ASX 200 futures higher + Macquarie is backing these 7 defensive stocks

ASX 200 futures are trading 12 points higher, up 0.16% as of 8:30 am AEST.

Note: The US market was closed for Juneteenth National Independence Day.

ASX 200 DAILY CHART

DEEPER DIVE

One for the bulls, and one for the bears

Today's deeper dive features a couple of broker notes. One is for the bulls and one is for the bears (although everything is relative, of course).

For the bulls, I've picked a recent note from Goldman Sachs which argues that a supply-led correction is coming for lithium prices in the near-term. But signs of recovery in the Chinese EV market means that year-end price forecasts will have risen to US$15,000 a tonne from US$11,000 tonne. In this environment, that means a buying signal for the ASX-listed lithium producers."

The Australian lithium sector has continued to outperform global peers with a narrowing multiple discount, where the valuation gap having also narrowed," analysts wrote.

• Allkem (ASX: AKE) and IGO (ASX: IGO) are BUY-rated
• Pilbara Minerals (ASX: PLS) and Liontown Resources (ASX: LTR) are both NEUTRAL rated
• Core Lithium (ASX: CXO) and Mineral Resources (ASX: MIN) remain SELL rated
• In the case of Pilbara, Liontown, Core Lithium, and MinRes, Goldmans argues that these ratings are hinged on spot prices remaining this high for at least another year - which they argue cannot be the case.

For the bears, I've selected a note from Macquarie Group - appropriately entitled "Don't cut your defense just because of CSL". For this note, the analysts are looking at the recent NAB Business Survey results which they say point to earnings downgrades down the road. They argue that while this risk won't spare any style of stock or investing, cyclicals are at a much greater risk in the upcoming full-year earnings period.

And CSL's recent surprise earnings downgrade only confirms that the lagged effects of rate hikes are providing the dampener on EPS guidance that it's intended to have.

• "For a downturn in orders, our team's OUTPERFORM-rated defensives in the ASX 100 include AGL (ASX: AGL), Coles (ASX: COL), CSL (ASX: CSL), Endeavour Group (ASX: EDV), ResMed (ASX: RMD), Telstra (ASX: TLS) and Treasury Wine Estates (ASX: TWE). "
• "UNDERPERFORM-rated stocks in sectors that tend to have downgrades when orders are negative are JB Hi-Fi (ASX: JBH) and REA Group (ASX: REA)."

RBA Minutes: Preview

A very quick word on RBA Meeting Minutes which are out at 11:30 am today. They should not be the most earth-shattering release of all time unless an incredibly hawkish change in words filters through to the page. And the markets have already gotten the new, much higher-for-longer shift in language. I thought Tony Sycamore of IG probably said it best.

"Despite equity market optimism, the rates market isn’t buying into the idea that the Fed has ended its tightening cycle. As recent RBA and BoC meetings showed, a “pause” is only good, if the data that follows cools."

We'll find out how hawkish they (really) feel this morning.

KEY EVENTS

ASX corporate actions occurring today:

• Trading ex-div: Premier Investments (PMV) – $0.70
• Dividends paid: Amcor (AMC) – $0.18
• Listing: None

Economic calendar (AEST):

• 11:30 am: RBA Meeting Minutes
• 10:30 pm: US Building Permits

This Morning Wrap was first published for Market Index by Hans Lee and Kerry Sun.