Evening Wrap: ASX 200 gains on rising global equities tide, but mining and energy stocks miss out again...

Finally…a gain befitting Aussie investors. Something to get excited about.

Well, if you can get excited about recouping the last couple days of losses plus a smidge more, that is.

Still, who are we to complain? We've got mining and energy stocks and commodities are on global investors' noses at the moment.

Just how stinky are commodities? I have the exact dollar amount answer for you in this evening's update, along with the usual swathe of notable gainers, losers, broker moves, an RBA interest rate meeting, scans, and more...so:

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 77.8 points higher at 7,778.1, 1.01% from its session low and just 0.03% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by an impressive 199 to 70.

Another all or nothing day – this time all – as in all 11 major ASX sectors were higher. Utilities (XUJ) (+2.4%) led the way but it’s a narrow sector, dominated by Origin Energy (ASX: ORG) (+3.5%) and AGL Energy (ASX: AGL) (+1.7%). Nothing specific in terms of news on either, but both have very decent charts and that’s good enough excuse for me!

Also doing well today were the same two defensive sectors we’ve noted here have been doing well for a while, Financials (XFJ) (+1.6%) and Health Care (XHJ) (+1.5%). Industrials (XNJ) (+1.5%) also did well.

It will be no surprise to you that the two sectors at the bottom of the sector performance list, and almost completely missing out on the coordinated increase in all risk on assets globally but for themselves – were Resources (XJR) (+0.07%) and Energy (XEJ) (+0.26%). Fingernail gains in each bellied several continued declines among many of their constituents.

ChartWatch

Today I came across a super interesting chart from Citi regarding capital flows in commodity markets. I don't have to tell you commodity prices are down (and I'm going to show you as much in a second!).

Extrapolate back from falling prices to the fact demand must have been less than supply to do so. But how much was demand less than supply?

About $12.7 billion suggests Citi based upon the most recent Commitment of Traders (COT) report for the week ending 11 June (the COT is published by the US Commodity Futures Trading Commission (CFTC)).

Figure 1. 2024 YTD commodity index and ETF combined cumulative flows. Source: Citi Research (From: Commodities Flows Chartpack week ending June 11, 2024)

Base metals charts: LME Aluminium, LME Copper, LME Nickel

Short term trends are putting major dents in long term trends

I'll mash the analysis together on these three as there's a consistent theme across most base metals charts at the moment: Growing and very steep short term downtrends are putting major dents in respective long term trends.

For aluminium and copper, those long term trends remain up, but for nickel it's likely the long term downtrend has re-established.

In all cases, expected dynamic demand from short term uptrend ribbons were sliced through, and price action is cascading peaks and troughs – both signals the supply side is in total control of price.

For Aluminium, demand is 2336-2403. A close below 2336 would likely also close the price below the dynamic demand of the long term uptrend ribbon, therefore nullifying aluminium's long term uptrend.

Supply is 2498 and up to the now dynamic supply of the short term trend ribbon. A close above the short term uptrend ribbon and or a return to rising peaks and rising troughs is require to restart a short term uptrend.

I last covered LME copper and nickel in ChartWatch in the Evening Wrap on 5 June. In that update I warned copper "smacks of a blow-off top" and that a "V-shaped rally" would be required to stave off deeper falls.

Unfortunately, no such V-shaped rally has materialised, at least not yet.

I reiterate: unless we get a V-shaped rally (and I suggest very soon), it will be difficult for copper and nickel to regain the strong upside momentum they demonstrated prior to the current correction.

I see copper demand at 9240, and failing this, the dynamic demand of the long term uptrend ribbon. Supply is likely at 9599-9930. A close above 9930 (would also close it above the short term trend ribbon) is required to restart the copper short term uptrend, and ideally we're also rising peaks and rising troughs by then.

For nickel, I see demand at 16330 and supply between 17625-18405. A close above 18405 (and a good chance also the long term downtrend ribbon by then) is required to restart the nickel short term uptrend, and ditto here with respect to rising peaks and rising troughs.

Economy

Today

• AUS Cash Rate Announcement

  • No change vs 4.35% previous

  • The board is more focussed on potential upside risks to inflation: "There is uncertainty around consumption growth. Real disposable incomes have now stabilised and are expected to grow later in the year, assisted by lower inflation and tax cuts. There has also been an increase in wealth, driven by housing prices. Together, these factors are expected to support growth in consumption over the coming year."

  • But is still on the fence, i.e. "not ruling anything in or ruling anything out" because: "But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market."

  • Summing it up: "The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome." (Note: emphasised text was ADDED this update!)

Later this week

Tuesday

• 22:30 USA Core Retail Sales May (+0.2% m/m forecast vs +0.2% in April)

Wednesday

• 00:00 USA non-trading day due to observance of Juneteenth

Thursday

• 20:00 UK Monetary Policy Summary & Official Bank Rate (no change vs 5.25% previous)

Friday

• 17:15 EUR/UK French, German, Eurozone, & UK flash PMIs

• 23:45 USA Flash Manufacturing PMI May (forecast 51 vs 51.3 in April) & Flash Services PMI May (forecast 53.4 vs 54.8 in April)

Saturday

• 00:00 USA Existing Home Sales May (4.08M forecast vs 4.14M in April)

Latest News

Interesting Movers

Trading higher

• +9.3% Capitol Health (CAJ) - CAJ enters Process Deed following IDX's Indicative Proposal

• +8.7% Develop Global (DVP) - No news, bounce in select ASX lithium stocks

• +7.9% WA1 Resources (WA1) - No news, bounce in select ASX lithium stocks

• +7.5% Bravura Solutions (BVS) - No news 🤔

• +6.7% Chalice Mining (CHN) - No news, same as DVP and WA1

• +5.8% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

• +5.8% OFX Group (OFX) - No news, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +5.6% Ora Banda Mining (OBM) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

• +5.4% Imdex (IMD) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

• +4.9% Infratil (IFT) - Infratil successfully completes NZ$1,000 million placement, rise is consistent with prevailing short and long term uptrend 🔎📈

• +4.6% Mesoblast (MSB) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

• +4.5% Sigma Healthcare (SIG) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

• +4.0% Southern Cross Electrical Engineering (SXE) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

• +3.8% Pilbara Minerals (PLS) - No news, bounce in select ASX lithium stocks

• +3.8% NRW (NWH) - No news, rise is consistent with prevailing short and long term uptrend 🔎📈

Trading lower

• -6.0% Immutep (IMM) - No news 🤔

• -5.4% Hansen Technologies (HSN) - No news, fall is consistent with prevailing short and long term downtrend 🔎📈

• -5.2% Fortescue (FMG) - Media report (AFR) institutional investor sold fixed-price block trade for $1.1 billion worth of shares at $21.60, fall is consistent with prevailing short and long term downtrend 🔎📈

• -4.8% Bellevue Gold (BGL) - No news 🤔

• -4.2% Spartan Resources (SPR) - No news 🤔 Modest pullback after massive rally

• -3.4% Imugene (IMU) - No news, fall is consistent with prevailing short and long term downtrend 🔎📈

• -2.9% MA Financial Group (MAF) - No news, fall is consistent with prevailing short and long term downtrend 🔎📈

• -2.8% Avita Medical Inc. (AVH) - No news, fall is consistent with prevailing short and long term downtrend 🔎📈

• -2.5% Nine Entertainment Co. (NEC) - No news, fall is consistent with prevailing short and long term downtrend 🔎📈

• -2.2% Beach Energy (BPT) - Strategic Review Outcomes Presentation, fall is consistent with prevailing short term downtrend, long term trend is transitioning from down to down 🔎📈

Broker Notes

• Life360 Inc. (360)

  • Initiated at buy at Canaccord Genuity; Price Target: US$40.00

  • Initiated at outperform at Evercore ISI; Price Target: US$37.00

  • Initiated at buy at Loop Capital Markets; Price Target: US$36.00

  • Initiated at neutral at UBS; Price Target: US$32.00

• Auckland International Airport (AIA)

  • Retained at buy at Citi; Price Target: NZ$9.20

• Australian Vintage (AVG)

  • Retained at hold at Bell Potter; Price Target: $0.21 from $0.41

• Black Cat Syndicate (BC8)

  • Retained at buy at Shaw and Partners; Price Target: $0.86 from $0.74

• Bigtincan (BTH)

  • Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $0.10 from $0.35

• Capitol Health (CAJ)

  • Retained at buy at Ord Minnett; Price Target: $0.32

  • Retained at buy at Unified Capital Partners; Price Target: $0.34

• Credit Clear (CCR)

  • Retained at buy at Shaw and Partners; Price Target: $0.40

• Close The Loop (CLG)

  • Retained at buy at Shaw and Partners; Price Target: $0.70

• Clinuvel Pharmaceuticals (CUV)

  • Retained at buy at Bell Potter; Price Target: $22.25

• Integral Diagnostics (IDX)

  • Retained at neutral at Jarden; Price Target: $2.59

  • Upgraded to overweight from neutral at JP Morgan; Price Target: $2.80 from $2.40

  • Retained at outperform at Macquarie; Price Target: $2.65 from $2.45

  • Retained at buy at Ord Minnett; Price Target: $2.70

  • Retained at sector perform at RBC Capital Markets; Price Target: $2.30 from $1.95

• Integrated Research (IRI)

  • Retained at buy at Bell Potter; Price Target: $0.95

• Macquarie Group (MQG)

  • Retained at overweight at Morgan Stanley; Price Target: $215.00

• Newmont Corporation (NEM)

  • Upgraded to buy from neutral at UBS; Price Target: $75.00 from $60.00

• Orora (ORA)

  • Upgraded to buy from overweight at Jarden; Price Target: $2.55 from $2.50

• PYC Therapeutics (PYC)

  • Initiated at buy at Canaccord Genuity; Price Target: $0.22

• Rio Tinto (RIO)

  • Retained at overweight at Morgan Stanley; Price Target: $137.50

• Super Retail Group (SUL)

  • Retained at lighten at Ord Minnett; Price Target: $11.00 from $10.50

• Tabcorp (TAH)

  • Retained at buy at Ord Minnett; Price Target: $1.05

• Treasury Wine Estates (TWE)

  • Retained at overweight at Morgan Stanley; Price Target: $14.50

Scans