price today – so on first pass – one would say: moving back to the balance of 1/2RP was the right call.

But today’s downward pointing shadow is bitter-sweet. It shows there is some BTD in the system – and exactly where we’d expect it at the long term uptrend ribbon – buy boy is it frustrating that it took seven bloody sessions after the 17-Jun strong demand side showing to occur! 🤦

(Wasn’t it 17-Jun I took the bait and moved back to 2/3RP… Regretting it the next day… And every day since!? 😉)

Common sense says that given the above chart is the epitome of equilibrium – as in, if ‘sideways’, ‘choppy’, and ‘zebra pattern’ had some unholy ménage à trois, then the present market would be conceived – then 1/2RP is the only logical conclusion! 🦓

Have a fantastic and safe weekend everyone!

View

I am 1/2RP on the OTP ⚖️ (i.e., my personal allowable capital allocation limit for my investments in Australian stocks is 50%).

Key levels

8984-9022 is the key zone of supply. Beyond that, it's 9201. Demand is in the 8485-8561 range, but the short- and long-term trend ribbons (presently 8696-8776) will likely also increasingly come into play as a dynamic zone of excess demand.

(Glossary of acronyms! OTP (Old Tin Pot): S&P/ASX 200 | MOTN: More Often Than Not | FOMO: Fear Of Missing Out | HOFU: Holding On For Upside | BTD: Buy The Dip | NUTE: No Urgency To Enter | FOHO: Fear Of Holding On | STR: Sell The Rally | RP: Risk Position)

***FRIDAY NIGHT VIEWING SORTED!!! 📺🍿***

BHP & RIO vs CSL battle royale! Is the ASX Resources run over!? Copper, Iron Ore, Lithium and more

Today

• There weren't any major economic data releases in our time zone today (apart from May JPN inflation data +1.6% p.a. – in line with expectations, but up from +1.3% p.a. in April)

Later this week

Friday

• 20:30 USA May Wholesale Inventories (+0.3% m/m forecast vs +0.6% m/m in April)