Evening Wrap: ASX 200 down as lithium, battery minerals, base metals and uranium stocks take another beating

Whilst the dip on the benchmark S&P/ASX 200 index was a modest 0.5%, there were far more severe falls in resources stocks as key commodity prices like lithium, copper, nickel and uranium continued to fall.

Everything is on hold anyway until we can get the mega-risky-double-whammy-pressure-points of US inflation data and an interest rate decision out of the way (due early tomorrow morning our time).

So, tomorrow could be the best day ever, or...🤔

Let's dive in!

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 39.9 points lower at 7,715.5, 0.51% from its session high and just 0.2% from its low. In the broader-based S&P/ASX 300 (XKO), advancers lagged decliners by a dismal 84 to 191.

For the first time in what feels like a long time, the Energy (XEJ) (+1%) sector was the best performing sector today, likely in response to firmer crude oil and natural gas prices in the last 24 hours. The price of US Natural Gas futures in particular looks interesting from a technical perspective as it is currently challenging the long term downtrend ribbon.

The best ASX Energy stocks today

The rest of the 11 major ASX sectors were down today, ranging from least worst Consumer Staples (XSJ) (-0.20%) and Communication Services (XTJ) (-0.28%) to worst worst Information Technology (XIJ) (-0.97%) and Utilities (XUJ) (-1.1%).

I’m not going to try and make up thematic sector drivers today – your guess is as good as mine. It just was. And that in itself is a bit of a thematic driver for the Aussie market the moment – as in don’t try to understand it because you will only hurt your brain...

Resources (XJR) (-0.47%) wasn't the best or the worst sector today, but underneath the surface continues to boil plenty of discontent as the prices of several key commodities continued their falls overnight.

Commodity prices continue to fall

This means it was another bruising day of falls in lithium, battery materials more generally, base metals, and uranium stocks (although technically the latter is part of the XEJ).

I won't do a table – just check the Interesting Movers section (specifically the Trading Lower list)

ChartWatch

NASDAQ Composite Index

Stairway to heaven

The last time we covered the Comp was in ChartWatch in the Evening Wrap on 6 June.

Just a quickie here, because it’s just onwards and upwards.

I know. It sucks.

It’s not fair.

Why do they get all the best stocks, and we’ve got Lend Lease, and Telstra, and Woodside, and all lithium stocks in general?

Well, to be fair, there’s nothing stopping you from taking some of your dough and adding a few US stocks to your portfolio. This is not an endorsement or financial advice, just a statement of fact.

Apple, Microsoft, Nvidia, Google, Amazon…nah…they’ve got nothing on Telstra!

Back to the chart above. I see great trends, great price action and great candles in terms of existing demand-side control.

Remember I am a trend follower, not a trend prognosticator.

So, that last candle (and isn’t it just an amazing demand-side candle too!?) could be the top of the Nasdaq forever.

It might be.

Or the wall of excess demand so evident in the picture above (all charts are just pictures of demand and supply interaction), could continue to propel prices much higher for much longer than any value investor can tolerate.

One of those scenarios is going to be correct – it’s up to you to decide which sits most comfortably with you..

Gold Futures Front Month COMEX

Gold has some issues here...

The last time we covered gold futures was in ChartWatch in the Evening Wrap on 30 May.

In that last update I said:

It’s starting to feel like the demand-side has lost its voracious appetite, and if this indeed is the case, it likely won’t be long before the supply-side starts to panic.

I’m going to go ditto based upon the current set of technicals. Although, I suggest evidence of supply-side panic is already printing in the form of the long black candle on 7 June.

The demand-side response since then has been feeble, and this is usually a good indication that there isn’t much of a demand-side response in the offing at all.

Instead, I suggest the supply-side has indeed taken control of the gold price in the short term at least, and this leaves it vulnerable to cracking the now key 2308 point of demand and then probing the dynamic demand of the long term uptrend ribbon.

There are some major data points in the US this week that could shove gold violently one way or the other, so whether you’re a gold bug or gold bear – proceed with caution.

My “supply side is in control” hunch will be disproven if the gold price can quickly close back above the now dynamic supply of the short term trend ribbon (neutralised). It will require a long white candle with a high close to do so.

2407 is the key point of demand. A close above there would signal the demand-side is firmly back in control..

Economy

Today

• 11:30 CHINA Consumer Price Index (CPI) May

  • +0.3% p.a. vs forecast +0.4% p.a. and +0.3% p.a. in April

  • Unlike us, the Chinese want a bit of inflation as it would indicate and stimulate stronger growth...so this data and the PPI data below show things are still very weak in China's economy. The PPI data was slightly better than expected, though (i.e., it showed less deflation than expected!).

• 11:30 CHINA Producer Price Index (PPI) May

  • -1.4% p.a. vs forecast -1.5% p.a. and -2.5% p.a. in April

Later this week:

Wednesday

• 22:30 USA Core Consumer Price Index (CPI) May (forecast +0.3% m/m and 3.6% p.a. vs +0.3% m/m and +3.7% p.a. April)

Thursday

• 04:00 USA Federal Reserve FOMC meeting, Fed Funds Rate, economic projections, statement, & press conference (forecast no change 5.25%-5.50%)

• 11:30 AUS Employment Change & Unemployment Rate May (forecast +30.5k vs +38.5k April | U-Rate forecast 4.0% vs 4.1% April)

• 22:30 USA Core Producer Price Index (CPI) May (forecast +0.3% m/m and 3.6% p.a. vs +0.3% m/m and +3.7% p.a. April)

Friday

• TBA JPN Bank of Japan Policy Rate & Monetary Policy Statement (forecast no change <0.1%)

Saturday

• 00:00 USA Prelim UoM Consumer Sentiment May (forecast 72.5 vs 69.1 April)

Latest News

Interesting Movers

Trading higher

• +11.5% Aura Energy (AEE) - Aura increases Tiris Mineral Resources by 55% to 91.3 Mlbs

• +8.6% Healius (HLS) - No news, rise is consistent with prevailing short term uptrend, needs to challenge the long term downtrend ribbon 🔎📈

• +7.6% Spartan Resources (SPR) - Possible delayed reaction to yesterday's Exceptional new thick, high-grade intercepts, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.1% Emerald Resources (EMR) - No news, initiated at buy at Canaccord Genuity with a price target of $4.60, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.6% Service Stream (SSM) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +5.5% Electro Optic Systems Holdings (EOS) - No news, retained at buy at Bell Potter but price target cut to $2.10 from $2.20

• +5.1% Liontown Resources (LTR) - No news, mystery bounce when you consider pretty much the rest of ASX lithium got belted today 🤔

• +4.2% Droneshield (DRO) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.9% Superloop (SLC) - SLC - Results of 2024 EGM, rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.8% Judo Capital Holdings (JDO) - ZSP: CSR Limited to be removed from the S&P/ASX 200 Index (inclusion in the S&P/ASX 200), rise is consistent with prevailing short and long term uptrends 🔎📈

• +3.6% Botanix Pharmaceuticals (BOT) - Final Sofdra Labelling Discussions with FDA, rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -14.0% Northern Minerals (NTU) - No news 🤔

• -11.4% Renascor Resources (RNU) - No news, several battery materials stocks hit hard again today, fall is consistent with prevailing short and long term downtrends 🔎📉

• -8.1% Syrah Resources (SYR) - No news, several battery materials stocks hit hard again today, fall is consistent with prevailing short and long term downtrends 🔎📉

• -7.6% Nickel Industries (NIC) - No news, another tough day for nickel and other base metals stocks on lower LME prices

• -7.0% Immutep (IMM) - Possibly to do with recent placement (Immutep completes institutional pro-rata offer & placement)

• -6.8% Iperionx (IPX) - No news, another tough day for many ASX gold stocks

• -5.6% Deep Yellow (DYL) - No news, uranium price, and uranium stock prices, continue to fall

• -5.5% Nexgen Energy (Canada) (NXG) - No news, uranium price, and uranium stock prices, continue to fall

• -5.4% Melbana Energy (MAY) - No news, uranium price, and uranium stock prices, continue to fall

• -5.2% Boss Energy (BOE) - No news, uranium price, and uranium stock prices, continue to fall

• -5.0% Core Lithium (CXO) - No news, several battery materials stocks hit hard again today, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.7% Strike Energy (STX) - TEG: L7 Booth Well Timing Update, fall is consistent with prevailing short and long term downtrends 🔎📉

• -4.4% WA1 Resources (WA1) - No news, several battery materials stocks hit hard again today, fall is consistent with prevailing short and long term downtrends 🔎📉

Broker Notes

• AIC Mines (A1M)

  • Retained at buy at Shaw and Partners; Price Target: $1.20

• AGL Energy (AGL)

  • Retained at neutral at Macquarie; Price Target: $10.86 from $10.69

  • Retained at equal-weight at Morgan Stanley; Price Target: $9.50

  • Retained at sector perform at RBC Capital Markets; Price Target: $10.00

• Eagers Automotive (APE)

  • Retained at sell at Citi; Price Target: $9.55

  • Retained at neutral at E&P; Price Target: $9.00

  • Retained at overweight at JP Morgan; Price Target: $14.00

  • Retained at neutral at Macquarie; Price Target: $10.60

  • Retained at overweight at Morgan Stanley; Price Target: $14.10

  • Retained at marketweight at Wilsons; Price Target: $10.47

• Abacus Storage King (ASK)

  • Retained at buy at Citi; Price Target: $1.40

• AUB Group (AUB)

  • Retained at outperform at Macquarie; Price Target: $33.84

• Accent Group (AX1)

  • Retained at neutral at Jarden; Price Target: $2.05

• Bapcor (BAP)

  • Retained at neutral at Citi; Price Target: $4.70

  • Retained at outperform at CLSA; Price Target: $5.43 from $5.00

  • Retained at hold at Jefferies; Price Target: $5.30

  • Retained at neutral at UBS; Price Target: $4.70

• Beach Energy (BPT)

  • Retained at overweight at Jarden; Price Target: $1.75

  • Retained at outperform at Macquarie; Price Target: $1.95 from $2.00

  • Retained at outperform at RBC Capital Markets; Price Target: $1.80

• BWP Trust (BWP)

  • Downgraded to sell from hold at Moelis Australia; Price Target: $3.61 from $3.64

• Champion Iron (CIA)

  • Upgraded to outperform from neutral at Macquarie; Price Target: $7.90 from $7.50

• Close The Loop (CLG)

  • Initiated at buy at Canaccord Genuity; Price Target: $0.65

• Coles Group (COL)

  • Retained at neutral at Jarden; Price Target: $16.60

• CSL (CSL)

  • Retained at overweight at Morgan Stanley; Price Target: $310.00

• CSR (CSR)

  • Retained at neutral at Jarden; Price Target: $9.00

• Calix (CXL)

  • Retained at buy at Shaw and Partners; Price Target: $4.50

• Emerald Resources (EMR)

  • Initiated at buy at Canaccord Genuity; Price Target: $4.60

• Electro Optic Systems Holdings (EOS)

  • Retained at buy at Bell Potter; Price Target: $2.10 from $2.20

• Flight Centre Travel Group (FLT)

  • Retained at buy at Jarden; Price Target: $23.50

• Macquarie Group (MQG)

  • Retained at sell at Citi; Price Target: $176.00

• National Storage Reit (NSR)

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

• Ora Banda Mining (OBM)

  • Initiated at buy at Canaccord Genuity; Price Target: $0.50

• Premier Investments (PMV)

  • Retained at neutral at Jarden; Price Target: $30.80

• Rio Tinto (RIO)

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

• Regal Partners (RPL)

  • Initiated at add at Morgans; Price Target: $4.70

• Steadfast Group (SDF)

  • Retained at outperform at Macquarie; Price Target: $6.70

• Super Retail Group (SUL)

  • Retained at neutral at Jarden; Price Target: $15.10

• Solvar (SVR)

  • Initiated at add at Morgans; Price Target: $1.40

• Southern Cross Electrical Engineering (SXE)

  • Retained at buy at Shaw and Partners; Price Target: $3.26

• Viva Leisure (VVA)

  • Retained at buy at Citi; Price Target: $2.50

• Woodside Energy Group (WDS)

  • Retained at neutral at Jarden; Price Target: $29.25

  • Upgraded to outperform from neutral at Macquarie; Price Target: $32.00

• Woolworths Group (WOW)

  • Retained at overweight at Jarden; Price Target: $39.90

Scans