Evening Wrap: ASX 200 steady as strong rebound in gold stocks makes up for sagging energy and property sectors

The S&P/ASX 200 closed 7.4 points lower, down 0.09%.

A relatively subdued result for the S&P/ASX 200, with narrow gains or losses across the key battleground stocks. The Gold sector was the clear standout, with several very strong performances helping lead the Resources sector to a rare but narrow gain. Energy stocks slumped again, following crude oil prices lower. Property stocks were also sharply lower. Steady performances near record highs like the one we witnessed today, are typically a good sign demand remains firm, patiently hoovering up any supply that happens to be creeping around.

Demand is biding it's time here, it doesn't want to rush and scare away supply. It probably doesn't have to with key US inflation data due on Friday. Could be more of the same tomorrow!

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 7.4 points lower at 7,963.7, 0.24% from its session low and just 0.13% from its high. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 119 to 151.

The Gold (XGD) (+2.9%) sub-index was the best performing sector today, likely in response to a modest rebound in the gold price overnight. Gold prices are edging higher in Asian trade, but they’re far from setting the investing world on fire – as can be seen in today’s ChartWatch below.

In a welcome reversal of its recent terrible form, the Resources (XJR) (+0.16%) sector also found itself in the winners column today – but only just. It’s not like commodity prices have staged a rally – they were generally down again Tuesday.

Commodities were generally down again

To be honest, when I look at the major stocks’ performance table below, taking out the contribution from gold, there really wasn’t a great deal to get excited about with respect to today’s meagre XJR gain. At least it wasn’t another loss…

ASX Gold and Resources stocks today

Financials (XFJ) (+0.15%) and Communication Services (XTJ) (+0.06%) were the only other two sectors in the black – but again, only just.

Doing it tough today were the Real Estate (XRE) (-1.6%) and Energy (XEJ) (-1.1%) sectors. No surprise about Energy's continuing struggles, key crude contracts fell the better part of 2% overnight.

Real Estate is more baffling, the benchmark yields this sector usually ebbs and flows on were down last night – typically a good thing. Some fund managers clearly had a bee in their bonnets for the sector today because I note plenty of long black candles around – in trends both good (e.g. Goodman Group (ASX: GMG) and bad (e.g., Lendlease Group (ASX: LLC) and Mirvac Group (ASX: MGR))!

ChartWatch

Gold Futures (Front month, back-adjusted) COMEX

Come on support...hold...!

The last time we covered gold was in ChartWatch in the Evening Wrap on 17 July.

In that update, we had all ten fingers and all ten toes crossed for a definitive break to new all-time highs. They’re still crossed. 🤞

The supply in the 2456-2477 supply zone proved too strong, manifesting itself as upward pointing shadows firstly, and then black-bodied candles, subsequently.

But it looks like gold is steadying itself at the dynamic demand of the short term uptrend ribbon. The candles since it reached the ribbon are rather anaemic compared to those that brought it here, though, so that’s a little concerning.

Still, one must trust the prevailing short and long term uptrends, which apart from this last (in the scheme of things) relatively small pullback – still look very much intact.

2456-2477 remains the elephant in the room in terms of excess supply. It’s now extended to the last peak and new key point of supply of 2489. A close above that, in theory, should yield the next leg up.

Alternatively, I really don’t want to see gold close below the short term uptrend ribbon, nor the most recent point of demand at 2385 that coincides with it.

Iron Ore 62% (Front month, back-adjusted) SGX

Ditto!

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 19 July.

In that update, we lamented the poor technicals here, noting almost total supply-side control. Unfortunately, the control remains vice-like, and we are indeed about to enter the key demand zone previously identified at 99.20-95.40.

Here’s the thing about my “demand zones”.

They’re expected demand zones. None of my TA is predictive, it’s all reactive (like all good TA methods should be!).

I think there will be demand there – because there was demand there before (i.e., the massive April rally).

But I won’t know there is demand there until I see the candles in the zone.

You know the drill here – white-bodied candles and or those with downward pointing shadows are the fingerprints of excess demand. The longer the white body, or the longer the downward pointing shadow – the greater the degree of excess demand demonstrated.

If we see those in the zone, then yes, the demand-side is stepping back in, and we may see another short term rally in what will still be a long term downtrend.

The opposite is too frightening for a West-Aussie to contemplate: instead of demand-side candles in the zone, we see supply-side ones – so, black-bodied candles and or upward pointing shadows.

If we see these – the demand that was so active in the zone last time is gone, and worse – the candles would suggest all that remains is excess supply. In this scenario (starts typing www.movetotheeasternstates...), one has to fear the worst for what comes next for the iron ore price…😭

Economy

Today

• AUS Flash Manufacturing Index & Flash Services Index June

  • Manufacturing: 47.4 vs 47.2 in May (readings below 50 indicate sector contraction)

  • Services: 50.8 vs 51.2 in May

Later this week

Wednesday

• 17:15 EUR Flash Manufacturing Index & Flash Services Index (FRA, GER, EUR, UK)

• 23:45 USA Flash Manufacturing Index & Flash Services Index

Thursday

• 00:00 New Home Sales (643k forecast vs 619k previous)

• 22:30 USA June Quarter Advance GDP (+1.95% p.a. vs +1.4% p.a. March Qtr)

• 22:20 USA Core Durable Goods Orders June (+0.2% in June vs -0.1% in May)

Friday

• 22:30 USA Core PCE Price Index June (+0.2% forecast vs +0.1% in May)

• 22:30 USA Personal Income (+0.4% forecast vs +0.5% in May) & Personal Spending June (+0.3% forecast vs +0.2% in May)

Latest News

Interesting Movers

Trading higher

• +9.1% Vulcan Energy Resources (VUL) - No news, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +8.8% WA1 Resources (WA1) - No news, bounced off the long term uptrend ribbon it touched yesterday!

• +7.5% Ora Banda Mining (OBM) - No news, I note yesterday's June 2024 Quarterly Activities and Cashflow Reports, ASX gold sector generally had a strong day today, rise is consistent with prevailing short and long term uptrends 🔎📈

• +7.0% Botanix Pharmaceuticals (BOT) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.8% Temple & Webster Group (TPW) - No news, but perhaps delayed response to the fact that the Consumer Discretionary sector is trading at record highs!

• +6.6% IVE Group (IGL) - No news, retained at buy at Bell Potter following Monday's IVE Group Reaffirms FY24 Guidance

• +6.5% Spartan Resources (SPR) - Continued positive response to yesterday's Dalgaranga Gold Project - Mineral Resource Estimate Update, rise is consistent with prevailing short and long term uptrends (a ChartWatch ASX Scans Uptrends Lists winner! 💪) 🔎📈

• +6.4% Red 5 (RED) - No news, ASX gold sector generally had a strong day today…

• +6.0% Emerald Resources (EMR) - Ditto for RED

• +4.7% GQG Partners (GQG) - Details of 2024 Half-Year Results Investor Conference Call, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.6% West African Resources (WAF) - Ditto for EMR and RED

• +4.3% Firefly Metals (FFM) - No news, but perhaps check out yesterday's FireFly Melbourne Mining Club Presentation, rise is consistent with prevailing short and long term uptrends 🔎📈

• +4.2% Westgold Resources (WGX) - Ditto for WAF, EMR, and RED!

• +4.2% Ramelius Resources (RMS) - Ditto

• +4.1% Evolution Mining (EVN) - Ditto you get the picture!

• +4.0% Resolute Mining (RSG) - " "

Trading lower

• -7.2% Telix Pharmaceuticals (TLX) - Telix Investor Presentation July 2024 and Telix Successfully Prices A$650M Convertible Bonds and FDA Accepts Telix NDA for New Prostate Cancer Imaging Agent

• -7.0% Calix (CXL) - No news, perhaps check out yesterday's Calix announces $15m grant for zero emissions plant and Reinstatement to Quotation, fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends Lists regular!) 🔎📉

• -6.7% Imugene (IMU) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.7% Flight Centre Travel Group (FLT) - FLT Amends FY24 Guidance Range

• -4.7% Iluka Resources (ILU) - Continued negative response to yesterday's Quarterly Review to 30 June 2024, several price target cuts from brokers today (See Broker Notes section), fall is consistent with prevailing short and long term downtrends (a ChartWatch ASX Scans Downtrends Lists regular!) 🔎📉

• -4.1% Core Lithium (CXO) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.4% Lotus Resources (LOT) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.3% Beach Energy (BPT) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -3.2% Mineral Resources (MIN) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

Broker Notes

Atlas Arteria (ALX)

• Retained at neutral at Morgan Stanley; Price Target: $5.55

• Retained at neutral at UBS; Price Target: $5.50 from $5.60

Arena Reit (ARF)

• Retained at hold at Ord Minnett; Price Target: $3.90

Car Group (CAR)

• Retained at neutral at Macquarie; Price Target: $34.60 from $32.70

Eagle Mountain Mining (EM2)

• Retained at buy at Shaw and Partners; Price Target: $0.30

Evolution Mining (EVN)

• Retained at accumulate at Ord Minnett; Price Target: $4.00 from $4.05

Global Lithium Resources (GL1)

• Retained at buy at Shaw and Partners; Price Target: $2.20

Genesis Minerals (GMD)

• Downgraded to hold from accumulate at Ord Minnett; Price Target: $2.00 from $1.90

Harvey Norman (HVN)

• Retained at underweight at Morgan Stanley; Price Target: $4.20 from $4.10

IVE Group (IGL)

• Retained at buy at Bell Potter; Price Target: $2.65 from $2.70

Iluka Resources (ILU)

• Retained at hold at Canaccord Genuity; Price Target: $6.70 from $7.40

• Retained at buy at Goldman Sachs; Price Target: $9.00 from $9.30

• Retained at overweight at JP Morgan; Price Target: $8.00 from $8.20

• Retained at neutral at Macquarie; Price Target: $7.00

• Retained at equal-weight at Morgan Stanley; Price Target: $6.70

• Retained at buy at Ord Minnett; Price Target: $7.30

• Retained at neutral at UBS; Price Target: $7.05 from $7.70

JB HI-FI (JBH)

• Retained at underweight at Morgan Stanley; Price Target: $54.70 from $52.80

Lynas Rare Earths (LYC)

• Retained at buy at Bell Potter; Price Target: $8.50 from $7.80

• Downgraded to hold from buy at Canaccord Genuity; Price Target: $6.25 from $7.00

• Downgraded to hold from outperform at CLSA; Price Target: $6.30 from $6.55

• Retained at buy at Goldman Sachs; Price Target: $7.00 from $7.50

• Retained at buy at Jefferies; Price Target: $7.00 from $7.50

• Retained at underweight at JP Morgan; Price Target: $5.00 from $4.70

• Retained at outperform at Macquarie; Price Target: $6.60 from $7.00

• Retained at underweight at Morgan Stanley; Price Target: $4.75 from $4.85

• Retained at buy at Ord Minnett; Price Target: $8.00

• Retained at buy at UBS; Price Target: $6.90

Metals Acquisition (MAC)

• Retained at buy at Ord Minnett; Price Target: $29.00

Mesoblast (MSB)

• Upgraded to overweight from neutral at Piper Sandler; Price Target: $11.00 from $4.00

Propel Funeral Partners (PFP)

• Retained at outperform at Macquarie; Price Target: $6.58

Premier Investments (PMV)

• Retained at overweight at Morgan Stanley; Price Target: $39.50

Polynovo (PNV)

• Retained at outperform at Macquarie; Price Target: $2.75

Reliance Worldwide Corporation (RWC)

• Retained at outperform at Macquarie; Price Target: $6.00 from $6.10

South32 (S32)

• Retained at equal-weight at Morgan Stanley; Price Target: $3.05 from $3.80

SRG Global (SRG)

• Retained at buy at Shaw and Partners; Price Target: $1.30 from $1.20

Southern Cross Gold (SXG)

• Retained at buy at Shaw and Partners; Price Target: $3.26

Transurban Group (TCL)

• Downgraded to hold from outperform at CLSA; Price Target: $13.40 from $14.10

• Retained at buy at UBS; Price Target: $14.60

Technology One (TNE)

• Upgraded to buy from neutral at UBS; Price Target: $21.90 from $17.20

Woodside Energy Group (WDS)

• Retained at outperform at Macquarie; Price Target: $32.00

• Retained at overweight at Morgan Stanley; Price Target: $35.00

• Retained at hold at Ord Minnett; Price Target: $28.50

Whitehaven Coal (WHC)

• Retained at neutral at Goldman Sachs; Price Target: $7.80 from $8.10

• Retained at buy at Ord Minnett; Price Target: $10.00 from $10.30

Scans