Evening Wrap: ASX slumps from session highs, unemployment rate rises for the first time in 10 months

The S&P/ASX 200 closed 14 points higher, up 0.21%.

The local sharemarket faded from session highs of 0.72%, the unemployment rate ticks higher, coal stocks surge again and some views about a 100 bp rate hike.

Let's dive in.

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ASX 200, All Ords and All Tech intraday overview

Markets

• 3 out of 11 sectors advanced

• Energy led to the upside as oil prices continue to recover

• A mix of growth and defensive stocks underperformed

• 57% of the top 200 companies declined

Stocks

• Select Harvests (ASX: SHV) +13.2% provided a crop, market and pollination update

  • Managing Director Paul Thompson: ““The strengthening of almond pricing is pleasing. The Select Harvests’ team have had to manage some difficult market and operational challenges over the last eighteen months.”

• Myer (ASX: MYR) 0% posted 5.7% profit growth to $49m in FY22. Management said the second half sales growth was its highest 2H NPAT in almost ten years

• Tyro Payments (ASX: TYR) -3.75% appointed Jonathan Davey as new Chief Executive Officer. Mr Davey was previously the CEO of Tyro’s health business 

• Lake Resources (ASX: LKE) -12.7% shares continued to sell off after Wednesday’s dispute with its technology partner about project milestone dates 

Economy

• Australian unemployment rose to 3.5% in August from 3.4% in July

  • Consensus expected unemployment to remain unchanged at 3.4%

  • First uptick in unemployment in 10 months 

  • “The August rise in employment and hours occurred after the winter school holidays and flooding events in New South Wales, where we saw more people than usual working fewer hours in July,” said Lauren Ford, Head of Labour Statistics at the ABS

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange rose 0.8%

  • Chinese authorities are ramping up efforts to finish stalled real estate projects and ensure housing delivery to home buyers, according to CN Wire

  • Special loans are being offered by policy banks, which aimed to reassure all participants in the market

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Latest news

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Scans

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Post market charts

S&P/ASX 200: Not the most inspiring bounce, down from session highs of 0.72%. The Index is still trading above 6,800. More time is needed.

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

S&P/ASX 200 Energy: The Index briefly touched the 50-day moving average on 8 September. It's managed to defend recent lows. Oil is back in the spotlight following headlines about easing lockdowns in China and Biden considering crude purchases to refill the Strategic Petroleum Reserve

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

Sectors and stocks

Energy, lithium and specialty metals remains the place to be. Although, the pick up in volatility after Wednesday has seen a lot of names fall hard from session highs. Could lithium's spectacular run finally take a breather?

Broad-based coal rally: Most coal stocks rallied between 2-10%. With names like Whitehaven Coal (ASX: WHC) and New Hope (ASX: NHC) marking another multi-year if not all-time high.

Whitehaven Coal chart (Source: TradingView, Annotations by Market Index)

Coronado Global chart (Source: TradingView, Annotations by Market Index)

Volatile lithiums: Things are starting to get really choppy. Names like Lithium Power International (ASX: LPI), Core Lithium (ASX: CXO) and Sayona (ASX: SYA) faced heavy intraday selling on above average volumes.

Core Lithium chart (Source: TradingView, Annotations by Market Index)

Heavyweights Pilbara Minerals (ASX: PLS) and Allkem (ASX: AKE) closed green but still down 2-3% from session highs.

Then you have Global Lithium (ASX: GL1) and Leo Lithium (ASX: LLL) that continue to defy gravity and rally into all-time highs.

Global Lithium chart (Source: TradingView, Annotations by Market Index)

Cobalt Blue: Moves out on high volume

Cobalt Blue chart (Source: TradingView, Annotations by Market Index)

Food for thought: The Fed

JP Morgan thinks 100 bps is unlikely: “Although the market is now pricing around 1-in-3 odds for the Fed to hike 100 bp next week, we see a smaller chance of such a move given that PCE inflation as well as GDP growth are tracking below the FOMC’s June projections.” 100 bps would result in intentional yield inversion: "Note that if the Fed were to hike 100 bps next week, it would take the upper-end of the Fed Funds Rate (3.5%) above the yield on the 10-year (3.40%), intentionally inverting their preferred measure of the yield curve," said Bespoke Invest

Source: Bespoke Investment Group

Fed to hike rates to CPI levels: US CPI is currently up 8.3% year-on-year versus the Fed funds rate of 2.5%. "Be aware the past 8 cycles saw the Fed continue to hie until above CPI," says Ryan Detrick, Chief Market Strategist of Carson Group. Currently, the Fed's peak terminal rate sits at 4.3% by March 2023

Source: Carson Group