Evening Wrap: ASX 200 surges to new record on panic buying in key energy, mining, financial and healthcare stocks

Panic buying. That's how I would describe today's trading on the Australian share market. It tends to happen when fund managers realise they're not going to get stuff much cheaper (at least in the short term). Given they can't afford to underperform the benchmark index, (which is soaring), it means they must act now to get some coin in.

They're also more likely to not to sell stuff.

So reluctantly or not, you end up with a whack of demand and a whisper of supply.

Economics 101 suggests prices must go up. And they did.

Click/scroll through for the usual reporting of the major sector and stock-specific moves, the broker responses to them, as well as all of the key upcoming economic data, in tonight's Evening Wrap.

Also, I have detailed technical analysis on the surging iron ore and copper prices in today's ChartWatch.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 57.6 points higher at 8,269.8, 0.70% from its session low and just 0.19% from its high. Despite the heroic in the benchmark, in the broader-based S&P/ASX 300 (XKO), advancers beat decliners by only a narrow 151 to 131.

The Energy (XEJ) (+2.6%) sector was the best performing sector today, as strong gains in oil and gas and coal producers offset falls in uranium stocks. For the first cohort, they likely tracked a modest gain for crude oil, but very strong gains for natural gas and coking coal on Friday.

There was also some news for Karoon Energy (ASX: KAR) (+7.2%) – it announced the restart of its Who Dat operation in the wake of Hurricane Helene.

ASX Energy sector interesting moves

Uranium prices were also modestly higher on Friday, so that wasn’t an impediment for U-stocks today. The sector has run very hard of late – so it could have been a case of profit taking…Either way, I have a full technical analysis overview of uranium and global and local uranium stocks in a ChartWatch Special for you here.

Also doing well today was the Resources (XJR) (+2.0%) sector. You would have had to be hiding under a rock to be unaware of the driving force behind this sector’s stunning resurgence (ok, rock dwellers – it's the massive China stimulus measures announced last week! 🚀). I have more analysis for you on the commodities stoking the gains in this sector in today's ChartWatch.

The best performing ASX Resources stocks today

The Information Technology (XIJ) (+0.73%) was the only other sector to outperform the XJO. This means most sectors actually underperformed the benchmark today. The most notable underperformers were the typically defensive sectors of Gold (XGD) (-1.9%), Communication Services (XTJ) (-0.33%), and Consumer Staples (XSJ) (-0.21%).

Not down today, and therefore adding to overall market strength was Financials (XFJ) (+0.37%) and Health Care (XHJ) (+0.39%). These sectors notably dragged on overall performance last week as the massive Resources rally sucked capital away from them. Today, the big fund managers had no choice but to allocate capital here also – such is the nature of new highs – you can’t afford to lag the index.

So as a fund manager, if you feel that Resources have run too hot lately…and you’ve largely corrected your underweight position there – you want to start picking up some liquid big-cap Financials and Healthcare also. Any time you string together big gains in Resources with even only half decent days for Financials and Health, there’s just too many index points there for the XJO not to have a good day.

ChartWatch

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

Stimulus will do that...

The last time we covered iron ore was in ChartWatch in the Evening Wrap on 26 September.

In that update, we noted that iron ore had been thrown a lifeline by “Devine intervention, Beijing intervention, or just pure…dumb…luck.”

It was up until that point a race against time between some convincing supply-sided technicals and the usual end of year seasonal rally.

Is this this the start of the seasonal rally? It probably is. Ironically, history won’t concern itself with “the why” the 2024 seasonal iron ore rally begun – merely that it did.

Today’s big white candle, if it holds, smacks of the realisation the seasonal rally is afoot – it’s gone straight through what in theory should have been points of supply at 103, 105.75, and 110.15. Upside momentum appears to be struggling a smidge around 114-114.30, which to be fair is the clearest point(s) of demand the iron ore price was likely to contend with in the short term.

Bigger picture, iron ore will need to close above this, and the long term uptrend ribbon – to facilitate further gains. Some supply here wouldn’t necessarily be a bad thing as it will give us an idea of just how motivated the supply-side is to fight this move. I suspect that given the timing of this move – there likely won’t be a major pushback.

Whist in itself creates an interesting potentiality. If there is a big pushback, i.e., some long black candles or a few long upward pointing shadows…that would say plenty about the supply-side’s motivation.

The long term uptrend ribbon is now demand, as is 103-105.75. As long as the iron ore price remains above these points, I suggest the 2024 seasonal rally is intact. Below it, well that’s the interesting potentiality…isn’t it? 🤔

A super interesting chart here at a super interesting juncture.

High Grade Copper Futures (Front month, back-adjusted) COMEX

X-marks the spot, or 4.762-4.768 did...anyways!

The last time we covered copper was in ChartWatch in the Evening Wrap on 26 September.

In that update, I gave myself a little pat on the back for picking this latest turnaround in copper so early. I concede it took a little China stimulus to precipitate the heroics on the chart above – to go up and tip perfectly my upside target of 4.762-4.768.

Heck…I was right...It doesn’t matter why – I’ll take it! 😁

Long suffering readers of this section of the Evening Wrap will know how I feel about candles with long upward pointing shadows. I usually say something like “supply-side candles” and “demonstrates the supply-side coming in to take control” and “blah blah blah”.

If that’s you (i.e., a long-suffering reader of this section) you’re probably looking at that last candle into the 4.762-4.768 supply zone and thinking this move is done and dusted. You might well be right – but today’s candle is still live – so we shouldn’t read anything into it just yet.

I agree something pretty amazing will need to occur tonight in the US to turn that long upward pointing shadow into a long white candle, after all long upward pointing shadows are reliable indicators of excess supply manifesting itself at the top of the shadow – but anything is possible.

Should that shadow stick, then consolidation of the recent uptrend is the most likely scenario here. I note in this case 4.39 is demand, but the short term uptrend ribbon will likely offer dynamic demand prior to that. The move to 4.762-4.768 was so quick, there’s little else to peg as likely demand in the meantime – but the candles suggest plenty of demand supporting all the way up.

A close above 4.762-4.768 would likely pave the way for a test of 4.969.

Economy

Today

• China Manufacturing PMI & China Non-Manufacturing PMI September (Official)

  • Manufacturing: 49.8 vs 49.4 forecast and vs 49.1 in August

  • Services: 50.0 vs 50.4 forecast and 50.3 in August

  • Note: Caixin (private sector) Manufacturing & Services PMI's September: 49.3 vs 50.5 forecast and 50.4 in August & 50.3 vs 51.6 forecast and 51.6 in August

  • Means official data shows a recovery in manufacturing, although PMI remained below key 50.0 delineator between growth and contraction in sector, but private sector data suggests Chinese business activity slowed sharply in September, with manufacturing dipping into contraction

Later this week

Tuesday

• All Day CHN National Day Public Holiday

• 03:55 USA Federal Reserve Chairman Jerome Powell speaks

• 19:00 EUR Core Consumer Price Index (CPI) Flash Estimate September (+2.7% p.a. forecast vs +2.8% forecast in August)

Wednesday

• All Day CHN National Day Public Holiday

• 00:00 USA ISM Manufacturing PMI September (47.6 forecast vs 47.2 in August)

• 00:00 USA JOLTS Job Openings (7.64 million forecast vs 7.67 million in August)

• 01:00 - 08:15 USA 4 x Federal Reserve Speakers (Bostic, Cook, Barkin, Collins)

Thursday

• All Day CHN National Day Public Holiday

Friday

• All Day CHN National Day Public Holiday

• 22:30 USA Non-Farm Payrolls September

  • Employment change 144,000 forecast vs 142,000 previous in August

  • Unemployment rate 4.2% forecast vs 4.2% in August

  • Average Hourly Earnings +0.3% m/m forecast vs +0.4% m/m in August

Latest News

Interesting Movers

Trading higher

• +18.0% The Star Entertainment Group (SGR) - FY2024 Financial Report, modest rebound after Friday's crushing falls…still well behind on a two-session basis.

• +7.2% Karoon Energy (KAR) - Who Dat restarts operations after Hurricane Helene.

• +6.6% Botanix Pharmaceuticals (BOT) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈.

• +6.3% Tabcorp (TAH) - Becoming a substantial holder.

• +6.0% Fletcher Building (FBU) - Fletcher Building completes the sale of Tradelink, upgraded to buy from sell at Citi and price target increased to NZ$3.30 from NZ$2.88.

• +5.9% Mineral Resources (MIN) - No news, continuation rally vs China stimulus news last week plus iron ore rally today - see ChartWatch.

• +4.7% Spartan Resources (SPR) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈.

Trading lower

• -5.8% Red 5 (RED) - No news, tough day for ASX gold stocks in general on weaker gold price Friday, fall is consistent with prevailing short and long term downtrends 🔎📉.

• -4.5% Resolute Mining (RSG) - Ditto ASX gold sector weakness.

• -4.5% Deep Yellow (DYL) - Appointment of Head of Project Delivery, generally tough day for ASX uranium stocks.

• -4.2% Genesis Minerals (GMD) - Ditto ASX gold sector weakness.

• -3.5% Emerald Resources (EMR) - Pit Access Restored at Okvau Well Ahead of Schedule, ditto ASX gold sector weakness.

• -3.5% Nine Entertainment (NEC) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉.

Broker Notes

• Life360 (360)

  • Retained at overweight at Morgan Stanley; Price Target: $20.50

• 4DMEDICAL (4DX)

  • Retained at buy at Ord Minnett; Price Target: $1.10 from $1.05

• The A2 Milk Company (A2M)

  • Retained at buy at Citi; Price Target: $7.04

  • Retained at neutral at Macquarie; Price Target: $5.60

• Audinate Group (AD8)

  • Retained at overweight at Morgan Stanley; Price Target: $10.50

• AGL Energy (AGL)

  • Retained at overweight at Morgan Stanley; Price Target: $12.88

• Auckland International Airport (AIA)

  • Retained at buy at Citi; Price Target: NZ$8.70

• ALS (ALQ)

  • Retained at outperform at Macquarie; Price Target: $15.00

• AMP (AMP)

  • Retained at neutral at Macquarie; Price Target: $1.26

• ANZ Group (ANZ)

  • Retained at sell at Citi; Price Target: $25.00

  • Retained at underweight at Morgan Stanley; Price Target: $27.50

• American West Metals (AW1)

  • Retained at buy at Shaw and Partners; Price Target: $0.32

• Aurizon (AZJ)

  • Retained at neutral at Macquarie; Price Target: $3.60

• BHP Group (BHP)

  • Retained at outperform at Macquarie; Price Target: $44.00

  • Retained at OER at Morgan Stanley; Price Target: $47.50

• Brickworks (BKW)

  • Retained at hold at Morgans; Price Target: $28.75 from $30.00

  • Retained at neutral at UBS; Price Target: $29.50 from $28.00

• Bluescope Steel (BSL)

  • Retained at outperform at Macquarie; Price Target: $24.00

• Car Group (CAR)

  • Retained at overweight at Morgan Stanley; Price Target: $42.00

• Commonwealth Bank of Australia (CBA)

  • Retained at sell at Citi; Price Target: $91.50

  • Retained at underweight at Morgan Stanley; Price Target: $113.50

• Champion Iron (CIA)

  • Retained at buy at Goldman Sachs; Price Target: $7.60

• Coles Group (COL)

  • Retained at neutral at Goldman Sachs; Price Target: $18.00

  • Retained at outperform at Macquarie; Price Target: $20.20

• Critical Resources (CRR)

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

• Corporate Travel Management (CTD)

  • Retained at overweight at Morgan Stanley; Price Target: $17.00

• Endeavour Group (EDV)

  • Retained at buy at Goldman Sachs; Price Target: $6.20

• Evolution Mining (EVN)

  • Retained at outperform at Macquarie; Price Target: $4.50

• Fletcher Building (FBU)

  • Upgraded to buy from sell at Citi; Price Target: NZ$3.30 from NZ$2.88

• Firefly Metals (FFP)

  • Retained at overweight at Morgan Stanley; Price Target: $6.40

• Fortescue (FMG)

  • Retained at underperform at Macquarie; Price Target: $14.25

• Focus Minerals (FMV)

  • Retained at overweight at Morgan Stanley; Price Target: $35.75

• Fisher & Paykel Healthcare Corporation (FPH)

  • Retained at outperform at Macquarie; Price Target: $35.95

• GDI Property Group (GDI)

  • Retained at buy at Bell Potter; Price Target: $0.80

• Goodman Group (GMG)

  • Retained at buy at Citi; Price Target: $40.00

  • Retained at neutral at Macquarie; Price Target: $36.47

  • Retained at overweight at Morgan Stanley; Price Target: $38.05

• GPT Group (GPT)

  • Retained at overweight at Morgan Stanley; Price Target: $5.60

• Hansen Technologies (HSN)

  • Retained at overweight at Morgan Stanley; Price Target: $5.50

• IDP Education (IEL)

  • Retained at neutral at Macquarie; Price Target: $16.00

• Iluka Resources (ILU)

  • Retained at outperform at Macquarie; Price Target: $7.10

• Incitec Pivot (IPL)

  • Retained at neutral at Citi; Price Target: $3.10 from $3.00

• James Hardie Industries (JHX)

  • Retained at overweight at Morgan Stanley; Price Target: $59.00

• Latitude Group (LFS)

  • Retained at underweight at Morgan Stanley; Price Target: $0.95 from $0.97

• Lynas Rare Earths (LYC)

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

• Mineral Resources (MIN)

  • Retained at outperform at Macquarie; Price Target: $40.00

• Macquarie Group (MQG)

  • Retained at overweight at Morgan Stanley; Price Target: $250.00

• Metcash (MTS)

  • Retained at outperform at Macquarie; Price Target: $4.20

• National Australia Bank (NAB)

  • Retained at sell at Citi; Price Target: $26.50

  • Retained at overweight at Morgan Stanley; Price Target: $38.00

• Newmont Corporation (NEM)

  • Retained at outperform at Macquarie; Price Target: $90.00

• Northern Star Resources (NST)

  • Retained at outperform at Macquarie; Price Target: $19.00

• Orica (ORI)

  • Retained at outperform at Macquarie; Price Target: $19.76

  • Retained at overweight at Morgan Stanley; Price Target: $21.50

• Paladin Energy (PDN)

  • Retained at overweight at Morgan Stanley; Price Target: $12.40

• Rio Tinto (RIO)

  • Retained at neutral at Citi; Price Target: $123.00

  • Retained at outperform at Macquarie; Price Target: $120.00

  • Retained at overweight at Morgan Stanley; Price Target: $135.50

• Resmed Inc (RMD)

  • Retained at outperform at Macquarie; Price Target: $36.25

• South32 (S32)

  • Retained at outperform at Macquarie; Price Target: $4.15

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.20

• Scentre Group (SCG)

  • Retained at overweight at Morgan Stanley; Price Target: $3.79

• Sandfire Resources (SFR)

  • Retained at outperform at Macquarie; Price Target: $10.00

• Stockland (SGP)

  • Retained at overweight at Morgan Stanley; Price Target: $5.30

• The Star Entertainment Group (SGR)

  • Downgraded to hold from outperform at CLSA; Price Target: $0.23 from $0.52

• Silk Logistics (SLH)

  • Retained at buy at Shaw and Partners; Price Target: $2.10

• Santos (STO)

  • Retained at outperform at Macquarie; Price Target: $8.70

  • Retained at overweight at Morgan Stanley; Price Target: $8.08

• Suncorp Group (SUN)

  • Retained at overweight at Morgan Stanley; Price Target: $20.50

• Seven Group (SVW)

  • Retained at outperform at Macquarie; Price Target: $43.90

• Transurban Group (TCL)

  • Retained at equal-weight at Morgan Stanley; Price Target: $13.33

• The Lottery Corporation (TLC)

  • Retained at equal-weight at Morgan Stanley; Price Target: $5.18

• Telstra Group (TLS)

  • Retained at overweight at Morgan Stanley; Price Target: $4.40

• Treasury Wine Estates (TWE)

  • Retained at outperform at Macquarie; Price Target: $13.90

• Westpac Banking Corporation (WBC)

  • Retained at sell at Citi; Price Target: $24.75

  • Retained at equal-weight at Morgan Stanley; Price Target: $29.70

• Woodside Energy Group (WDS)

  • Retained at sell at Citi; Price Target: $23.00 from $24.50

  • Retained at outperform at Macquarie; Price Target: $33.00

• Wesfarmers (WES)

  • Retained at underweight at Morgan Stanley; Price Target: $55.70

• Westgold Resources (WGX)

  • Initiated at accumulate at Ord Minnett; Price Target: $3.10

• Whitehaven Coal (WHC)

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

• Worley (WOR)

  • Retained at outperform at Macquarie; Price Target: $17.92

• Woolworths Group (WOW)

  • Retained at buy at Goldman Sachs; Price Target: $40.10

  • Retained at neutral at Macquarie; Price Target: $37.00

Scans