Evening Wrap: ASX 200 torpedoed by inflation data, consumer stocks tank, gold and silver only place to hide

The S&P/ASX 200 closed 101.1 points lower, down 1.30%.

Normally when someone gets a 100 there's cheers and celebrations, raising of bats, kissing of badges on helmets etc. Hopefully we see a few stonking centuries over the next few weeks in the Caribbean / USA from Maxi, Big Stoin, and Bison over the next few weeks...

And no more of the 100's we witnessed on the ASX today 👎.

Even worse, I bet when you woke up this morning, rolled over and grabbed the phone to check up on US stock indices, you thought today was going to be a good day...

What turned things so horribly on its head for Aussie stocks since then?

April CPI data. It was bad...Very, very bad ⚠️

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 101.1 points lower at 7,665.6, 1.32% from its session high and just 0.06% from its high/low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a truly dismal 59 to 214.

All 11 of the major ASX sectors were down today, so it was a case of least bad versus downright terrible.

The least bad prize goes to the Gold (XGD) (-0.08%) sub-index. It enjoyed (if you can call it that) the tailwinds from higher gold and silver prices overnight. FYI, I updated the silver chart on X/Twitter this morning, you can check it here.

Outside of a sharp news-related drop in Ramelius Resources (ASX: RMS) (-7.3%), the sector actually wasn't completely terrible today.

Gold stocks weren't completely terrible today.

If you want to see terrible, then the prize goes to Consumer Staples (XSJ) (-2.1%). It didn't fare so well as a result of the worse than expected inflation data.

Alas for them, the heady days of gouging us are gone, and things might get even tighter for budget conscious consumers – particularly those looking for cheap plonk judging by today’s worst performer (and cheap milk!?)

Cheap plonk and milk and Consumer Staples stocks

Industrials (XNJ) (-1.9%), Financials (XFJ) (-1.7%), and Consumer Discretionary (XDJ) (-1.5%) were also harshly dealt with – most likely all for the same reason as their XSJ counterparts.

ChartWatch

Brent Crude Oil Futures ICE

Long term uptrend ribbon held!

The last time we covered Brent crude oil was in ChartWatch in the Evening Wrap on 20 May.

Good news first, bad news later.

Brent has staged another solid rally from the long term uptrend ribbon which continues to provide dynamic demand.

It has to get this one right, though, as the last one we investigated back on 20 May looked just as impressive!

At least this one has closed above the dynamic supply of the short term downtrend ribbon (now neutralised), and it’s the closest close to the 84.48 point of supply since Brent closed below it.

That level is now crucial to this recovery. An emphatic close above 84.48, that is with a long white-bodied candle and high session close would confirm to both the demand and supply sides that this fledgling rally has some legs.

If so, then higher points of supply at 88.36 and 89.44 are possible.

If not, that is if instead of demand-side candles at 84.48 we get supply-side versions (i.e., black bodies and or upward pointing shadows), then the supply side is very much still in control here.

If that’s the case, then the now-crucial points of demand at 80.37-80.77 must hold – because a close below there would signal to all the long term uptrend is over.

Uranium Futures COMEX

Short term trend neutralised...

The last time we covered uranium was in ChartWatch in the Evening Wrap on 8 May. Things were going to plan then, now, not so much.

The strong move from 86.50 to 93.75 on the back of the ban on Russian uranium has now faded, and the price action as of yesterday’s close has swung to falling peaks and falling troughs.

Falling peaks is a symptom of building supply. Falling troughs is a symptom of demand removal.

The price also closed below the supposed dynamic demand of the short term uptrend ribbon.

The long term uptrend remains intact, and the long term uptrend ribbon has done an excellent job of providing dynamic demand.

Overall, this chart smacks of growing equilibrium. Equilibrium means sideways, and certainly the technicals here indicate that the short term trend is neutralised.

As for the long term trend, it remains intact as long as the price continues to close above 83.40.

A close below 90.10, then 86.50, would be further proof of building excess supply, whereas a close above 93.75 is required to recommence the short term uptrend.

S&P/ASX 200 (XJO)

So, so disappointing...and on a day with such positive overseas leads!

The last time we covered the XJO was in ChartWatch in the Evening Wrap on 27 May. In that update I said that a close below 7714 “potentially sets us up for deeper falls to probe historical demand at 7556 and the dynamic demand of the long term uptrend ribbon”.

Add in the fact we closed just about right on the low today and I have to say – refer to the last sentence. Enough said 😭!

(7556 is the next point of demand, it also coincides with the dynamic demand of the long term uptrend ribbon – let’s hope we get a better showing down there – big white candles and or downward pointing shadows please!)

Economy

Today

• AUS Consumer Price Index (CPI) April

  • +3.6% p.a. in April vs +3.4% p.a. forecast and +3.5% p.a. in March

  • The most significant price rises were Housing (+4.9%), Food and non-alcoholic beverages (+3.8%), Alcohol and tobacco (+6.5%) and Transport (+4.2%)

  • Excluding volatile items (i.e., food and energy) and holiday travel +4.1% p.a. unchanged from March

  • Big miss, no sugar coating it – inflation was supposed be coming down, it looks like it’s going back up...going to torpedo rate cut expectations as it puts extreme pressure back on the RBA (hike odds must be firming again!)

Thursday

• 11:30 AUS Building Approvals April (+1.8% m/m forecast vs +1.9% m/m March)

• 22:30 USA Prelim GDP March (+1.3% q/q forecast vs +1.6% q/q December)

Friday

• 00:00 USA Pending Home Sales April (+0.1% m/m forecast vs +3.4% m/m March)

• 11:30 CHN Manufacturing PMI May (50.4 forecast vs 50.4 April)

• 11:30 CHN Non-Manufacturing PMI May (51.5 forecast vs 51.2 April)

• 19:30 EUR Core CPI Flash Estimate May (+2.5% p.a. forecast vs +2.4% p.a. April)

• 22:30 USA Core PCE Price Index April (+0.2% m/m and +2.8% p.a. forecast vs +0.3% m/m and +2.8% p.a. March)

Latest News

Interesting Movers

Trading higher

• +10.7% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term trends (see here) 🔎📈

• +10.0% Avita Medical Inc. (AVH) - No news 🤔

• +6.5% Westgold Resources (WGX) - TOV:WGX Panel Receives Application, generally stronger ASX gold sector today on rising gold price, rise is consistent with prevailing long term uptrend, bounced off long term uptrend ribbon 🔎📈

• +6.3% 29METALS (29M) - No news, copper price was up Tuesday, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +5.0% APM Human Services International (APM) - No news 🤔

• +4.5% Peninsula Energy (PEN) - No news, retained at buy at Shaw and Partners (see Broker Notes section)

• +4.0% Vulcan Energy Resources (VUL) - No news, rise is consistent with prevailing short and long term trends 🔎📈

• +3.8% Resolute Mining (RSG) - No news, generally stronger ASX gold sector today on rising gold price, rise is consistent with prevailing short and long term trends 🔎📈

• +3.7% Fisher & Paykel Healthcare Corporation (FPH) - Preliminary Final Report, rise is consistent with prevailing short and long term trends 🔎📈

• +3.7% IPD Group (IPG) - FY24 Earnings Guidance

• +3.4% Alumina (AWC) - Alumina Limited 2024 AGM - Chairman and CEO speeches, sharp rally in aluminium price on Tuesday, rise is consistent with prevailing short and long term trends 🔎📈

Trading lower

• -9.3% Neuren Pharmaceuticals (NEU) - Corporate Presentation, 29 May 2024

• -7.3% Ramelius Resources (RMS) - TOV:WGX Panel Receives Application

• -6.2% Centuria Capital Group (CNI) - No news 🤔

• -6.1% Zip Co Limited. (ZIP) - No news, fall is consistent with prevailing short term downtrend, falling peaks and falling troughs 🔎📉

• -5.8% Cettire (CTT) - No news, fall is consistent with prevailing short and long term trends 🔎📉

• -5.7% Brainchip Holdings (BRN) - No news, fall is consistent with prevailing short and long term trends 🔎📉

• -4.5% Strike Energy (STX) - No news, fall is consistent with prevailing short and long term trends 🔎📉

• -4.5% Adriatic Metals (ADT) - Successful completion of equity raising

• -4.5% Treasury Wine Estates (TWE) - No news, fall is consistent with prevailing short and long term trends 🔎📉

Broker Notes

• AGL Energy (AGL) retained at neutral at Macquarie; Price Target: $10.69 from $10.30

• Aristocrat Leisure (ALL) retained at outperform at Macquarie; Price Target: $50.50

• ALS (ALQ) retained at add at Morgans; Price Target: $15.50 from $15.00

• Eagers Automotive (APE) upgraded to hold from underperform at Jefferies; Price Target: $10.10 from $10.80

• Car Group (CAR) retained at neutral at Citi; Price Target: $34.70

• Contact Energy (CEO) retained at outperform at Macquarie; Price Target: $0.27 from $0.25

• De Grey Mining (DEG) retained at buy at Bell Potter; Price Target: $1.76 from $1.90

• Domino's Pizza Enterprises (DMP)

  • Retained at neutral at Goldman Sachs; Price Target: $36.30

  • Retained at overweight at Morgan Stanley; Price Target: $52.00

• Data#3 (DTL) upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $8.40 from $8.10

• EML Payments (EML) retained at hold at Ord Minnett; Price Target: $1.05

• Fortescue (FMG) initiated at underweight at Jarden; Price Target: $19.11

• Iluka Resources (ILU)

  • Retained at neutral at Citi; Price Target: $7.80

  • Retained at buy at Goldman Sachs; Price Target: $9.90

• Lendlease Group (LLC)

  • Retained at equal-weight at Morgan Stanley; Price Target: $7.35

  • Retained at neutral at UBS; Price Target: $7.10

• Monadelphous Group (MND) retained at buy at Citi; Price Target: $16.20

• Matador Mining (MZZ) retained at buy at Shaw and Partners; Price Target: $0.19

• NRW Holdings (NWH) retained at buy at Citi; Price Target: $3.25

• Origin Energy (ORG) retained at outperform at Macquarie; Price Target: $10.52 from $10.14

• Peninsula Energy (PEN) retained at buy at Shaw and Partners; Price Target: $0.26 from $0.31

• Playside Studios (PLY) retained at buy at Shaw and Partners; Price Target: $1.00 from $0.90

• Pro Medicus (PME)

  • Retained at buy at Goldman Sachs; Price Target: $136.00 from $134.00

  • Retained at outperform at Macquarie; Price Target: $127.50 from $120.00

  • Retained at sell at Ord Minnett; Price Target: $34.50

• Premier Investments (PMV) retained at overweight at Morgan Stanley; Price Target: $39.50 from $38.00

• Perseus Mining (PRU) initiated at buy at Argonaut Securities; Price Target: $3.00

• Peter Warren Automotive Holdings (PWR)

  • Downgraded to sell from neutral at Citi; Price Target: $1.70 from $2.40

  • Downgraded to neutral from positive at E&P; Price Target: $2.23 from $3.07

  • Retained at overweight at Morgan Stanley; Price Target: $3.00

  • Downgraded to hold from buy at Ord Minnett; Price Target: $1.95 from $3.30

• Qube Holdings (QUB)

  • Retained at buy at Citi; Price Target: $4.15 from $3.95

  • Retained at outperform at CLSA; Price Target: $4.05 from $3.95

  • Retained at neutral at E&P; Price Target: $3.65

  • Retained at accumulate at Ord Minnett; Price Target: $3.87 from $3.86

• Retail Food Group (RFG) retained at buy at Shaw and Partners; Price Target: $0.10

• Sims (SGM) retained at buy at Citi; Price Target: $13.50

• Stockland (SGP) retained at buy at Citi; Price Target: $5.20

• Serko (SKO) retained at buy at Ord Minnett; Price Target: $4.25 from $5.45

• Structural Monitoring Systems (SMO) retained at buy at Shaw and Partners; Price Target: $2.20

• Smartpay Holdings (SMP) downgraded to hold from buy at Bell Potter; Price Target: $1.30 from $1.76

• Saturn Metals (STN) retained at buy at Shaw and Partners; Price Target: $0.44

• The Reject Shop (TRS) retained at equal-weight at Morgan Stanley; Price Target: $3.70 from $4.75

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