ASX 200 dragged lower by technology and resources as lithium, uranium and copper stocks crumble

Today in Review

Markets

The S&P/ASX 200 (XJO) finished points lower at , 0.41% from its session high and just 0.06% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 108 to 155.

The Gold (XGD) (+0.82%) sub-index was the best performing sector today, likely in response to a modest gain in the gold price overnight. Also doing well today was the Energy (XEJ) (+0.50%) sector which was boosted by a similar gain in the crude oil price. I'll review interesting gold chart and one interesting energy chart in today's ChartWatch.

Doing it tough today was the Information Technology (XIJ) (-1.6%) sector, but the Communication Services (XTJ) (-1.0%) sector wasn’t great either. There’s a great deal of overlap between the two. Rising market rates are likely to blamer for the underperformance here.

Whilst the Resources (XJR) (-0.72%) sector wasn't the worst today, it was responsible for some of the worst individual performances. Particularly harshly treated today were lithium, uranium, and copper plays.

Lithium stocks were belted on the back of a 6% plunge in benchmark July lithium carbonate futures yesterday, as reported in Monday's Evening's Wrap. Uranium plays were perhaps a little hard done by in comparison given the very modest 0.5% dip in the uranium price overnight.

Copper stocks were hobbled by a combination of 29Metals (29M) (-25.9%) closure of their Capricorn mine due to an "extended period of rainfall", while sector leader Sandfire Resources (SFR) (-5.0%) copped a downgrade to sell by major broker Citi, who said the stock "now looks fully valued".

ChartWatch

Perseus Mining (ASX: PRU)

PRU is showing a well-established short term uptrend and a long term trend which appears to be about to transition back to up.

The price action recently has compressed, but is still showing rising peaks and rising troughs. Consolidations like this are customary around previous historical points of supply, in this case there's likely some influence from the major peak at 2.05.

I like to look at the price action that occurred prior to a consolidation, in this case, it is a very strong move from February's low. This tells me there is significant excess demand lurking in the system.

Short term supply is working in the market, causing the current consolidation, but a close above 2.14 would signal it likely has been overcome. I place a higher probability on this scenario given the prevalence of white candles which are usually a good indicator of accumulation.

The next major historical point of supply after 2.14 is the April 2023 high of 2.51. Demand resides at 1.98. The short term uptrend is intact while PRU continues to close above this price.

Karoon Energy (ASX: KAR)

KAR's short term uptrend is nowhere near as impressive as PRU's, and its long term downtrend remains clearly pointing down.

Price action is rising peaks and rising troughs, however, which indicates a return to a buy the dip mentality among market participants.

The most impressive technical signal on this chart is today's large white candle with a close on the high of the session. This speaks of a confident burst of excess demand, and the high close indicates a high probability there's likely more demand remaining in the system.

Importantly, today's close is above the dynamic resistance of the long term downtrend ribbon. This is pivotal in changing the long term trend. The close also eclipsed historical supply at 2.04-2.05 and is just shy of the major peak at 2.11.

The next key historical supply points are at 2.24 and 2.43. The key historical demand point is 1.94. The short term trend remains intact while the KAR price continues to close above this level.

Economy

Today

• AUS Westpac Consumer Sentiment March

  • -1.8% to 84.4 vs +6.2% February (readings below 100 indicate general pessimism vs above 100 indicates general optimism)

  • Now marks 24-months since Australian consumers were optimistic

  • Households are disappointed with a lack of certainty around timing of rate cuts / not getting one yet

  • Also concerned about finances (-1.4% to 65.2) and economic outlook over the next 12-months (-4.5% to 84.9)

Later this week

Tuesday

• 23:30 USA Core Durable Goods Orders February (+0.4% forecast vs -0.4% January)

Wednesday

• 01:00 USA Conference Board Consumer Confidence March (106.9 forecast vs +106.7 February)

• 11:30 AUS Consumer Price Index February (CPI) (+3.5% p.a. forecast vs +3.4% p.a. January)

Thursday

• 11:30 AUS Retail Sales February (+0.4% forecast vs +1.1% January)

Friday

• All day AUS Good Friday Holiday

• 23:30 USA Core PCE Price Index February (+0.3% forecast vs +0.4% January)

Saturday

• 02:30 USA Federal Reserve Chairman Powell speech at Monetary Policy Conference, in San Francisco

Latest News

ASX Microcaps with a blue-chip profile: Austin Engineering

Insider Trades: Directors are buying shares in these 21 ASX companies

The companies the Easter Bunny should deliver to your portfolio (and which to avoid)

ChartWatch: ASX lithium’s last gasp (Spoiler: Only 1 out of these 20 charts isn’t struggling!)

How few ETFs do you need to build the perfect portfolio?

Short Selling: Goodman Group shorts spike, Syrah shorters cash in on $98m raise

Interesting Movers

Trading higher

• +45.5% Mesoblast (MSB) - FDA Notifies Clinical Data Sufficient for Refiling aGVHD BLA

• +21.0% Catapult Group International (CAT) - Response to ASX Price Query, rise is consistent with prevailing short and long term uptrends

• +6.1% Karoon Energy (KAR) - No news, stronger energy sector today on rising crude oil price, back to rising peaks and rising troughs, now challenging long term downtrend ribbon

• +5.7% Vulcan Energy Resources (VUL) - No news, rise is consistent with prevailing short term uptrend, bouncing off short term uptrend ribbon

• +5.3% Cooper Energy (COE) - No news, stronger energy sector today on rising crude oil price

• +4.8% The Star Entertainment Group (SGR) - No news, retained at hold at Ord Minnett, price target: $0.90

• +4.7% Macmahon Holdings (MAH) - No news, rise is consistent with prevailing short and long term uptrends

• +4.4% Premier Investments (PMV) - H1 FY24 Results, rise is consistent with prevailing short and long term uptrends

• +4.0% Elders (ELD) - No news, retained at buy at Bell Potter, price target: $9.50

• +3.6% Grange Resources (GRR) - No news 🤔

• +3.3% Breville Group (BRG) - No news 🤔

• +3.0% Alpha HPA (A4N) - Projects Update

• +3.0% Temple & Webster Group (TPW) - No news, rise is consistent with prevailing short term uptrend

• +2.9% Regis Resources (RRL) - No news, generally stronger gold sector today on overnight rise in gold price, closed back above long term trend ribbon

• +2.9% De Grey Mining (DEG) - Ivan Mullany to Chair Hemi Gold Project Committee, generally stronger gold sector today on overnight rise in gold price

• +2.9% Beach Energy (BPT) - No news, stronger energy sector today on rising crude oil price, upgraded to add from hold at Morgans; Price Target: $2.15 from $1.65, rise is consistent with prevailing short and long term uptrends

• +2.9% Latin Resources (LRS) - Colina delivers further high-grade results

• +2.8% Capricorn Metals (CMM) - No news, generally stronger gold sector today on overnight rise in gold price, rise is consistent with prevailing short and long term uptrends

• +2.8% Adairs (ADH) - No news, rise is consistent with prevailing short term uptrend

Trading lower

• -25.9% 29Metals (29M) - Capricorn Copper - Suspension of Operations

• -6.7% Wildcat Resources (WC8) - No news, sector weakness due to sharp fall in lithium carbonate price on GFEX yesterday, closed below short term uptrend ribbon

• -5.1% Atlas Arteria (ALX) - Ex-dividend $0.20 unfranked, any excess fall is consistent with prevailing short and long term downtrends

• -5.0% Sandfire Resources (SFR) - No news, downgraded to sell from neutral at Citi, price target: $7.30 from $6.90

• -4.8% Lotus Resources (LOT) - No news, uranium sector weakness on small pullback in uranium price

• -4.5% Novonix (NVX) - No news, sector weakness due to sharp fall in lithium carbonate price on GFEX yesterday

• -4.5% Arcadium Lithium (LTM) - No news, sector weakness due to sharp fall in lithium carbonate price on GFEX yesterday, fall is consistent with prevailing short and long term downtrends

• -4.4% Weebit Nano (WBT) - No news, fall is consistent with prevailing short and long term downtrends

• -4.2% Chalice Mining (CHN) - No news, sector weakness due to sharp fall in lithium carbonate price on GFEX yesterday

• -4.1% Seven Group (SVW) - Third Supplementary Bidders Statement

• -3.7% Iluka Resources (ILU) - No news, fall is consistent with prevailing long term downtrends, rebounding lower off long term downtrend ribbon, closed back below short term uptrend ribbon

• -3.6% Playside Studios (PLY) - No news, pullback from recent substantial rally

• -3.6% Pilbara Minerals (PLS) - No news, sector weakness due to sharp fall in lithium carbonate price on GFEX yesterday

• -3.2% IDP Education (IEL) - Appointment of Chief Financial Officer, UBS cuts price target to $25.30 from $28, fall is consistent with prevailing short and long term downtrends

• -2.8% Mineral Resources (MIN) - No news, sector weakness due to sharp fall in lithium carbonate price on GFEX yesterday

Broker Notes

• 29METALS (29M) retained at neutral at Citi; Price Target: $0.55 from $0.45

• The A2 Milk Company (A2M) retained at hold at Bell Potter; Price Target: $5.70

• Australian Agricultural Company (AAC) retained at buy at Bell Potter; Price Target: $2.00

• ALS (ALQ)

  • Retained at buy at Goldman Sachs; Price Target: $13.60 from $13.70

  • Retained at buy at Jarden; Price Target: $13.70 from $13.80

  • Retained at outperform at Macquarie; Price Target: $13.90 from $14.25

  • Retained at neutral at UBS; Price Target: $13.30 from $13.00

• Amcor (AMC) retained at accumulate at Ord Minnett; Price Target: $17.00 from $18.10

• APA Group (APA) retained at outperform at Macquarie; Price Target: $9.40 from $8.80

• ASX (ASX) retained at underweight at Morgan Stanley; Price Target: $53.50

• Australian Vintage (AVG) retained at hold at Bell Potter; Price Target: $0.41

• Bega Cheese (BGA) retained at buy at Bell Potter; Price Target: $5.00

• BHP Group (BHP) upgraded to add from hold at Morgans; Price Target: $47.60

• Beach Energy (BPT) upgraded to add from hold at Morgans; Price Target: $2.15 from $1.65

• Bubs Australia (BUB) retained at hold at Bell Potter; Price Target: $0.14

• Car Group (CAR) retained at neutral at Citi; Price Target: $34.70

• Cobram Estate Olives (CBO) retained at hold at Bell Potter; Price Target: $1.80

• Clean Seas Seafood (CSS) retained at hold at Bell Potter; Price Target: $0.27

• Cleanaway Waste Management (CWY) initiated buy at Bell Potter; Price Target: $3.10

• DGL Group (DGL) retained at buy at Bell Potter; Price Target: $0.75

• Elders (ELD)

  • Retained at buy at Bell Potter; Price Target: $9.50

  • Retained at neutral at UBS; Price Target: $9.70 from $7.60

• Evolution Mining (EVN) retained at buy at Citi; Price Target: $3.90

• Genesis Minerals (GMD)

  • Upgraded to outperform from neutral at Macquarie; Price Target: $2.00

  • Retained at buy at Shaw and Partners; Price Target: $2.30 from $2.20

• Graincorp Class A (GNC) retained at buy at Bell Potter; Price Target: $9.30

• IDP Education (IEL) retained at buy at UBS; Price Target: $25.30 from $28.00

• Inghams Group (ING) retained at buy at Bell Potter; Price Target: $4.35

• Mineral Resources (MIN) downgraded to hold from accumulate at Morgans; Price Target: $71.00

• Macquarie Group (MQG) retained at overweight at Morgan Stanley; Price Target: $225.00 from $202.00

• MMA Offshore (MRM)

  • Downgraded to hold from buy at Bell Potter; Price Target: $2.60 from $2.70

  • Initiated at buy at Citi; Price Target: $2.60

  • Downgraded to hold from buy at Shaw and Partners; Price Target: $2.60

• Noumi (NOU) retained at buy at Bell Potter; Price Target: $0.175

• Nufarm (NUF) retained at hold at Bell Potter; Price Target: $6.35

• Pilbara Minerals (PLS)

  • Retained at hold at Bell Potter; Price Target: $3.55

  • Retained at underweight at Morgan Stanley; Price Target: $3.30

• Rural Funds Group (RFF) retained at buy at Bell Potter; Price Target: $2.40

• Regal Partners (RPL) initiated positive at E&P; Price Target: $4.20

• Sandfire Resources (SFR) downgraded to sell from neutral at Citi; Price Target: $7.30 from $6.90

• The Star Entertainment Group (SGR) retained at hold at Ord Minnett; Price Target: $0.90

• Select Harvests (SHV) retained at buy at Bell Potter; Price Target: $4.70

• Synlait Milk (SM1) retained at hold at Bell Potter; Price Target: $0.75

Scans

This article first appeared on Market Index on Tuesday 26 March 2024.