ASX 200 slips on miners, lithium blood bath, uranium soars on US supply plans
Bad news for Aussie lithium stocks, a souped-up Commodore 64 thinks it can reduce lithium in batteries by up to 70%.
The ASX 200 gave back most of yesterday's gains as sharp falls in key base metals like iron ore and copper undermined the Materials sector.
Elsewhere, lithium stocks were almost unanimously dumped following a report AI is potentially about to solve the battery efficiency case. It seems a souped-up Commodore 64 thinks it can reduce lithium usage by up to 70%.
It wasn't all doom and gloom, though. Uranium stocks went into melt-up on news the US Department of Energy (DOE) intends to bolster its supply chain for enriched uranium. A busy day indeed!
Let's dive in.
Today in Review
Markets
ASX 200 Session Chart
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The S&P/ASX200 (XJO) finished 52.0 points lower at 7,468.5, 0.7% from its session high and smack-bang on its session low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by 109 to 167.
A quick nod to the best sectors today, Information Technology (XIJ) +0.6% and Health Care (XHJ) +0.4%. They were also yesterday's two best sectors, so you read yesterday's Evening Wrap for why!
Far more interesting is the stuff which got dumped today. The Materials (XMJ) sector was down 2.1% as major iron ore and copper stocks reacted poorly to lower respective commodity prices. Possibly also undermining confidence in the sector, is the fallout from several recent operational shut downs.
Also interesting, and acutely painful if you've decided to stick with the sector, was ASX lithium stocks. As suggested above, the AI team at Microsoft has been helping scientists investigate potential new battery designs using alternative materials to those currently employed in an attempt to improve battery efficiency.
The team managed to build a working, rechargeable prototype which uses as much as 70% less lithium. Whilst practical applications of the new technology are likely many years away, it is unwanted news for the local lithium sector which was already struggling under the weight of plunging lithium minerals prices.
I'll leave you on a positive note, a very positive one! Local uranium stocks were the polar opposite of their lithium counterparts today after news broke of the US Department of Energy's (DoE) plans to jump start the production of domestic uranium supply for advanced nuclear reactors. The usual suspects got a nice boost, as can be seen in the table below.
Economy
-
AU Consumer Price Index (CPI), forecast to rise 4.5% p.a. to end of November
- Actual 4.3% p.a. = Beat / lower than expected
- Nicely down from October's annualised rate of 4.9% p.a.
- Core CPI 4.6% p.a. vs 5.1% p.a. in October, remains well above RBA's 3% p.a. target
- Housing costs +6.6% p.a. remain biggest driver, food inflation moderating +4.6%
What to watch out for...
Tomorrow:
- No major economic data releases tomorrow!
Later this week:
- USA Consumer Price Index (CPI) Friday 12 Jan at 12:30am, forecast to rise 3.2% p.a. to end of December
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Interesting Movers
Trading higher
- +22.8% 29METALS (29M) - No news! 🤔
- +17.3% Alumina (AWC) - No news since 09-Jan Curtailment of Kwinana Alumina Refinery
- +13.6% Silex Systems (SLX) - Uranium sector rally on US DOE moves to shore up domestic supply of enriched uranium, move is in line with prevailing short and long tem trends
- +13.0% Immutep (IMM) - No news since 08-Jan Immutep Corporate Presentation, move is in line with short and long term trends
- +10.8% Paladin Energy (PDN) - Uranium sector rally on US DOE moves to shore up domestic supply of enriched uranium, move is in line with prevailing short and long tem trends
- +10.8% Bannerman Energy (BMN) - Uranium sector rally on US DOE moves to shore up domestic supply of enriched uranium, move is in line with prevailing short and long tem trends
- +8.3% Lotus Resources (LOT) - Uranium sector rally on US DOE moves to shore up domestic supply of enriched uranium, move is in line with prevailing short and long tem trends
- +7.3% Accent Group (AX1) - No news! 🤔
- +6.9% Boss Energy (BOE) - Uranium sector rally on US DOE moves to shore up domestic supply of enriched uranium, move is in line with prevailing short and long tem trends
- +6.4% Deep Yellow (DYL) - Uranium sector rally on US DOE moves to shore up domestic supply of enriched uranium, move is in line with prevailing short and long tem trends
Trading lower
- -8.3% Latin Resources (LRS) - Report AI could improve battery design, use 70% less lithium
- -8.0% IGO (IGO) - Report AI could improve battery design, use 70% less lithium
- -6.1% Mineral Resources (MIN) - Report AI could improve battery design, use 70% less lithium
- -5.3% Piedmont Lithium Inc (PLL) - Report AI could improve battery design, use 70% less lithium
- -4.4% Pilbara Minerals (PLS) - Report AI could improve battery design, use 70% less lithium
- -4.4% Newmont Corporation (NEM) - Downgraded from buy to hold at TD Securities, price target $46
- -4.3% Lynas Rare Earths (LYC) - Caught up in lithium downdraft
- -4.0% Cobram Estate Olives (CBO) - No news! Correction after substantial rally continues
- -3.9% Weebit Nano (WBT) - No news! Usual Weebit shenanigans!
- -3.9% Liontown Resources (LTR) - Report AI could improve battery design, use 70% less lithium
Broker Notes
- ALS (ALQ) downgraded to underperform from neutral at BofA; Price Target: $11.96 from $11.60
- Altium (ALU) retained at neutral Citi; Price Target: $46.65
-
Alumina (AWC)
- Retained at buy Citi; Price Target: $1.10
- Retained at neutral Macquarie; Price Target: $0.85
- Retained at accumulate Ord Minnett; Price Target: $1.18
- Accent Group (AX1) retained at neutral Citi; Price Target: $1.93
- Car Group (CAR) retained at neutral Citi; Price Target: $29.65
- Challenger (CGF) retained at neutral Macquarie; Price Target: $6.50 from $6.30
- Capricorn Metals (CMM) retained at neutral Macquarie; Price Target: $4.80
- Corporate Travel Management (CTD) retained at overweight Morgan Stanley; Price Target: $29.00
- Domain Holdings Australia (DHG) retained at neutral Citi; Price Target: $3.70
- Galan Lithium (GLN) retained at outperform Macquarie; Price Target: $1.20
- Healius (HLS) upgraded to neutral from underperform at BofA; Price Target: $1.70
- Integral Diagnostics (IDX) downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $1.70 from $1.95
- JB Hi-Fi (JBH) upgraded to neutral from underperform at Macquarie; Price Target: $55.00 from $45.00
- Jumbo Interactive (JIN) retained at overweight Morgan Stanley; Price Target: $19.30 from $21.00
- Magellan Financial Group (MFG) downgraded to underweight from neutral at JPMorgan; Price Target: $8.20 from $7.50
- Monadelphous Group (MND) initiated hold at Argonaut Securities; Price Target: $15.30
- Newmont (NEM) downgraded to hold from buy at TD Securities; Price Target: $46
- Orora (ORA) upgraded to buy from neutral at BofA; Price Target: $3.21 from $3.37
- QBE Insurance Group (QBE) retained at outperform Macquarie; Price Target: $16.60
- REA Group (REA) retained at neutral Citi; Price Target: $159.00
Scans
This article first appeared on Market Index on 10 January 2024.
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Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl has a passion for technical analysis and has taught his unique brand of price-action trend following to thousands of Aussie investors.
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Investing is risky. Inevitably you will endure losses. If you can't cope with losing, don't invest.
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Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl...
Carl has over 30-years investing experience and has helped investors navigate several bull and bear markets over this time. He is a well respected markets commentator who specialises in how the global macro impacts Australian and US equities. Carl...
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