Gold is heading towards A$4,000 and miners are getting cheap: UBS
Wed 05 Jun 24, 12:05pm (AEST)
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/Evening Wrap: ASX 200 rebounds on defensive plays as mining and energy belted (copper et al. down again!)
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Market Wraps
/Evening Wrap: ASX 200 rebounds on defensive plays as mining and energy belted (copper et al. down again!)
Market Wraps
Evening Wrap: ASX 200 rebounds on defensive plays as mining and energy belted (copper et al. down again!)
Wed 05 Jun 24, 5:31pm (AEST)
Stocks in article
The S&P/ASX 200 closed 31.9 points higher, up 0.41%.
Mining and energy stocks were hit hard again today as the prices of several key commodities including copper, nickel, lithium, uranium, gold, silver, and crude oil fell (basically everything!).
The benchmark S&P/ASX 200 did eke out a modest gain, though, roughly the same as yesterday's loss. Up today were mostly defensive stocks in sectors like Communication Services, Healthcare, and Consumer Staples.
Elsewhere, falling bond yields helped interest rate sensitive sectors like Real Estate and Consumer Discretionary.
But by far and away the biggest stories (and the biggest falls) were in Resources stocks 😭...so...
Let's dive in!
Today in Review
Wed 05 Jun 24, 4:29pm (AEST)
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Markets
ASX 200 Session Chart
The S&P/ASX 200 (XJO) finished 31.9 points higher at 7,769.0, 0.52% from its session low and just 0.07% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by 170 to 113.
In a near mirror opposite of yesterday’s performance 8 out of the 11 major ASX sectors were up today. The best performers were largely defensive sectors like Communication Services (XTJ) (+2.0%), Health Care (XHJ) (+1.7%), and Consumer Staples (XSJ) (+1.6%).
Also doing well today were the interest rate sensitive sectors of Real Estate Investment Trusts (XPJ) (+1.6%) and Consumer Discretionary (XDJ) (+1.1%) as key benchmark bond yields in the USA and at home fell for the fourth straight session.
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
|---|---|---|---|---|---|
Cyclopharm (CYC) | $1.695 | +$0.295 | +21.1% | -2.0% | -21.2% |
Treasury Wine Estates (TWE) | $11.99 | +$0.6 | +5.3% | +4.5% | +2.4% |
Seek (SEK) | $23.78 | +$1.1 | +4.9% | -1.7% | +0.9% |
Nanosonics (NAN) | $2.92 | +$0.13 | +4.7% | 0% | -43.0% |
Pro Medicus (PME) | $122.92 | +$5.44 | +4.6% | +8.7% | +97.8% |
Graincorp (GNC) | $9.23 | +$0.36 | +4.1% | +17.4% | +22.6% |
Car Group (CAR) | $35.71 | +$1.18 | +3.4% | +2.5% | +50.6% |
Charter Hall Social Infrastructure Reit (CQE) | $2.50 | +$0.08 | +3.3% | -1.6% | -15.5% |
Fisher & Paykel Healthcare Corporation (FPH) | $28.81 | +$0.89 | +3.2% | +10.0% | +29.7% |
Cettire (CTT) | $2.30 | +$0.07 | +3.1% | -27.4% | +8.5% |
Inghams Group (ING) | $3.63 | +$0.11 | +3.1% | -4.2% | +29.2% |
Bapcor (BAP) | $4.34 | +$0.13 | +3.1% | -3.1% | -29.7% |
ARB Corporation (ARB) | $38.60 | +$1.03 | +2.7% | -0.2% | +35.4% |
Aussie Broadband (ABB) | $3.45 | +$0.09 | +2.7% | -12.2% | +24.1% |
Lovisa Holdings (LOV) | $30.53 | +$0.79 | +2.7% | -3.6% | +55.5% |
Dexus (DXS) | $6.96 | +$0.18 | +2.7% | -1.4% | -15.6% |
Resmed Inc (RMD) | $31.80 | +$0.82 | +2.6% | -2.7% | -3.6% |
Collins Foods (CKF) | $9.38 | +$0.24 | +2.6% | -1.0% | +12.6% |
The Lottery Corporation (TLC) | $5.08 | +$0.13 | +2.6% | +1.0% | +1.8% |
HMC Capital (HMC) | $7.47 | +$0.19 | +2.6% | +15.6% | +74.1% |
ASX best performers today
Doing it tough again today was the trio of Resources (XJR) (-1.2%), Gold (XGD) (-1.0%), and Energy (XEJ) (-0.91%). No surprises as to the rationale for the falls here. Commodity prices, i.e., base and precious metals, as well as energy unanimously lower overnight.
Here’s a catch up on those LME metals moves (plus iron ore). FYI, gold is down around 1%, silver nearly 4%, and crude oil is down 1-1.3% depending on whether you’re talking Brent or West Texas Intermediate.
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
|---|---|---|---|---|---|
Aluminium - LME Official Cash | $2603.00 | -$22 | -0.8% | +3.7% | +14.1% |
Copper - LME Official Cash | $9858.50 | -$127 | -1.3% | +2.1% | +20.1% |
Iron Ore CFR China 62% Fe Spot | $107.69 | -$2.41 | -2.2% | -8.8% | +2.4% |
Nickel - LME Official Cash | $18900.00 | -$425 | -2.2% | +2.7% | -9.4% |
Lead - LME Official Cash | $2205.00 | -$19 | -0.9% | +2.8% | +10.9% |
Tin - LME Official Cash | $32000.00 | -$600 | -1.8% | +2.0% | +25.1% |
Zinc - LME Official Cash | $2869.00 | -$60 | -2.0% | +0.4% | +26.3% |
LME metals and iron ore moves Tuesday
And here’s a summary of the best and worst across the above sectors (hint: there weren't many in the best list):
Company | Last Price | Change $ | Change % | 1mo % | 1yr % |
|---|---|---|---|---|---|
Imdex (IMD) | $2.28 | +$0.03 | +1.3% | +14.0% | +21.9% |
Red 5 (RED) | $0.435 | +$0.005 | +1.2% | -1.1% | +171.9% |
Winsome Resources (WR1) | $1.060 | +$0.01 | +1.0% | -17.5% | -46.1% |
Genesis Minerals (GMD) | $1.830 | +$0.01 | +0.5% | +2.2% | +43.5% |
Silver Lake Resources (SLR) | $1.470 | +$0.005 | +0.3% | +1.0% | +33.6% |
South32 (S32) | $3.85 | -$0.11 | -2.8% | +5.5% | -2.0% |
Silver Mines (SVL) | $0.175 | -$0.005 | -2.8% | +2.9% | -12.5% |
Firefly Metals (FFM) | $0.690 | -$0.02 | -2.8% | -18.8% | +21.1% |
IGO (IGO) | $6.82 | -$0.23 | -3.3% | -13.2% | -51.0% |
Whitehaven Coal (WHC) | $8.02 | -$0.31 | -3.7% | +0.9% | +36.2% |
Alumina (AWC) | $1.785 | -$0.085 | -4.5% | +10.5% | +26.1% |
Champion Iron (CIA) | $6.43 | -$0.32 | -4.7% | -10.8% | +7.2% |
Deep Yellow (DYL) | $1.560 | -$0.08 | -4.9% | -6.9% | +166.7% |
Wildcat Resources (WC8) | $0.385 | -$0.02 | -4.9% | -21.4% | +347.7% |
29METALS (29M) | $0.515 | -$0.03 | -5.5% | +10.8% | -21.2% |
Sandfire Resources (SFR) | $8.86 | -$0.53 | -5.6% | -9.3% | +48.7% |
Liontown Resources (LTR) | $1.210 | -$0.075 | -5.8% | -5.5% | -55.8% |
Lotus Resources (LOT) | $0.410 | -$0.03 | -6.8% | -13.7% | +141.2% |
AIC Mines (A1M) | $0.475 | -$0.035 | -6.9% | -1.0% | +21.8% |
Ioneer (INR) | $0.180 | -$0.015 | -7.7% | -10.0% | -46.3% |
Latin Resources (LRS) | $0.230 | -$0.02 | -8.0% | -9.8% | +27.8% |
Cooper Energy (COE) | $0.200 | -$0.02 | -9.1% | 0% | +37.9% |
ASX Resources, Precious Metals, and Energy sectors best vs worst performers today
ChartWatch
Copper - LME Official Cash
V-shaped top for copper not a good look
I haven’t covered LME copper in ChartWatch before, as I usually cover High Grade Copper futures instead. But, given I’m going to do LME nickel next, and given the bearish technicals that we observed in the HGC chart in the Evening Wrap on 30 May, let’s go with the “other copper chart” today.
I get regular enquiries from my X/Twitter followers seeking to know when lithium prices are going to bounce. My response is the same each time – the time for a sharp bounce has passed because V-shaped rallies make the most enduring and potentially tradeable recoveries.
Lithium’s rally is far V-shaped, and it is evolving into a bump-along-the-bottom pattern (likely to take many months and possibly even years to resolve).
Why is this relevant here? Because A-shaped pullbacks after a steep run up are usually associated with an enduring top – and that’s what I see here (A-shaped price action being the natural opposite of V-shaped!).
The move from 9728, slicing through 10426 and the previous ATH of 10730 without any respect, and subsequent drop back to Tuesday’s close of 9858 smacks of a blow-off top to me.
Especially when one considers that just as little respect was shown to key points of supply on the way up, little respect has also been shown to theoretical key points of demand at 9974 and the short term uptrend ribbon (dynamic) on the way down.
The price action is falling peaks and falling troughs. Falling peaks indicates supply reinforcement, while falling peaks and those closes below key points of demand indicates demand removal.
The key zone of supply is now the short term uptrend ribbon, and then up to the 10331 point of supply. A V-shaped bounce to close back above the short term trend ribbon (I suggest by then end of this week) is required to steady the ship and restore confidence in the copper uptrend.
Alternatively, a close below demand between 9599-9728 would signal the big copper bull market of 2024 is over. In this case, there’s a good chance the price will prove lower demand points towards the dynamic demand of the long term uptrend ribbon.
Nickel - LME Official Cash
It's not a good look for nickel either
The last time we looked at LME nickel was in ChartWatch in the Evening Wrap on 17 May. In that update (FYI, the nickel price was 19335) I declared that a new long term uptrend in nickel had begun.
The price subsequently topped out at 21275 and has since pulled back in a similar V-shape to copper. Also like copper, the nickel price has closed below theoretical key points of demand in 19180 and the short term uptrend ribbon (dynamic).
Also, also like copper (!), the price action is falling peaks and falling troughs – again signalling supply reinforcement and demand removal.
Unlike copper, however, nickel is very close to the dynamic demand of its long term uptrend ribbon. Demand there should kick in around 18270-18790.
To maintain its new long term uptrend, nickel needs to print a trough in-or-above the short term uptrend ribbon, followed by higher troughs, and finally the price action must return to higher peaks too.
A close back above the short term uptrend ribbon is crucial, and even further – above 20255 is preferable.
V-shapes are clearly the theme of today’s ChartWatch, and it’s clear both copper and nickel require V-shaped bounces quickly to keep their 2024 momentum going.
Economy
Today
AUS GDP March Quarter
+0.1% versus +0.2% q/q forecast and +0.3% q/q December (revised up from +0.2% q/q)
Annual GDP growth +1.1% y/y
Very weak, grinding to a halt, and down 0.4% q/q on a per-capita basis (-1.3% y/y) = per capita recession continues into fifth consecutive quarter
But! Ultimately, a token data release as it relates to end of March quarter and we're nearly at the end of the June quarter!
Australian quarterly GDP. Source: Forex Factory & Fair Economy
Later this week:
Wednesday
22:15 USA ADP Non-Farm Employment Change May (173,000 forecast vs 192,000 April)
Thursday
22:15 EUR Main Refinancing Rate & Monetary Policy Statement (-0.25% to 4.25%)
Friday
22:30 USA Non-Farm Employment Change May (189,000 forecast vs 175,000 April)
22:30 USA Average Hourly Earnings May (+0.3% m/m forecast vs +0.2% m/m April)
Latest News
Interesting Movers
Trading higher
+21.1% Cyclopharm (CYC) - TECHNEGAS Awarded US Pass-Through Reimbursemt Status
+6.9% Generation Development Group (GDG) - Successful completion of institutional offer, rise is consistent with prevailing short and long term uptrends 🔎📈
+6.0% Zip Co Limited. (ZIP) - Proposed new legislation requiring BNPL companies to conduct basic credit checks on new customers
+5.5% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈
+5.3% Treasury Wine Estates (TWE) - TAM Investor Presentation and F24 Guidance Reaffirmation, several broker moves, generally positive (see Broker Notes section)
+4.9% Seek (SEK) - SEEK to sell Latin American assets
+4.7% Nanosonics (NAN) - CORIS Outperforms Manual Cleaning in Biofilm Removal
+4.6% Pro Medicus (PME) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈
+4.1% Graincorp (GNC) - No news, two brokers retained buy rating and each increased their price target for the stock (see Broker Notes section)
+3.8% Catapult Group International (CAT) - No news, continued positive response to FY24 Appendix 4E and Full Year Statutory Accounts, rise is consistent with prevailing short and long term uptrends 🔎📈
Trading lower
-9.2% Novonix (NVX) - Trading Halt (fears of a massive & heavily discounted capital raise in media/social media), at the end of the day...fall is consistent with prevailing short and long term downtrends 🔎📉
-9.1% Cooper Energy (COE) - 2024 Cooper Energy Investor Briefing, several broker moves (see Broker Notes section)
-8.2% Iperionx (IPX) - No news 🤔
-8.0% Immutep (IMM) - Immutep completes institutional pro-rata offer & placement (yet another nice uptrend killed by a discounted capital raise! 😒)
-8.0% Latin Resources (LRS) - No news, weaker lithium prices
-7.7% Ioneer (INR) - Closing of Draft EIS Comment Period, generally weaker lithium sector on weaker lithium prices, closed below long term trend ribbon 🔎📉
-6.8% Lotus Resources (LOT) - No news, generally weaker uranium sector on weaker uranium price
-6.3% Aura Energy (AEE) - No news, generally weaker uranium sector on weaker uranium price
-6.1% Brainchip Holdings (BRN) - No news, fall is consistent with prevailing short and long term downtrends 🔎📉
-5.8% Liontown Resources (LTR) - No news, weaker lithium prices, fall is consistent with prevailing short and long term downtrends 🔎📉
-5.6% Sandfire Resources (SFR) - External Investigation into Disturbance of Artefact Scatters, generally weaker copper sector on weaker copper/base metals prices, closed below long term trend ribbon 🔎📉
-5.5% 29METALS (29M) - No news, generally weaker copper sector on weaker copper/base metals prices, closed below long term trend ribbon 🔎📉
Broker Notes
Life360 Inc. (360)
Retained at overweight at Morgan Stanley; Price Target: $17.50
Alligator Energy (AGE)
Retained at buy at Bell Potter; Price Target: $0.10
Boss Energy (BOE)
Retained at buy at Bell Potter; Price Target: $6.35
Capitol Health (CAJ)
Initiated at positive at E&P; Price Target: $0.30
Cooper Energy (COE)
Retained at buy at Canaccord Genuity; Price Target: $0.27 from $0.25
Retained at overweight at Jarden; Price Target: $0.24 from $0.23
Retained at neutral at JP Morgan; Price Target: $0.21 from $0.20
Retained at outperform at Macquarie; Price Target: $0.30 from $0.27
Deep Yellow (DYL)
Retained at buy at Bell Potter; Price Target: $1.90
Graincorp (GNC)
Retained at buy at Bell Potter; Price Target: $9.90 from $9.50
Retained at buy at Ord Minnett; Price Target: $9.95 from $9.80
Humm Group (HUM)
Retained at hold at Ord Minnett; Price Target: $0.50
Integral Diagnostics (IDX)
Downgraded to neutral from positive at E&P; Price Target: $2.40
Infomedia (IFM)
Upgraded to buy from hold at Bell Potter; Price Target: $1.90 from $1.80
Ingenia Communities Group (INA)
Retained at buy at Citi; Price Target: $5.30
Lendlease Group (LLC)
Retained at neutral at Citi; Price Target: $6.30 from $6.90
Lotus Resources (LOT)
Retained at buy at Bell Potter; Price Target: $0.50
Lovisa Holdings (LOV)
Retained at buy at Bell Potter; Price Target: $36.00
Paladin Energy (PDN)
Retained at hold at Bell Potter; Price Target: $15.70
Retained at overweight at Morgan Stanley; Price Target: $17.45
Treasury Wine Estates (TWE)
Retained at neutral at Citi; Price Target: $12.40
Retained at positive at E&P; Price Target: $14.68
Retained at overweight at Jarden; Price Target: $14.50
Retained at buy at Jefferies; Price Target: $16.00
Retained at overweight at Morgan Stanley; Price Target: $14.50
Retained at buy at UBS; Price Target: $15.00 from $15.25
Whitehaven Coal (WHC)
Downgraded to outperform from buy at CLSA; Price Target: $9.70 from $9.50
Xero (XRO)
Retained at buy at Citi; Price Target: $158.20
Scans
Carl has over 30-years investing experience, helping 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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