Evening Wrap: Aussie stocks take breather as ASX 200 steadies beneath 8-week high

The S&P/ASX 200 closed 47.5 points lower, down 0.67%.

It's possibly the pullback we had to have after two strong days of gains, and what was at one stage a 5.5% rally from the October low of 6,751 to yesterday's high of 7,152. Today's 0.67% decline is modest in that context, and most of the damage was limited to resources names, in particular energy and gold.

Let's dive in.

ASX 200 Session Chart

Not the prettiest session, but consider how far we've come this month (Source: Market Index)

A modest bounce in long-term bond yields, along with strong local employment data, helped push interest rate sensitive and growth related names lower as fears of higher international and local rates resurfaced.

Wednesday's winners Property (XPJ) and Technology (XIJ) were among the underperformers today, down 0.95% and 1.0% respectively.

The worst performer today was Energy (XEJ), down 1.2%, as continued weakness in the price of crude oil continued to undermine sentiment. The sector is now down 10% on a year on year basis.

Sector-wise wins were few and modest. Utilities (XUJ) gained 0.6% as sector heavyweight Origin Energy (ASX: ORG) rebounded 2.0%. Staples (XSJ) +0.4% and Telco's (XTJ) +0.1% were the only other two sectors in the black.

Economy

Aussie employment data justifies RBA's last hike, Christmas hike too?

Employment data released today by the ABS showed a sharp spike in the number of jobs created in the Australian economy in October. Economists were expecting 23,000 jobs were created, they got 55,000.

It's a solid result compared to the recent run rate of 36,000 jobs created per month (median) since 2022. Combined with yesterday's wages data, which showed 1.3% growth in the September quarter and 4%p.a., it paints a very positive picture of the local jobs market.

This is great news if you like being employed and earning an income. The Aussie economy appears to be firing on all cylinders despite the Reserve Bank's attempts to cool it down with rate hikes.

And there's the bad news. This data likely confirms to the RBA the local economy is running too hot. Not only does today's employment data justify the RBA's Cup Day hike, it likely firms the case for a December hike - although market pricing for this scenario remains low for now.

Watch out for...

Just a couple of key data points tonight in the US. Watch out for weekly unemployment claims at 12:30am AEDT where economists are expecting 221,000 claims, and Industrial Production numbers at 1:15am AEDT where a 0.4% decline is expected.

Latest news

Interesting news and movers

Trading Higher:

• +12.9% Servcorp (SRV) - trading update

• +7.9% Galan Lithium (GLN) - secures 5-year offtake agreement with Glencore

• +5.0% Vulcan Energy Resources (VUL) - bridging study reduces project capex

• +3.0% Australian Agricultural Co (AAC) - earnings

• +2.4% Solvar (SVR) - Bell Potter upgrade

• +1.8% GrainCorp (GNC) - earnings

Trading Lower:

• -15.8% AMP (AMP) - investor update

• -9.5% Deep Yellow (DYL) - broadly weaker ASX uranium sector

• -7.0% Life 360 (360) - pullback after yesterday's Q3 trading update, CY24 EBITDA upgrade

• -5.5% Boss Energy (BOE) - weaker ASX uranium sector

• -4.3% Reckon (RKN) - Novatti to sell 19.9% stake at A$0.40/share

• -4.2% Sonic Healthcare (SHL) - USA acquisition

• -4.1% Beach Energy (BPT) - continued fallout from AGM, trading update 14 Nov, broadly weaker energy sector

Investors dump yellow

In the Markets section we noted the poor performance of the Energy sector today. The likes of majors Santos and Woodside Energy were lower, but the sharpest falls today came from Aussie uranium stocks. Yes, uranium companies are grouped into the Energy sector!

No major news driving this fall, US major Cameco was modestly lower last night - but nothing like the plunges we saw today. No clue from the uranium price either, it was up Wednesday and continues to push to new 15-year highs. Just a pull back?

Another sub-index got belted today. Gold. Again, little to explain this one, as the gold price is actually nudging higher in Asian trade. I do note that the recent pop in the Australian Dollar is undermining the Aussie Dollar-based god price.

Perhaps it's just a case of some hot money sloshing around both sectors lately, and there's a little "last in-first-out" going on.

Yellow cake and yellow metal producers were severely dealt with today

Broker notes

• a2 Milk Co. (A2M) upgraded to outperform from underperform at CLSA; Price Target: $4.40

• Flight Centre (FLT)

  • CLSA: Downgraded to outperform from buy; Price Target: $21 from $26

  • Jarden: Retained overweight; Price Target: $22 from $23.60

  • Jefferies: Upgraded to hold from underperform; Price Target: $18.00

  • UBS: Retained neutral; Price Target: $23.45

  • Wilsons: Retained overweight; Price Target: $23.80

• Nufarm (NUF) upgraded to buy from neutral at Citi; Price Target: $5.60 from $4.65

• Solvar (SVR) upgraded to buy from hold at Bell Potter; Price Target: $1.09

• TPG Telecom (TPG) downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $4.40 from $5.60

• Wesfarmers (WES) downgraded to underweight from neutral at Barrenjoey; Price Target: $45 from $48

Scans