Evening Wrap: ASX closes near two month low as early rally fizzles, lithium producers outperform

The S&P/ASX 200 closed 19 points lower, down -0.29%.

The local sharemarket closed towards session lows, close to a fresh two month low as the post hotter-than-expected inflation selloff continues.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

• The ASX 200 rallied 0.22% early trade but failed to hold onto gains

• 2 out of 11 sectors advanced

• Real Estate and Materials were the only green sectors

• Financials and Staples were also relative outperformers

• Growth-y sectors including Tech and Health Care underperformed

• 62% of the top 200 companies declined

Stocks

• Lake Resources (ASX: LKE) +12.4% said its demo plant has commenced dry commissioning and expected to begin processing brines in the first week of October 

• Polynovo (ASX: PNV) +9.96% received FDA clearance for its NovoSorb MTX product. This expands Polynovo’s addressable market in the US by an estimated $500m

• Origin Energy (ASX: ORG) -0.9% will divest 100% of its interest in the Beetaloo Basin and announced its intention to ‘exit its upstream exploration permits’  

• Infomedia (ASX: IFM) -4.4% has received three buyout bids since May. The company said it has yet to receive a binding proposal from Solera or the TA Consortium  

Quick bites 

• China's bounce from rock bottom: China Beige Book's August Flash Data showed a "rebound in key economic indicators after a poor July. Every major sector, with the critical exception of Property - reported better conditions ... Two important clouds hang ... first, July's severe weakness opens the possibility that August is a dead-cat bounce ... second, an August explosion in covid cases poses additional risk that the current improvement could be rapidly undone."

• Ugly S&P 500 historicals: The 20th to 26th day of September marks one of the S&P 500's largest historical losing streaks based on average returns between 1950 to 2021. On average, the market falls every day with a total decline of -1.12% across the seven days

• S&P 500 performance on rate hike days: The S&P 500 has rallied more than 1% since the Fed's tightening cycle started in March

  • 16 March +2.2%

  • 4 May +3.0%

  • 15 June +1.5%

  • 27 July +2.6%

• Central bank party: There are 13 central bank meetings this week, the most high profile being the Fed and Bank of England. Both are expected to raise rates by 75 bps and 50 bps respectively

Economy

No high profile economic announcements. Just giving you a rest for what's in store for the rest of the week.

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange rose 0.3%

• Coal futures fell -1.5% to US$439 a tonne

• Uranium futures fell -3.8% to US$48.3/lb, according to fuel brokers UxC

Latest news

Scans

Post market charts

S&P/ASX 200: The market has undercut 7-8 September lows. It struggled to hold early gains and sold off intraday, closing towards session lows.

XJO chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Tech: Reverses the break above the channel.

XIJ chart (Source: TradingView, Annotations by Market Index)

Sectors and stocks

More uranium weakness: Broad-based 1-5% selloff for most uranium names. In the absence of bullish nuclear energy headlines and strength from the broader market, the uranium rally has fizzled. Spot prices tumbled from recent highs of US$53.6/lb to now US$48.8/lb. Again, the seemingly bullish play on net zero emissions has gone nowhere in the last 12 months.

Paladin Energy chart (Source: TradingView, Annotations by Market Index)

Large cap lithiums holding up: As we've noted in past Wraps, large cap lithium names like Pilbara Minerals (ASX: PLS), Allkem (ASX: AKE) and Mineral Resources (ASX: MIN) have outperformed small-to-med cap names in recent weeks. They've received a lot of coverage from brokers like Macquarie and Credit Suisse, and their producer status means they can capitalise on current sky-high prices. The large caps closed green but still off session highs. Whereas the smaller end of town was more volatile and mostly closed lower.

Macquarie Bank: Briefly dipped below the support area.

Macquarie Bank chart (Source: TradingView, Annotations by Market Index)

CSL: Broke its two-and-a-half month trading range. Holding the 200-day moving average

CSL chart (Source: TradingView, Annotations by Market Index)

Flight Centre: Rolling over

Flight Centre chart (Source: TradingView, Annotations by Market Index)

Brainchip: Threatening to break below the key 88 cent level.

Brainchip chart (Source: TradingView, Annotations by Market Index)