Evening Wrap: ASX 200 suffers worst day in nine weeks as Real Estate, Copper and Gold stocks slide

The S&P/ASX 200 closed 52.1 points lower, down 0.61%.

In a nutshell:

• The market hasn't been hit this hard since 5 May, when a weak earnings report from Westpac sparked a sell-off among big banks

• Yield-sensitive real estate stocks continued to sell off after the unexpected RBA hold, while the Australian 10-year yield gained 3 bps to 4.34%

• The Materials Index was set to make a meaningful break above its 200-day moving average, only to spend the last four days in red

Let's dive in.

ASX 200 Session Chart

ASX 200 closed down 52.1 points (Source: Market Index)

Markets

• ASX 200 suffered its largest one-day decline in nine weeks, closing the session at worst levels

• Market breadth was weak, with 127 S&P/ASX 200 constituents closing flat or lower, and seven of eleven sectors in the red

• The rate-sensitive real estate sector (-1.65%) led to the downside, now down 2.1% in the last two sessions

• Materials sector (-1.31%) under pressure, with notable declines from copper names like Sandfire Resources (-3.5%) and Capstone Copper (-3.0%).

• S&P/ASX 200 Materials Index closed above its 200-day moving average on 3-Jul, only to go on a four-day losing streak – I guess it was just a short-term bounce afterall

• Gold miners closed broadly lower, led by Pantoro (-10.1%), Evolution Mining (-7.0%) and West African Resources (-6.6%)

• Lifestyle Communities dived 37.2% after a VCAT ruling invalidated some of its exit fee clauses, while A2 Milk fell 4.1% on a Citi downgrade to Neutral

• Pantera Lithium shares ($11m market cap) doubled after the company entered into a binding agreement to sell its Smackover lithium project project for $40m ($6m cash and $34m in scrip) – a pretty big deal given asset sale is still worth almost 4x its market cap

Economy

• China's consumer price index unexpectedly increased 0.1% year-on-year in June, ending a four-month streak of negative prices. Though Bloomberg flagged this as a short-term effect of government subsidies as opposed to a lasting recovery.

• China's producer price index fell 3.6% year-on-year in June, deepening the country's deflation problem. Price momentum is firmly negative, extending the -3.3% fall in May.

• Reserve Bank of New Zealand kept rates on hold at 3.25% after six consecutive cuts, signaling further easing dependent on inflation pressures and the economic recovery pace

Interesting Movers

Trading higher

• +20.69% Botanix Pharmaceuticals (BOT) – Bounce after ~50% selloff on Tuesday

• +8.40% Vulcan Energy Resources (VUL) – Lithium sector move

• +6.94% Skycity Entertainment Group (SKC) – No news

• +6.16% Telix Pharmaceuticals (TLX) – HCPCS code grant, means insurers in the US will be able to process and reimburse claims for Telix's Gozellix product

• +6.09% Metals X (MLX) – Tin sector move

• +4.93% Liontown Resources (LTR) – Lithium sector move

Trading lower

• -36.51% Lifestyle Communities (LIC) – VCAT ruled its deferred management fee clause in some residential site agreements as void and unenforceable

• -13.93% Synlait Milk (SM1) – No news

• -11.43% Dateline Resources (DTR) – No news

• -10.12% Pantoro Gold (PNR) – Gold sector selloff

• -8.66% Paladin Energy (PDN) –Uranium sector weakness

• -7.21% Silex Systems (SLX) –Uranium sector weakness

Broker Notes

AIC Mines (A1M)

• Retained at Buy at Shaw and Partners; Price Target: $0.70

The a2 Milk Company (A2M)

• Downgraded to Neutral from Buy at Citi; Price Target: $8.20

Amplitude Energy (AEL)

• Upgraded to Buy from Neutral at Goldman Sachs; Price Target: $0.26 from $0.27

Bannerman Energy (BMN)

• Retained at Speculative buy at Canaccord Genuity; Price Target: $3.86 from $3.74

Boss Energy (BOE)

• Downgraded to Hold from Buy at Ord Minnett; Price Target: $4.10 from $6.00

CAR Group (CAR)

• Retained at Buy at Citi; Price Target: $42.60 from $42.00

Challenger (CGF)

• Retained at Outperform at Macquarie; Price Target: $9.30 from $7.00

Centuria Industrial REIT (CIP)

• Retained at Hold at Morgans; Price Target: $3.25 from $2.85

Centuria Office REIT (COF)

• Retained at Hold at Morgans; Price Target: $1.14 from $1.05

Cochlear (COH)

• Retained at Hold at Ord Minnett; Price Target: $295.00 from $285.00

Digico Infrastructure REIT (DGT)

• Retained at Buy at Morgans; Price Target: $5.10 from $5.60

Dexus Convenience Retail REIT (DXC)

• Retained at Hold at Morgans; Price Target: $3.00 from $3.20

Dexus Industria REIT (DXI)

• Retained at Accumulate at Morgans; Price Target: $3.00 from $2.65

Eureka Group Holdings (EGH)

• Retained at Buy at Morgans; Price Target: $0.79

Garda Diversified Property Fund (GDF)

• Retained at Hold at Morgans; Price Target: $1.20 from $1.15

Goodman Group (GMG)

• Retained at Hold at Morgans; Price Target: $37.20 from $36.65

Gold Road Resources (GOR)

• Retained at Neutral at Macquarie; Price Target: $3.30 from $3.40

HealthCo Healthcare and Wellness REIT (HCW)

• Retained at Hold at Morgans; Price Target: $0.75 from $0.90

HomeCo Daily Needs REIT (HDN)

• Retained at Accumulate at Morgans; Price Target: $1.33

HMC Capital (HMC)

• Retained at Hold at Morgans; Price Target: $4.20 from $5.20

HUB24 (HUB)

• Downgraded to Market weight from Overweight at Wilsons; Price Target: $90.62 from $71.50

James Hardie Industries Plc (JHX)

• Retained at Hold at Ord Minnett; Price Target: $41.50 from $40.00

Karoon Energy (KAR)

• Downgraded to Sector perform from Outperform at RBC Capital Markets; Price Target: $1.90 from $1.80

Lifestyle Communities (LIC)

• Retained at Buy at UBS; Price Target: $8.83 from $10.37

Netwealth Group (NWL)

• Downgraded to Market weight from Overweight at Wilsons; Price Target: $34.08 from $27.66

Origin Energy (ORG)

• Retained at Neutral at Macquarie; Price Target: $10.94 from $10.12

Praemium (PPS)

• Retained at Market weight at Wilsons; Price Target: $0.71 from $0.69

Qualitas (QAL)

• Retained at Accumulate at Morgans; Price Target: $3.80 from $3.35

SGH (SGH)

• Downgraded to Hold from Buy at Jefferies; Price Target: $56.70 from $61.00

Waypoint REIT (WPR)

• Retained at Hold at Morgans; Price Target: $2.50

Xero (XRO)

• Retained at Overweight at Morgan Stanley; Price Target: $235.00 from $225.00

Scans