ASX 200 records keep tumbling as investors snap up banking stocks

Markets

The S&P/ASX200 (XJO) finished 83.3 points higher at 7,847.0, 1.1% from its session low and just 0.08% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 186 to 90. This is important because broad-based moves which close at the high of the session are more likely to be sustainable.

For the week, the XJO finished up 101.4 points or 1.29% higher.

The Financials (XFJ) (+2.03%) sector was the best performing sector today. Also doing well today was the Health Care (XHJ) (+1.25%) and Consumer Staples (XSJ) (+1.27%) sectors.

Financial stocks were the clear superstars today, lead by Virgin Money UK (VUK) which surged over 35% after it announced it had received a takeover bid from UK's Nationwide Building Society. The big banks and insurance companies weren't far behind, with much maligned among the brokers Commonwealth Bank of Australia (CBA) notching a new all-time high.

All 11 of the major ASX sectors were higher today, but the notable laggard was the Resources (XJR) (+0.24%) sector. It was also yesterday’s worst performer, and it’s been near the bottom of the sector performance table all week.

This is quite unusual. Market records are usually driven by strong earnings growth, which in turn, is usually driven by strong economic growth. Generally, that strong economic growth is a global phenomenon, and that’s typically good for commodities prices. So, I suggest the resources sector is conspicuous by its absence from the current record-breaking rally!

Does this mean this is a non-economic growth-based rally? 🤔

ChartWatch

ANZ Group Holdings (ANZ)

There's going to be a bit of a ditto about today's ChartWatch, but I couldn't go past the Big 4 Aussie banks. Starting with ANZ, it's easy to dismiss such a chart as having "gone up too much".

I suggest the chart has looked this good for many months now – so if the pattern looked the same in say, January, and February was up...then why would the result be any different for now versus next month?

In yesterday's ChartWatch I discussed the key pillars of my technical model: short and long term trends, price action, and candles. Each pillar is screaming excess demand on ANZ, and whilst this says nothing about what's going to happen on Monday and beyond, one must agree there's every chance the rampant demand impacting this chart remains unquenched.

Commonwealth Bank of Australia (CBA)

CBA has garnered plenty of attention this week because it has notched a couple of record highs. I suggest the key pillars look as good here as they do on ANZ, but with the added bonus of proximity to both the recent consolidation zone below 118 and the short term trend ribbon (light green zone).

Both factors could potentially indicate CBA is more of a coiled spring than ANZ, which could be considered more of a sprung spring (is that how you say it?). Basically, the further the price is from my short term trend ribbon, the greater is the chance of mean reversion back to the ribbon.

Keep this in mind when considering each of these amazing bank charts.

National Australia Bank Ltd (NAB)

As I said, ditto. There's nothing in this chart which suggests to me the current state of excess demand is going to end any time soon.

Westpac Banking Corporation (WBC)

Last and certainly not least!

Don't worry, I understand your scepticism! The Big 4 move in fits and starts Carl. They're awesome for a bit, then they're lousy for years! Either way, I'm holding on through thick and thin for the dividend yield, so stop wasting my time with your technical mumbo jumbo!

Fair enough! At the very least, this analysis should give you some comfort that the demand-supply picture for the big banks in your portfolio is well and truly skewed towards strength for the time being.

I'll be keeping any eye on the technicals for the signs excess supply is creeping in, and no doubt the Big 4 will feature again in ChartWatch when that occurs!

Economy

Today

• No major economic data releases in our timezone today!

Later this week

• Friday

  • 00:15 ECB Meeting & Monetary Policy Statement (forecast no change at 4.5%)

  • 02:00 US Federal Reserve Chairman Jerome Powell semiannual monetary policy testimony to a House committee

• Saturday

  • 00:30 US Non-Farm Employment Change February (forecast +198K vs 353K January), Unemployment Rate (forecast 3.7% vs 3.7% January), & Average Hourly Earnings (forecast +0.2% vs +0.6% January)

  • 12:30 CHN Consumer Price Index (CPI) February (forecast +0.3% vs -0.8% January)

  • 12:30 CHN Producer Price Index (PPI) February (forecast -2.5% vs -2.5% January)

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Interesting Movers

Trading higher

• +32.9% Virgin Money UK LSE (VUK) - Has received a takeover bid from UK's Nationwide Building Society

• +10.0% Cooper Energy (COE) - No news, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up

• +7.5% Lindsay Australia (LAU) - No news, closed back above long term uptrend ribbon

• +6.8% Lotus Resources (LOT) - No news, rally in select uranium stocks today, rise is consistent with prevailing short and long term uptrends

• +5.8% Life360 (360) - No news, continued positive response to last week's 2023 Full Year Results, rise is consistent with prevailing short and long term uptrends

• +5.8% Judo Capital Holdings (JDO) - No news, rise is consistent with prevailing short and long term uptrends

• +5.2% Alumina (AWC) - No news, aluminium price rally, rally in Alcoa shares on Thursday (scrip takeover in play)

• +4.8% Opthea (OPT) - No news, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up

• +4.7% Strike Energy (STX) - No news, relatively small bounce compared to massive declines in February

• +4.4% Polynovo (PNV) - No news, continued positive response to Monday's India update, rise is consistent with prevailing short and long term uptrends

• +4.0% Audinate Group (AD8) - 2 x director sales didn't appear to have an impact! Rise is consistent with prevailing short and long term uptrends

Trading lower

• -7.4% Mesoblast (MSB) - No news, gave up all of yesterday's gains. Fall is consistent with prevailing short and long term downtrends

• -6.1% Arafura Rare Earths (ARU) - No news, fall is consistent with prevailing short and long term downtrends

• -5.2% Calix (CXL) - No news, fall is consistent with prevailing short and long term downtrends

• -4.9% Brainchip Holdings (BRN) - No news, rally fading fast…

• -4.5% Core Lithium (CXO) - No news, fall is consistent with prevailing short and long term downtrends

• -3.9% Talga Group (TLG) - No news, showing signs of excess supply at the long term downtrend ribbon

• -3.8% Resolute Mining (RSG) - Ore Reserves and Mineral Resource Statement

• -3.4% Tyro Payments (TYR) - No news, showing signs of excess supply at the long term downtrend ribbon

Broker Notes

• 29METALS (29M) downgraded to neutral from overweight at Jarden; Price Target: $0.38

• Australian Clinical Labs (ACL) retained at buy at Citi; Price Target: $3.35

• Ansell (ANN) retained at neutral at Citi; Price Target: $26.00

• Charter Hall Group (CHC) upgraded to outperform from underperform at CLSA; Price Target: $13.74 from $11.74

• Cochlear (COH) retained at sell at Citi; Price Target: $265.00

• CSL (CSL) retained at neutral at Citi; Price Target: $305.00

• Ebos Group (EBO) retained at sell at Citi; Price Target: $33.00

• Genesis Minerals (GMD) retained at outperform at Macquarie; Price Target: $2.00

• Healius (HLS) retained at sell at Citi; Price Target: $1.10

• Integral Diagnostics (IDX) retained at neutral at Citi; Price Target: $2.20

• Ingenia Communities Group (INA) upgraded to outperform from underperform at CLSA; Price Target: $5.51 from $4.82

• Lendlease Group (LLC) retained at buy at Ord Minnett; Price Target: $13.30

• Megaport (MP1) retained at buy at Citi; Price Target: $16.80

• Nanosonics (NAN) retained at sell at Citi; Price Target: $2.70

• Noumi (NOU) retained at buy at Bell Potter; Price Target: $0.16

• Nufarm (NUF) downgraded to hold from buy at Bell Potter; Price Target: $6.35

• Pro Medicus (PME) retained at sell at Citi; Price Target: $80.00

• Ramsay Health Care (RHC) retained at neutral at Citi; Price Target: $56.50

• Resmed Inc (RMD) retained at buy at Citi; Price Target: $34.00

• Sandfire Resources (SFR) downgraded to neutral from overweight at Jarden; Price Target: $6.50

• Sonic Healthcare (SHL) retained at neutral at Citi; Price Target: $31.00

• Sigma Healthcare (SIG) retained at neutral at Citi; Price Target: $1.15

• Southern Cross Media Group (SXL) retained at buy at Ord Minnett; Price Target: $1.70

• WA1 Resources (WA1) initiated at buy at Bell Potter; Price Target: $17.65

Scans

This article first appeared on Market Index on 8 March 2024.