Evening Wrap: ASX 200 thumped as nagging inflation dashes 2024 rate cut hopes, gold & copper only places to hide

A bunch of stuff got belted today as markets swung decidedly risk off.

Why? Same as usual, it's all about interest rates and the timing of much anticipated cuts thereto. US benchmark yields were on the climb yesterday, tipping 4.73%, and sucking the life out of investors' need to invest in anything more risky with a lower yield – which let's face it – is pretty much everything.

There were a couple of places to hide from the carnage, though. Gold and copper stocks rose strongly on a flight to safety and a flight to anything BHP Group (ASX: BHP) might write a cheque for, respectively.

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 107.1 points lower at 7,575.9, 1.41% from its session high and just 0.10% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 54 to 230.

For the week, the XJO finished up 8.6 points or 0.1% higher. Note though, this gain belies the fact we closed 157 points or 2% below the high point of the week at 7,724.

All eleven of the major ASX sectors were in the red today, with the Information Technology (XIJ) (-0.39%) and the Health Care (XHJ) (-0.59%) sectors the two least worst, at less than half of the benchmark’s loss.

Not officially a sector, but rather a sub-sector, the Gold (XGD) (+3.4%) sub-index was the only place to hide. All things considered, investors in gold stocks will happily take today's handy gain, but they will no doubt also be ruing the extreme volatility experienced in the sector this week.

One area of the market that was consistently strong this week was copper. There's no copper sub-index, but if there was, it would easily have trounced gold's wobbly performance. Today, anything with copper exposure, including major gold producer Newmont Mining (ASX: NEM) (+13.9%) was boosted by the BHP-Anglo merger talk.

Gold and copper stocks were the only places to hide today

Doing it tough today were interest rate sensitive sectors like Real Estate Investment Trusts (XPJ) (-2.0%) and Financials (XFJ) (-1.6%), but to be fair, there were plenty of sectors which have more or less to do with interest rates which were more or less belted. The bottom line is: A bunch of stuff got belted...markets swung decidedly risk off this week.

Why? Same as usual, it's all about interest rates and the timing of much anticipated cuts thereto. US benchmark yields were on the climb yesterday, tipping 4.73%, and sucking the life out of investors' need to invest in anything more risky with a lower yield – which let's face it – is pretty much everything.

US benchmark yields are sucking the air out of risk takers' lungs (and money from their wallets!)

I've written about how much the US situation has changed recently, but note that the after our worse than expected CPI result on Wednesday, the first RBA rate cut has been pushed out from February 2025 to August 2025 . I show you below the RBA cash rate implied yield curve. Worse still, note that August 2024's implied yield has notched back above the current 4.35% rate...as in...the possibility of a rate hike is back on the table! 😭

The first RBA rate cut has been pushed out to August 2025!

ChartWatch

Gold Futures COMEX

High Grade Copper daily chart

Amidst all of the bad news stands copper. That's Dr. Copper to you. 👨‍⚕️

The Doctor keeps powering on, only briefly pausing at the overhead points of supply I've identified for you in prior updates like 4.33, 4.373, and 4.49.

Trends, price action, and candles exemplify demand-side control, and so, I can't see any reason why the current short term uptrend can't continue.

The next logical question is then: Where are the next key points of supply above 4.49? For that we need to look at the weekly chart?

High grade copper weekly chart

4.72 is the next key point of supply, and above this, the March 2022 high of 5.202 that was touched in the wake of Russia's invasion of Ukraine.

If you don't have any copper exposure, and you don't think you're too late to the party, here's a neat little article I wrote for you a while back (quite prophetical!) on every ASX copper producer.

FTSE China A50 Index Futures

Chinese stocks bucked the trend in a big way today

Just a quick one here, but I noticed a nice pop on the FTSE China A50. The last candle is still live, so I'm not going to make any official judgements on it, but for all intents and purposes if it holds, it officially commences a new long term uptrend in Chinese stocks.

Watch this space, I certainly will be!

Economy

Today

• Bank of Japan meeting and policy rate decision

  • No change as expected, but small upward adjustment in inflation forecast

  • Yen sold off against major currencies (meeting viewed as dovish by markets), hitting near-35 year lows against the Greenback

Later tonight

• 22:30 USA Core PCE Price Index March (+0.3% forecast & +2.7% p.a. vs +0.3% & 2.8% p.a. February)

Latest News

Interesting Movers

Trading higher

• +13.9% Newmont Corporation (NEM) - No news, got a boost today from the BHP-Anglo merger news (i.e., copper production re-rated), rise is consistent with short term uptrend 🔎📈

• +12.7% Nick Scali (NCK) - Entry into UK Market, Acquisition and Equity Raising, rise is consistent with long term uptrend, closed back above short term trend ribbon 🔎📈

• +11.2% Firefly Metals (FFM) - No news, gold and copper stocks (of which this is both) got a boost today, price is consistent with prevailing short and long term uptrends 🔎📈

• +9.6% Resmed Inc (RMD) - ResMed Announces Results for the Third Quarter of FY2024, has bounced off long term uptrend ribbon 🔎📈

• +6.8% 29METALS (29M) - No news, gold and copper stocks (of which this is both) got a boost today

• +5.6% Westgold Resources (WGX) - No news, gold and copper stocks got a boost today

• +5.3% Champion Iron (CIA) - No news, upgraded to buy from overweight at Jarden and price target increased to $7.95 from $7.76

Trading lower

• -9.1% Grange Resources (GRR) - Quarterly Report for 3 months ended 31 March 2024, fall is consistent with prevailing short and long term downtrends 🔎📉

• -8.9% Chrysos Corporation (C79) - Continued negative response to Tuesday's Quarterly Activities & Appendix 4C Cashflow Report, plunging further below long term trend ribbon 🔎📉

• -6.7% Immutep (IMM) - No news, pullback after surge following Wednesday's Positive preliminary topline results from TACTI-003 Cohort B

• -6.4% Metals X (MLX) - Quarterly Activities Report, but also likely last few days pullback in line with corresponding move in tin price on LME

• -5.7% Fleetpartners Group (FPR) - No news, closed below short term uptrend ribbon 🔎📈

• -5.4% Avita Medical Inc (AVH) - No news, fall is consistent with prevailing short term trend, long term trend is transitioning from up to down 🔎📉

• -5.3% Platinum Asset Management (PTM) - No news, fund managers hit hard today on weaker markets

• -5.1% Magellan Financial Group (MFG) - No news, fund managers hit hard today on weaker markets

• -5.0% Boss Energy (BOE) - No news, fall is consistent with prevailing short term trend and falling peaks and falling troughs 🔎📉

• -4.9% Insignia Financial (IFL) - No news, fund managers hit hard today on weaker markets

• -4.8% Imugene (IMU) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.8% Polynovo (PNV) - Victorian Government Grant for Expansion of R&D Facility

• -4.6% BHP Group (BHP) - Response to announcement by Anglo American plc

• -4.4% Healius (HLS) - No news, fall is consistent with prevailing short and long term downtrends

Broker Notes

Beach Energy (BPT)

• Retained at overweight at Barrenjoey; Price Target: $1.86 from $1.88

• Upgraded to overweight from neutral at JP Morgan; Price Target: $1.85 from $1.80

• Retained at overweight at JP Morgan; Price Target: $1.85 from $1.80

• Retained at outperform at Macquarie; Price Target: $2.00 from $1.95

• Retained at buy at UBS; Price Target: $1.85

Champion Iron (CIA)

• Retained at buy at Citi; Price Target: $8.60

• Upgraded to buy from overweight at Jarden; Price Target: $7.95 from $7.76

Fortescue (FMG)

• Retained at neutral at Citi; Price Target: $23.50 from $24.50

• Upgraded to underweight from sell at CLSA; Price Target: $24.25 from $20.00

Kogan.Com (KGN)

• Retained at sell at Citi; Price Target: $4.80 from $5.50

Lynas Rare Earths (LYC)

• Downgraded to sell from neutral at Citi; Price Target: $5.30 from $6.70

• Downgraded to underperform from buy at CLSA; Price Target: $6.85 from $7.20

Mineral Resources (MIN)

• Retained at overweight at Barrenjoey; Price Target: $74.00

• Retained at buy at Citi; Price Target: $79.00 from $76.10

• Retained at outperform at CLSA; Price Target: $76.50 from $70.50

• Retained at sell at Goldman Sachs; Price Target: $47.00 from $48.00

• Retained at hold at Morgan Stanley; Price Target: $71.00

Nick Scali (NCK)

• Upgraded to buy from overweight at Jarden; Price Target: $15.40 from $13.87

Paladin Energy (PDN)

• Retained at buy at Shaw and Partners; Price Target: $16.40

Perpetual (PPT)

• Retained at neutral at Citi; Price Target: $25.95 from $25.70

Perseus Mining (PRU)

• Retained at neutral at Citi; Price Target: $2.30 from $1.85

Resmed Inc (RMD)

• Retained at buy at Citi; Price Target: $34.00

Regis Resources (RRL)

• Retained at sell at Citi; Price Target: $1.30

• Downgraded to sell from neutral at UBS; Price Target: $1.80 from $2.15

Select Harvests (SHV)

• Retained at overweight at Barrenjoey; Price Target: $4.80

• Retained at underperform at CLSA; Price Target: $3.75

• Retained at overweight at Wilsons; Price Target: $5.39 from $5.53

Southern Cross Electrical Engineering (SXE)

• Initiated at buy at Shaw and Partners; Price Target: $1.50

Tuas (TUA)

• Retained at buy at Citi; Price Target: $4.50

Scans