ASX 200 flat, uranium soars on production glitch, Pilbara Minerals dumps on downgrade

Today in Review

Markets

ASX 200 Session Chart

The S&P/ASX200 (XJO) finished 2 points lower at 7,496.3, 0.25% from its session low and just 0.12% from its high. The trading range of 27.5 points, or 0.37%, was one of the smallest seen since the pandemic. As if to confirm just how “stuck in the middle” today’s trading session was, in the broader-based S&P/ASX 300 (XKO), advancers and decliners were closely balanced at 141 to 138.

Despite the lack of volatility at the index level, there was however plenty going on beneath the surface. The best performing sectors logged tidy gains, the S&P/ASX 200 Energy Sector (XEJ) rising 2.1% and the S&P/ASX 200 Communication Services Sector (XTJ) adding 1.1%.

As we've mentioned many times in the Evening Wrap, uranium stocks are part of the XEJ. They were major beneficiaries of an announcement of major global producer Kazatomprom it is would likely delver lower than expected production due to a shortage of key chemicals used in the uranium extraction process, as well as ongoing construction delays.

Doing it tough today was the S&P/ASX 200 Materials Sector (XMJ) which dipped 0.8%. As mentioned in today’s ChartWatch Weekly Insights article, the prices of key commodities iron ore, copper and lithium continue to come under short term selling pressure.

In that same ChartWatch, I also place a big question mark over the health of the Chinese stock market, which I suspect is largely to blame for weaker metals prices. If you have a large exposure to resources companies in your portfolio, then I recommend you check out the Economy section of this Evening Wrap very closely - the Data Dump is coming!

Pilbara Minerals (ASX: PLS) led the lithium sector lower, dipping a hefty 4.8% following a downgrade by Goldman Sachs to sell. Goldman retained its $3.20 price target which is still some $0.26 or 7.3% below PLS's closing price of $3.56.

The rest of the sector didn't need much of a reason to follow suit given lithium minerals prices were again subdued in Asian trading. At the time of writing, the benchmark July lithium carbonate futures contract on GFEX is down 1.1% from Friday's close, and SMM's Spodumene Index is down 0.8%

Economy

• MI Inflation Gauge for December, previous reading +2.3% p.a

  • Actual +1.0% monthly (vs +0.3% in November); +5.2% p.a. (vs +4.4% in November)

  • Indicates Australian inflation likely accelerated towards the end of 2024

  • Well above RBA 2%-3% target range, and hottest inflation print in 17 months! ⚠️

• ANZ Job Advertisements for December, previous reading -4.6%

  • Actual +0.1% (vs November revised -5.2%)

  • Now down 17% from November 2022 peak

What to watch out for...

Tonight:

• Not much due to the Martin Luther King Jr. Holiday in the States

Later this week:

• Weds from 1:00pm: China "Data Dump" including Industrial Production, quarterly GDP, new home prices, retail sales, fixed asset investment, NBS interest rate decision, unemployment rate

• Thurs from 12:30am: US retail sales; from 11:30am Australian employment change and unemployment rate

Latest News

ChartWatch Weekly Insights: ASX 200, uranium, iron ore, copper, lithium & more

The ASX 200 stocks hit with the biggest broker downgrades last week: Core Lithium, The Star

The 10 most overbought and oversold ASX 200 stocks – Week 3

ASX 200 stocks with fresh 52-week highs and lows – Week 3

The ASX 200 stocks attracting the biggest broker upgrades: Alumina, uranium miners

3 growth industries that could add some sizzle to your portfolio in 2024

Interesting Movers

Trading higher

• +11.6% Deep Yellow (DYL) - Uranium prices spiked on Kazatomprom production warning, rally is consistent with prevailing short and long term uptrends

• +9.6% Boss Energy (BOE) - Uranium prices spiked on Kazatomprom production warning, rally is consistent with prevailing short and long term uptrends

• +7.5% Paladin Energy (PDN) - Uranium prices spiked on Kazatomprom production warning, rally is consistent with prevailing short and long term uptrends

• +7.3% Silex Systems (SLX) - Uranium prices spiked on Kazatomprom production warning, rally is consistent with prevailing short and long term uptrends

• +7.2% Fineos Corporation Holdings (FCL) - No news, rally is consistent with prevailing short and long term uptrends

• +6.7% K&S Corporation (KSC) - No news, rally is consistent with prevailing short and long term uptrends

• +6.2% Bannerman Energy (BMN) - Uranium prices spiked on Kazatomprom production warning, rally is consistent with prevailing short and long term uptrends

• +5.7% Super Retail Group (SUL) - Trading Update, rally is consistent with prevailing short and long term uptrends

• +5.7% Qoria (QOR) - No news, rally is consistent with prevailing short term trend, long term trend may be turning up

• +5.5% Universal Store Holdings (UNI) - No news, rally is consistent with prevailing short term trend, long term trend may be turning up

• +5.4% MMA Offshore (MRM) - No news, rally is consistent with prevailing short and long term uptrends

• +5.4% Smartpay Holdings (SMP) - No news, rally is consistent with prevailing short term trend, long term trend may be turning back up

• +4.9% Elders (ELD) - No news, rally is consistent with prevailing short and long term uptrends

Trading lower

• -9.7% Chalice Mining (CHN) - No news, fall is consistent with prevailing short and long term downtrends

• -7.4% Tuas (TUA) - No news ⚠️

• -6.6% Nuix (NXL) - No news since 12-Jan 1H24 Results Update

• -6.5% Syrah Resources (SYR) - No news since 12-Jan Vidalia start of AAM production update, fall is consistent with prevailing short and long term downtrends

• -6.2% Omni Bridgeway (OBL) - No news, fall is consistent with prevailing short and long term downtrends

• -5.8% IGO (IGO) - No news, fall is consistent with prevailing short and long term downtrends

• -5.8% Arcadium Lithium (LTM) - No news, fall is consistent with prevailing short and long term downtrends

• -4.8% Pilbara Minerals (PLS) - No news, Goldman Sachs downgrade to sell, fall is consistent with prevailing short and long term downtrends

• -4.8% Healius (HLS) - No news, fall is consistent with prevailing short and long term downtrends

• -4.4% Qantas Airways (QAN) - No news, fall is consistent with prevailing short and long term downtrends

Broker Notes

• Argosy Minerals (AGY) retained at neutral Macquarie; Price Target: $0.14

• Arena REIT (ARF) upgraded to outperform from underperform at CLSA; Price Target: $3.87 from $3.71

• Alumina (AWC) retained at neutral Macquarie; Price Target: $1.10 from $0.85

• Charter Hall Long Wale Reit (CLW) downgraded to underweight from neutral at JP Morgan; Price Target: $3.70 from $3.50

• Cromwell Property Group (CMW) upgraded to overweight from neutral at JP Morgan; Price Target: $0.50 from $0.53

• Centuria Capital Group (CNI) downgraded to neutral from overweight at JP Morgan; Price Target: $18.00

• Core Lithium (CXO) retained at neutral Macquarie; Price Target: $0.20

• Evolution Mining (EVN) retained at hold Ord Minnett; Price Target: $3.70 from $3.60

• Global Lithium Resources (GL1) upgraded to outperform from neutral at Macquarie; Price Target: $1.30

• Goodman Group (GMG) downgraded to neutral from overweight at JP Morgan; Price Target: $25.50 from $25.00

• GPT Group (GPT) downgraded to neutral from overweight at JP Morgan; Price Target: $4.80

• IGO (IGO) retained at outperform Macquarie; Price Target: $10.00

• Iluka Resources (ILU) retained at outperform Macquarie; Price Target: $8.90

• Judo Capital Holdings (JDO) initiated buy at Jefferies; Price Target: $2.20

• Karoon Energy (KAR) downgraded to overweight from buy at Jarden; Price Target: $2.35 from $2.50

• Loyal Lithium (LLL) retained at outperform Macquarie; Price Target: $0.50

• Liontown Resources (LTR) retained at Macquarie; Price Target: $1.60

• Lynas Rare Earths (LYC) retained at outperform Macquarie; Price Target: $7.40 from $7.50

• Mirvac Group (MGR) upgraded to neutral from underweight at JP Morgan; Price Target: $2.30 from $2.20

• Mineral Resources (MIN) retained at outperform Macquarie; Price Target: $75.00

• Newmont Corporation (NEM) retained at neutral UBS; Price Target: $60.00

• Orora (ORA) retained at buy at Citi; Price Target: $3.28

• Piedmont Lithium Inc (PLL) retained at outperform Macquarie; Price Target: $0.60

• Pilbara Minerals (PLS)

  • Downgraded to sell at Goldman Sachs; Price Target: $3.20

  • Retained at outperform Macquarie; Price Target: $4.40

• Patriot Battery Metals Inc. (PMT) retained at outperform Macquarie; Price Target: $2.10

• Region Group (RGN) downgraded to underweight from neutral at JP Morgan; Price Target: $2.30

• Rio Tinto (RIO) retained at neutral Macquarie; Price Target: $120.00

• South32 (S32) retained at neutral Macquarie; Price Target: $3.40 from $3.30

• Scentre Group (SCG) retained at overweight Morgan Stanley; Price Target: $3.30 from $3.10

• Stockland (SGP) downgraded to underweight from neutral at JP Morgan; Price Target: $4.50 from $4.40

• Smartgroup (SIQ) upgraded to buy from outperform at CLSA; Price Target: $10.50 from $9.65

• Stanmore Resources (SMR) retained at buy Ord Minnett; Price Target: $4.30

• Santos (STO) downgraded to neutral from overweight at Jarden; Price Target: $7.70 from $7.25

• Sayona Mining (SYA) retained at outperform Macquarie; Price Target: $0.09

• Telstra Group (TLS) retained at buy UBS; Price Target: $4.50

• TPG Telecom (TPG) retained at neutral UBS; Price Target: $5.45 from $5.14

• Treasury Wine Estates (TWE) retained at outperform at Macquarie; Price Target: $14.00 from $13.36

• Vicinity Centres (VCX)

  • Downgraded to neutral from overweight at JP Morgan; Price Target: $2.10

  • Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $1.95

• Woodside Energy Group (WDS) downgraded to underweight from neutral at Jarden; Price Target: $29.00 from $30.50

Scans

This article first appeared on Market Index on 15 January 2024.