Evening Wrap: Miners lift the ASX 200 to a 1-month high, gold stocks rally on Newcrest bid

A broad-based rally for miners and the Big 4 Banks pushes the ASX 200 to a one month high, Newmont raises its Newcrest bid by 16% to $29.4 billion, Australia is inching closing to stabilising its relationship with China and S&P 500 shorts surge to levels not seen since November 2011.

Let's dive in.

ASX 200 Session Chart

ASX 200 gaps up and closes around session highs (Source: Market Index)

Markets

The market shoots higher on Tuesday even after showing a little bit of weakness last Thursday. Today's rally was bolstered by strength across the big banks and miners - which is pretty much all that matters as far as the index weighting is concerned.

• Materials experienced a broad-based rally, led by names in lithium, rare earths and a revised bid for Newcrest propped up gold names

• Staples rallied amid headlines that Chinese sanctions on Australian barley and possibly wine could soon be lifted

• Banks powered ahead, with the Big Four all up around 1.5%

Economy

No major economic announcements.

Latest news

Market Insights

Inching closer to "stabilising" relationship with China

China is set to undertake a review of tariffs on barely exports, according to the Australian.

“In this instance, that outcome should be the complete and unconditional removal of tariffs on Australian barley and wine tariffs, which should never have been imposed in the first place," said Shadow Trade Minister Kevin Hogan.

Beijing confirmed that Vince Minister of Foreign Affairs Ma Zhaoxu will travel to Australia later this week, marking one of the most senior official visits in years.

As for ASX-listed companies, there wasn't anything too exciting outside of Treasury Wine Estates (ASX: TWE), which rallied 4.3% and closed near session highs.

TWE intraday chart (Source: Market Index)

Its CPI print week

There's nothing like another high stakes US inflation print at 10:30 pm AEST on Wednesday followed by FOMC minutes. In terms of S&P 500 performance on inflation print days (since January 2022):

• 3 in-line with expectations: Average gain of 0.65%

• 9 hotter than expected: Average fall of 0.98%

• 2 cooler than expected: Average gain of 3.8%

Positioning has been rather interesting: "Large speculators, mostly hedge funds, saw their net short positions in S&P 500 e-mini futures increase to roughly 321,000 contracts as of Tuesday, according to data from the Commodity Futures Trading Commission. That’s the most bearish reading since November 2011 following the downgrade of the US’s sovereign credit rating."

Interestingly, that short positioning in 2011 put in the bottom and started the decade long bull market.

Source: Bloomberg

Interesting news and movers

Trading higher

• +48.2% 4DMedical (4DX) – Continuation rally, up 80% in last three

• +6.7% Medical Developments (MVP) – Penthrox US strategy update

• +5.7% EcoGraf (EGR) – Tanzanian Government Framework agreement

• +5.2% Newcrest Mining (NCM) – Revised offer from Newmont

• +4.3% Treasury Wine (TWE) – China potentially lifting wine tariffs

• +3.3% Blackmores (BKL) – Asahi spoke about buying Blackmores

• +2.1% Arafura Rare Earths (ARU) – Offtake with Siemens

Trading lower

• -30.1% Nova Minerals (NVA) – Global Estelle Mineral Resource update

• -8.0% BCI Minerals (BCI)

• -5.7% DGL Group (DGL)

• -5.3% Wam Research (WAX) – Ex-dividend

• -3.2% Temple & Webster (TPW) 

Broker updates

Macquarie’s quarterly review on lithium and rare earths:

• “Should the low prices persist, we expect a growth in lithium exports from China driven by price arbitrage opportunities between Chinese and regional LCE prices.”

• “As outlined in our Lithium Market Update, we remain constructive on the lithium market outlook despite near-term headwinds from higher inventories and slow EV sales.”

• “MIN and PLS are our preferred producers with PMT and GL1 key picks of the exploration plays.”

• “We see value in both AKE and LTR, with AKE offering unique exposure to both lithium brine in South America and spodumene production in Australia.”

Macquarie’s global travel trends for April:

• “Domestic: Asia had the highest capacity at 109%, with North America, ANZ & Europe at 102%, 94% and 92% respectively. Looking out 3 months to Jul- 23, capacity in all key regions is forecast to range 95-110%.”

• “International: North America had the highest capacity at 97%, with Europe, ANZ & Asia behind at 92%, 83% and 68%. Looking out 3 months to Jul-23, capacity in Asia is 74% with other key regions forecast to range 85-99%.”

• “We have an Outperform rec on WEB and FLT and Neutral on CTD. WEB and FLT’s Leisure businesses should benefit from stronger-than-expected consumer spending.”

Scans