ASX 200 edges higher but iron ore price plunge drags on resources sector

Today in Review

Markets

The S&P/ASX200 (XJO) finished 16.9 points higher at 7,729.4, 0.24% from its session high and 0.16% from its high. In the broader-based S&P/ASX 300 (XKO), advancers and decliners were almost matched at 136 to 135.

So, apart from the modest gain, you could say it was a stalemate on the Australian stock market today.

Sounds benign, but one could also argue we squandered some strong leads from European and US markets overnight. More relevant, perhaps, we blew another chance to recoup Monday's 143 point fall.

So we tip-toe around near the all-time high wondering if we'll see another any time soon...

The Consumer Discretionary (XDJ) (+1.29%) sector was the best performing sector today on the back of several strong performances from retail, travel, and gaming stocks.

Doing it tough today…well, do I really need to say? The not so dynamic duo of Resources (XJR) (-0.83%) and Energy (XEJ) (-0.36%).

Once again it was a case of weaker iron ore and coking coal prices undermining stocks in both sectors respectively. I documented the major issues facing the commodities and the stocks which produce them in my ChartWatch article today – definitely worth a read.

Elsewhere in resources, gold stocks stumbled after a modest pullback in the gold price. In contrast, several lithium stocks rallied as lithium bulls celebrated the lithium carbonate futures price on GFEX tipping RMB 120,000/t. If the benchmark July contract can close above this point, it will be the first time it's done so since 21 November 2023.

ChartWatch

Lithium Carbonate Futures July 2024 GFEX

I've described it as a "triple layer fudge cake" of supply in a recent tweet: the zone of historical supply points at RMB 121200/t, RMB 125000/t, and RMB 131450/t.

But, as I say in the tweet, if demand can eat that cake, lithium bulls will have their much anticipated V-shaped recovery.

Today's candle is incomplete, currently trading around RMB 121,200/t the time of writing, so closing above the first layer of supply is still in the balance.

But, checking the technicals, the price action is rising peaks and rising troughs, the candles have swung to predominantly demand-side, and the short term trend ribbon is up and looks to be providing dynamic support. Check, check, check, and check.

I think lithium bulls probably want me to just leave it there. We don't want to jinx it!

Economy

Today

• No major economic data releases in our time zone today!

Later this week

Thursday

• 04:00 US 30-year bond auction

• 23:30 US Core Producer Price Index (PPI) February (+0.2% monthly forecast vs +0.5% monthly in January)

• 23:30 US Retail Sales February (+0.8% forecast vs -0.8% January)

Friday

• 23:30 US Empire State Manufacturing Index (-7.6% forecast vs -2.4% previous)

Saturday

• 01:00 US Prelim UoM Consumer Sentiment (77.3 forecast vs 76.9 previous)

Latest News

ChartWatch: ASX iron ore & coal stocks at critical juncture, BHP, RIO, FMG, WHC, NHC, YAL & more

3 red flags from Appen's takeover offer

Why Core Lithium could find itself in even deeper waters

Morning Wrap: ASX 200 to rise, S&P 500 shrugs off hot US inflation data

Evening Wrap: ASX 200 delivers dead cat bounce, gold and tech stocks best, coal stocks slump

Insider Trades: Directors are buying shares in these 13 ASX 200 companies

Interesting Movers

Trading higher

• +8.0% Regis Healthcare (REG) - No news, retained at buy at Ord Minnett and price target increased to $4.25 from $3.90; rise is consistent with prevailing short and long term uptrends

• +6.2% PSC Insurance Group (PSI) - ASX Query Re Media Speculation, rise is consistent with prevailing short and long term uptrends

• +6.1% Liontown Resources (LTR) - Kathleen Valley Debt Facility, GFEX lithium carbonate futures trading back above RMB 120,000/t

• +6.0% Novonix (NVX) - No news, continued short covering rally, general feeling a low in lithium prices is in likely also helping

• +5.6% Vulcan Energy Resources (VUL) - GFEX lithium carbonate futures trading back above RMB 120,000/t

• +5.5% Regal Partners (RPL) - No news, rise is consistent with short term uptrend, long term trend appears transitioning from down to up

• +5.3% Cooper Energy (COE) - Euroz Hartleys Rottnest Institutional Conference, rise is consistent with short term uptrend, long term trend appears transitioning from down to up

• +5.2% Universal Store Holdings (UNI) - No news, rise is consistent with short term uptrend, long term trend appears transitioning from down to up

• +5.0% Nuix (NXL) - No news, rise is consistent with prevailing short and long term uptrends

• +4.5% Anteris Technologies (AVR) - Continued positive response to yesterday's Updated 30-day DurAVR THV Clinical Data

• +4.4% Mader Group (MAD) - Euroz Hartleys Institutional Conference Presentation

• +4.2% Cettire (CTT) - No news, bounce after sharp sell off following 6 Mar Response to Media Article, trying to hold above the long term uptrend ribbon

• +3.6% RPMGlobal Holdings (RUL) - No news, rise is consistent with prevailing short and long term uptrends

• +3.5% Silex Systems (SLX) - No news, rise is consistent with prevailing short and long term uptrends

Trading lower

• -9.1% Core Lithium (CXO) - Half Year FY24 Financial Results plus CEO Transition, fall is consistent with prevailing short and long term downtrends

• -6.5% Chalice Mining (CHN) - No news, fall is consistent with prevailing short and long term downtrends

• -5.9% Omni Bridgeway (OBL) - No love for yesterday's Change of Director's Interest Notice (on market purchase of ~$78k worth of shares), fall is consistent with prevailing short and long term downtrends

• -5.8% West African Resources (WAF) - No news, gold price fell overnight, general gold sector weakness

• -5.6% Grange Resources (GRR) - No news, general iron ore sector weakness on sharp fall in iron ore price, fall is consistent with prevailing short and long term downtrends

• -5.1% Mesoblast (MSB) - No news, pullback after recent strong run following Monday's FDA Supports Accelerated Approval Pathway for Heart Failure, dynamic resistance at the long term downtrend

• -4.9% Data#3 (DTL) - No news 🤔

• -4.7% Capricorn Metals (CMM) - No news, gold price fell overnight, general gold sector weakness

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

• -4.2% APM Human Services International (APM) - No news, consistent with recent volatility

• -3.9% Stanmore Resources (SMR) - No news, general coal sector weakness on falling coking coal price

Broker Notes

• Aristocrat Leisure (ALL) retained at buy at Citi; Price Target: $52.70 from $44.70

• AMP (AMP) retained at buy at Citi; Price Target: $1.25

• ASX (ASX) retained at neutral at Citi; Price Target: $65.90

• Australian Vintage (AVG) retained at add at Morgans; Price Target: $0.55 from $0.58

• Accent Group (AX1) upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $2.45 from $1.95

• Brickworks (BKW)

  • Downgraded to underperform from outperform at CLSA; Price Target: $31.60 from $26.50

  • Retained at neutral at Macquarie; Price Target: $25.15

• Boral (BLD) downgraded to underperform from outperform at CLSA; Price Target: $6.25

• Challenger (CGF) retained at sell at Citi; Price Target: $6.65

• Computershare (CPU) retained at buy at Citi; Price Target: $30.00

• CSL (CSL) retained at overweight at Morgan Stanley; Price Target: $310.00

• CSR (CSR)

  • Downgraded to underperform from outperform at CLSA; Price Target: $9.00

  • Retained at neutral at Macquarie; Price Target: $9.00

• Core Lithium (CXO) downgraded to sell from hold at Canaccord Genuity; Price Target: $0.14 from $0.19

• GWA Group (GWA) retained at outperform at Macquarie; Price Target: $3.10 from $2.70

• Insurance Australia Group (IAG) retained at buy at Citi; Price Target: $6.75

• Insignia Financial (IFL) retained at sell at Citi; Price Target: $2.35

• James Hardie Industries (JHX)

  • Downgraded to underperform from outperform at CLSA; Price Target: $64.50 from $60.00

  • Retained at outperform at Macquarie; Price Target: $68.20 from $65.60

• Link Administration Holdings (LNK) retained at neutral at Citi; Price Target: $2.20

• Liontown Resources (LTR) upgraded to overweight from market-weight at Wilsons; Price Target: $1.85 from $0.85

• Mineral Resources (MIN) retained at buy at Citi; Price Target: $76.10 from $71.00

• Medibank Private (MPL)

  • Retained at neutral at Citi; Price Target: $3.80

  • Retained at neutral at Macquarie; Price Target: $3.60

• Metcash (MTS)

  • Retained at neutral at Citi; Price Target: $4.00

  • Upgraded to buy from outperform at CLSA; Price Target: $4.60 from $4.10

  • Retained at buy at Jefferies; Price Target: $4.30 from $4.00

  • Retained at overweight at JP Morgan; Price Target: $4.40 from $4.30

  • Upgraded to outperform from neutral at Macquarie; Price Target: $4.30 from $3.90

  • Retained at buy at UBS; Price Target: $4.25 from $4.00

• NIB Holdings (NHF)

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

  • Retained at neutral at Macquarie; Price Target: $7.30

• Nextdc (NXT) retained at buy at UBS; Price Target: $20.10

• Pilbara Minerals (PLS) retained at underweight at Morgan Stanley; Price Target: $3.30

• Premier Investments (PMV) retained at overweight at Morgan Stanley; Price Target: $32.00

• Perpetual (PPT) retained at neutral at Citi; Price Target: $25.70

• QBE Insurance Group (QBE) retained at buy at Citi; Price Target: $18.00

• Regis Healthcare (REG) retained at buy at Ord Minnett; Price Target: $4.25 from $3.90

• Reece (REH) retained at underperform at Macquarie; Price Target: $19.40

• Rio Tinto (RIO) retained at buy at Citi; Price Target: $139.00

• Ramelius Resources (RMS)

  • Retained at neutral at Macquarie; Price Target: $1.60

  • Retained at buy at Ord Minnett; Price Target: $2.10 from $2.00

  • Retained at buy at Shaw and Partners; Price Target: $2.20 from $2.00

• Reliance Worldwide Corporation (RWC) retained at outperform at Macquarie; Price Target: $6.10 from $5.10

• Suncorp Group (SUN) retained at neutral at Citi; Price Target: $16.60

• Telstra Group (TLS) upgraded to buy from hold at Bell Potter; Price Target: $4.25

• Task Group Holdings (TSK)

  • Downgraded to hold from buy at Bell Potter; Price Target: $0.85 from $0.59

  • Downgraded to hold from buy at Ord Minnett; Price Target: $0.81 from $0.58

• Treasury Wine Estates (TWE) retained at overweight at Morgan Stanley; Price Target: $13.75

• Woodside Energy Group (WDS) retained at neutral at Macquarie; Price Target: $31.00 from $32.00

• Zip Co (ZIP) upgraded to buy from neutral at Citi; Price Target: $1.40 from $0.78

Scans

This article first appeared on Market Index on Wednesday 13 March 2024.