ASX 200 smashed as iron ore rout continues, bank profits too tantalising to ignore

Today in Review

Markets

The S&P/ASX200 (XJO) finished 142.8 points lower at 7704.2, 1.85% from its session low and just 0.1% from its high. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners miserably by 45 to 230. The close pretty much at the low of the session, along with the breadth of the decline is disturbing as it hints of unquenched supply!

In keeping with the sector’s substantial underperformance last week, the Resources (XJR) (-2.6%) sector was again the worst performing sector today, but Financials (XFJ) (-2.2%) and Energy (XEJ) (-2.1%) stocks also weighed heavily on index performance.

Iron ore stocks are worth pointing out due to their sharp falls, but also given their size, the oversized impact they had on the index today. Check ChartWatch below for analysis of what the iron ore futures price did in Singapore today.

To be fair, though, looking at the table below there were plenty of other casualties who don't have anything to do with iron ore...

Much of the rest of the 142.8 points of the S&P/ASX 200's fall likely came from the financials sector, mainly due to falls in the Big 4 Banks. There's nothing specific driving this move today, and I'll entertain the inevitable "they just looked too good on Friday" talk...but I hate using the old "profit taking" phrase in a market wrap because it's a cop out. So I won't!

Banks fell today because there was more supply than demand for their shares.

All 11 of the major ASX indices were lower today, but if there was a “least worst”, it would go to the Information Technology (XIJ) (-0.33%) sector. Iress (IRE) (2.7%), Xero (XRO) (+0.3%) and Altium (ALU) (+0.2%) were three of the better performers in this sector.

ChartWatch

Iron Ore 62% Futures SGX

Iron ore prices have taken a substantial turn for the worse and are on track to close below the key 109.25 historical demand point.

This moves only confirms what the techincals were already telling us, though. The short term downtrend ribbon is well established. The long term trend ribbon transitioned to neutral back in February and is converging towards a transition to down.

Even more damning, the price closed below the long term uptrend ribbon on 20 Feb, retested it on 7 Mar, but it failed to close back above. Such price action confirms the long term trend ribbon has transitioned from providing long term dynamic support to long term dynamic resistance.

The next key level of historical demand is 99.20 and then 94. In the absence of massive demand side candles on volume, and/or a return to higher peaks and higher troughs, it would take a close above the long term downtrend ribbon to signal the demand-side has regained control of the price.

S&P/ASX200 (XJO)

Big black candles which close on the low of the session are never good in any trend if you're a bull. Today's big black candles is particularly disappointing given how good the S&P/ASX200 technicals looked up until today.

All is not lost! There's plenty of key demand points to come into play before we must declare the short term uptrend over, and many more than those before we assume an end of the long term uptrend. But today's price action is a major warning signal all is not right in the demand-supply environment.

The supply-side made a massive move today to grab control, and we must now be on notice their influence may increase in the candles ahead. But rarely does one candle a make major market top. We will look for confirmation in the form of further supply side candles, lower peaks and lower troughs, and a close below the dynamic support of the trend ribbons.

Until then, we trust the prevailing trends and hope to see a strong demand-side response tomorrow. This would equate to a similarly large white candle, and or a long lower shadow.

Key levels to watch for: 7585 as support and 7853 now moves to resistance.

Economy

Today

• There weren't any major data releases today

Later this week

Tuesday

• 11:30 NAB Business Confidence

• 23:30 US Core Consumer Price Index (CPI) February (+0.3% monthly for +3.1% p.a. forecast vs +0.4% monthly for +3.1% p.a. in January)

Wednesday

• 04:00 US 10-year bond auction

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

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Interesting Movers

Trading higher

• +6.1% Cooper Energy (COE) - No news, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up

• +4.0% EML Payments (EML) - No news, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up

• +3.9% APM Human Services International (APM) - No news, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up

• +3.7% Judo Capital Holdings (JDO) - No news, rise is consistent with prevailing short term uptrend, long term uptrend is transitioning from down to up

• +3.7% Block (SQ2) - Rise is consistent with increase in share price of NYSE listing, also consistent with prevailing short and long term uptrends

• +3.0% Corporate Travel Management (CTD) - No news, continued bounce after sharp sell off following first half results announcement

• +2.3% Ebos Group (EBO) - No news, closed above long term downtrend ribbon

• +1.7% Kogan.Com (KGN) - No news apart from daily buyback notice, rise is consistent with prevailing short and long term uptrends

• +1.6% Mesoblast (MSB) - FDA Supports Accelerated Approval Pathway for Heart Failure

Trading lower

• -6.8% Metals X (MLX) - No news, pullback after recent strong rally

• -6.7% Strike Energy (STX) - No news, fall is consistent with prevailing short and long term downtrends

• -6.5% Arafura Rare Earths (ARU) - No news, fall is consistent with prevailing short and long term downtrends

• -6.4% Bellevue Gold (BGL) - No news…tough day at the office for many!

• -5.9% Coronado Global Resources (CRN) - No news, fall is consistent with prevailing short and long term downtrends

• -5.9% Champion Iron (CIA) - On market sale of shares by director, price clossed below key area of technical support

• -5.4% Novonix (NVX) - No news…tough day at the office for many!

• -5.0% Chalice Mining (CHN) - No news, pullback after recent strong rally

• -4.8% West African Resources (WAF) - No news, pullback after recent strong rally

• -4.8% Latin Resources (LRS) - No news, long term uptrend ribbon appears to be providing dynamic resistance

• -4.7% Regis Resources (RRL) - No news, pullback after recent strong rally

• -4.7% Deep Yellow (DYL) - Successful $220m Placement to Move Tumas Towards Production

• -4.6% Arcadium Lithium (LTM) - No news, fall is consistent with prevailing short and long term downtrends

Broker Notes

• Life360 (360) retained at buy at Goldman Sachs; Price Target: $14.20

• Abacus Group (ABG)

  • Retained at buy at Citi; Price Target: $1.35

  • Retained at outperform at Macquarie; Price Target: $1.21

• Atlas Arteria (ALX) retained at neutral at Macquarie; Price Target: $5.39 from $5.44

• APA Group (APA) retained at equal-weight at Morgan Stanley; Price Target: $9.18

• Arena REIT/Units (ARF) retained at outperform at Macquarie; Price Target: $3.96

• Abacus Storage King (ASK) retained at buy at Citi; Price Target: $1.40

• Car Group (CAR) retained at neutral at Citi; Price Target: $34.70

• Commonwealth Bank of Australia (CBA) retained at sell at Citi; Price Target: $82.00

• Charter Hall Group (CHC)

  • Retained at buy at Citi; Price Target: $13.40

  • Retained at outperform at Macquarie; Price Target: $15.54 from $12.90

• Centuria Industrial REIT (CIP) retained at outperform at Macquarie; Price Target: $3.66

• Charter Hall Retail REIT (CQR) retained at buy at Citi; Price Target: $4.00

• Corporate Travel Management (CTD) retained at neutral at Citi; Price Target: $17.50 from $17.55

• Dicker Data (DDR) retained at sell at Goldman Sachs; Price Target: $10.50 from $10.20

• Domain Holdings Australia (DHG) retained at buy at Citi; Price Target: $3.85

• Develop Global (DVP) retained at buy at Bell Potter; Price Target: $4.10 from $4.30

• Dexus Industria REIT/Units (DXI)

  • Retained at outperform at Macquarie; Price Target: $3.62

  • Retained at outperform at Macquarie; Price Target: $3.00

• Fineos Corporation Holdings (FCL)

  • Retained at neutral at Goldman Sachs; Price Target: $1.95 from $2.20

  • Retained at outperform at Macquarie; Price Target: $2.22

• Flight Centre Travel Group (FLT) retained at buy at Citi; Price Target: $14.15

• Goodman Group (GMG)

  • Retained at buy at Citi; Price Target: $32.50

  • Retained at outperform at Macquarie; Price Target: $34.84 from $31.81

• Growthpoint Properties Australia (GOZ)

  • Retained at buy at Citi; Price Target: $2.60

  • Retained at outperform at Macquarie; Price Target: $2.50

• GPT Group (GPT)

  • Retained at buy at Citi; Price Target: $4.90

  • Retained at outperform at Macquarie; Price Target: $4.61

  • Retained at equal-weight at Morgan Stanley; Price Target: $4.50

• Healthco Healthcare and Wellness REIT (HCW) retained at outperform at Macquarie; Price Target: $1.45

• IDP Education (IEL) retained at buy at Goldman Sachs; Price Target: $26.60

• Ingenia Communities Group (INA) retained at buy at Citi; Price Target: $5.30

• Inghams Group (ING) retained at sell at Goldman Sachs; Price Target: $3.15

• IPH (IPH) retained at buy at Goldman Sachs; Price Target: $8.70

• Lifestyle Communities (LIC) retained at buy at Goldman Sachs; Price Target: $21.32

• Macquarie Technology Group (MAQ) retained at buy at Goldman Sachs; Price Target: $93.00 from $82.10

• MAAS Group (MGH) downgraded to hold from buy at Jefferies; Price Target: $0.00

• Nightingale Intelligent Systems Inc (NGR) retained at outperform at Macquarie; Price Target: $2.38

• National Storage REIT (NSR) retained at buy at Citi; Price Target: $2.60

• Pacific Current Group (PAC) retained at buy at Ord Minnett; Price Target: $12.50 from $12.00

• Paladin Energy (PDN) retained at buy at Citi; Price Target: $1.45

• Propel Funeral Partners (PFP) retained at outperform at Macquarie; Price Target: $6.38 from $6.06

• Pilbara Minerals (PLS) retained at underweight at Morgan Stanley; Price Target: $3.30 from $2.95

• Qualitas (QAL) retained at outperform at Macquarie; Price Target: $2.89

• Qualitas Real Estate Income Fund (QRI) retained at buy at Citi; Price Target: $1.60

• Readytech Holdings (RDY) retained at buy at Goldman Sachs; Price Target: $4.25 from $4.50

• REA Group (REA) retained at neutral at Citi; Price Target: $187.00

• Regal Partners (RPL) initiated at buy at Ord Minnett; Price Target: $3.60

• Stockland (SGP) retained at buy at Citi; Price Target: $5.20

• Santos (STO) retained at neutral at Citi; Price Target: $7.75

• Sayona Mining (SYA) upgraded to speculative buy from hold at Canaccord Genuity; Price Target: $0.06

• Telix Pharmaceuticals (TLX) retained at buy at Bell Potter; Price Target: $14.50 from $14.00

• Treasury Wine Estates (TWE) retained at buy at UBS; Price Target: $14.00

• Virgin Money UK LSE (VUK)

  • Downgraded to neutral from outperform at Macquarie; Price Target: $4.25 from $3.70

  • Retained at hold at Ord Minnett; Price Target: $4.25

• Woodside Energy Group (WDS) retained at sell at Citi; Price Target: $26.00

Scans

This article first appeared on Market Index on Monday 11 March 2024.