Evening Wrap: ASX 200 sneaks gain on strong banks, Telstra and Wesfarmers rally, as lithium and uranium stocks slump

The ASX 200 barely moved as fresh US strikes on Iran's ability to disrupt Strait of Hormuz shipping sent oil surging more than 4% and split the market cleanly down familiar lines — energy producers and the banks absorbed defensive capital flows while gold, technology, and miners lost ground.

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 2.5 points higher at 8,808.5, 0.44% from its session low and 0.17% from its high. Don’t get too excited about that little ‘sneak into the black’, though, because in the broader-based S&P/ASX 300 (XKO) advancers lagged decliners by a distant 112 to 170.

Brent Crude Oil Futures (Front month, back-adjusted) ICE

Energy (XEJ) (+0.7%) was lifted by an ICE Brent crude surge of 4.6% to US$79.51/bbl as conflicting claims over the Strait of Hormuz's status — Iran asserting it is closed, the US asserting traffic continues — kept supply disruption fears simmering. Downstream fuel retailers were the biggest beneficiaries, with Ampol (ALD) (+4.2%) — which separately secured a new $400 million KKR-backed subordinated debt facility — and Viva Energy (VEA) (+3.6%) both surging. Oil and gas producers were also stronger — Karoon Energy (KAR) (+2.1%) and Woodside Energy (WDS) (+0.9%) both advanced.

ASX 200 Financials Sector Index (XFJ) intraday chart

Financials (XFJ) (+0.7%) drew steady institutional flows as fund managers pulled capital out of the mining sector for a second week running and deployed it into the market's most liquid defensive alternative. There were few specific news catalysts — this was largely a portfolio allocation exercise, with the sector's combination of size, fully franked dividend income, and index weight making it a natural destination. Insurance Australia Group (IAG) (+2.0%), ANZ (ANZ) (+1.1%), National Australia Bank (NAB) (+1.1%), Westpac (WBC) (+1.0%), and Commonwealth Bank (CBA) (+0.7%) all advanced.

Communication Services (XTJ) (+0.9%) was a tale of two cohorts. Telstra (TLS) (+1.6%) recouped a portion of Friday's outage-driven decline, its utility-like earnings making it a natural candidate for bargain-hunting buyers in a defensive session. The online classified names moved in the opposite direction — CAR Group (CAR) (-1.6%) and Seek (SEK) (-0.3%) both fell, caught in the same selling that hit other high-multiple growth stocks, but not enough to drag the sector into negative territory given Telstra's weight.

Consumer Discretionary (XDJ) (+0.9%) was, at the sector level, almost entirely a Wesfarmers (WES) (+1.8%) story — the conglomerate's size, yield, and defensive Kmart and Bunnings earnings made it a natural harbour in a risk-off session. The rest of the sector told a different story: IDP Education (IEL) (-6.5%), Temple & Webster (TPW) (-4.8%), and Myer (MYR) (-3.4%) all fell sharply.

ASX 200 Information Technology Sector Index (XIJ) intraday chart

Information Technology (XIJ) (-2.5%) was the session's worst performer, hit by a combination of higher benchmark bond yields following Friday's US oil-driven inflation anxiety and a stock-specific shock from Xero (XRO) (-4.3%), whose chief executive Sukhinder Singh Cassidy sold approximately $2.2 million worth of shares last week to manage personal tax obligations. Life360 (360) (-2.9%), Appen (APX) (-2.8%), and WiseTech Global (WTC) (-2.0%) were also lower.

The Gold Sub-Index (XGD) (-1.9%) delivered the by-now predictable result — oil surging pushes inflation expectations higher, which pushes bond yields up, which raises the opportunity cost of holding non-yielding precious metals, which pressures gold stocks. Pantoro Gold (PNR) (-2.9%), Northern Star Resources (NST) (-2.8%), Evolution Mining (EVN) (-1.8%), and Newmont (NEM) (-1.1%) were all lower.

Health Care (XHJ) (-0.6%) extended its pullback from the three-month highs set in late June, with ResMed (RMD) (-4.9%) the sharpest faller after a Citi downgrade. Telix Pharmaceuticals (TLX) (-1.7%), Sonic Healthcare (SHL) (-1.5%), and CSL (CSL) (-1.3%) were also lower as the same higher-yield pressure that hit technology weighed on the sector's long-duration valuations.

Materials (XMJ) (-0.6%) was restrained in its overall decline but continued to lag. Perhaps most notably, lithium stocks continued their painful descent as the sector responds to a sustained slump in commodity prices — GFEX lithium carbonate futures steadied modestly, gaining 0.4% to CNY 152,240/t, but that level is roughly 27% below the CNY 209,880/t peak of just two months ago. Vulcan Energy Resources (VUL) (-4.5%), Liontown Resources (LTR) (-4.4%), Develop Global (DVP) (-4.3%), Pilbara Minerals (PLS) (-3.2%), IGO (IGO) (-2.9%), and Mineral Resources (MIN) (-2.8%) all fell.

In other commodity sector moves, uranium stocks gave back much of Friday's Australia-India-driven gains — Silex Systems (SLX) (-7.9%), Boss Energy (BOE) (-3.7%), Paladin Energy (PDN) (-3.7%), and Deep Yellow (DYL) (-3.5%) all fell.

Analysis

“Sense of inevitability”

Three words that perhaps describe the present Comp setup the best!

Friday showed hardly any supply side intent, engagement, or control. The supply side is – possibly quite literally – on holiday. 🏖️

Active supply appears to be absent from the market… As can be seen from both Friday’s near-nil downside volatility and lowest volume bar since 1 May.

And yet, there’s always cash flowing into markets. It comes from growing retirement savings, easy credit and rising money supply.

That pervasive demand side creep can mix with a bit of speculative FOMO, and in an environment where supply is unwilling or unable to engage – jam prices sharply higher.

It’s just a matter of time.

Oops. That was a prediction. Pull your head in Carl, we don’t predict in ChartWatch!

There’s what I expect will happen, and what I am allowed to actually do about it based on what I can see in the trends, price action, and candles. As much as my gut suggests… primed to blast off… I must consider:

• Trends: ST ⬆️ (just flicked back, but is hardly emphatic); LT ⬆️ (no issues here) ✅✅

• Price action: Rising peaks and rising troughs (just flicked back with Friday’s candle high taking out the last peak high set on 2-Jul at 26261) 📈 Decent separation between last troughs = shallow pullback from last peak ✅

• Candles: I propose, also just flicked back to demand side control since 27191 major peak – or at least very close to it ✅

• Major D/S: 8-Jul trough low now closest point of demand vs 26789-27191 = ‘the big one’ in terms of supply!

What did I say on Friday? "Solid. Very solid"?

You must understand what I fear most as a trend follower, i.e., what's my motivation.

See, unlike most investors who fear buying before the market crashes – I have zero fear of such an instance because I have a clear cut system for switching to cash really, really fast. 🏃💨

Nope, the thing I fear the most is holding piles of cash during a strong uptrend 😱.

So, I’m grappling with the potential disconnect between my present analysis (and gut feel) and my present risk position…

View

I am at 1/2RP on my US portfolio (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

Dead simple! 26789-27191 is the key zone of supply vs 24980-25015 is the key zone of demand. In between = 1/2RP vs >= FRP and <= 1/3RP.

Analysis

🥱

On the surface anyway. +2.5pts or +0.03%. Boring!

But under the surface... Well, um, not that great, either. 112 up vs 170 down in the ASX 300 today.

That doesn't smack of the broad-based risk seeking confidence required to shove the OTP from its present 8808 to above the all-time high set on 2 Mar of 9201.

What a distant memory that is now (immediately after came the Trump vs Iran fallout! 🤦)

What's even more disappointing/disturbing/not surprising one iota – is how much the big banks have been used to prevent the OTP from cracking below the 8708-8656 demand zone – a break that could quite possibly have precipitated a very nasty fall.

Check out the chart of the XFJ below... Look at those last 5 candles.

ASX 200 Financials Sector Index (XFJ) chart 🧃

Juiced or not – now try to imagine the OTP without the standout performance of the ASX's go-to 'buy when resources are falling to balance out the impact on ASX 200' sector!

Oh well, it is what it is... As some wise person once said.

We remain stuck in the middle here, but (juiced or not) with some signs the demand side remains ready to BTD into 8708-8656.

The big question is whether there's any desire to move past simply buying the dip... And into chasing prices higher = FOMO? 🤔

If it's a case of one sector firing while all of the others flip-flop about – then it's hard to see it happening... No matter how much FFS juices the big banks! 🧃

View

I'm 1/2RP on my Aussie portfolio ⚖️ (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, while demand is at 8708-8656 (now more than ever!).

(Glossary of acronyms! Old Tin Pot (OTP): 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 | FFS: Fund Flow Shenanigans!)

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Today

• There weren't any major economic data releases in our time zone today...