Evening Wrap: ASX 200 notches new record on surging mining and energy stocks as Fed's big cut stokes gains across region

The S&P/ASX 200 closed 49.8 points higher, up 0.61%.

Another day, another record (the fourth in a row). It just all seems so easy, doesn't it!?

Ironically, whilst US markets faltered in late trading following the FOMC's "big rate cut", Asia loved it. We've seen equities and commodities rise in unison across the region, partly due a big sigh of relief there weren't any major fireworks overnight.

But the other part is equally as important. At the end of the day, lower US interest rates contributes to an environment of lower global interest rates, and that's usually good for the region's export-based economies.

It's also potentially very good for stimulating demand for key commodities like aluminium, copper, iron ore, nickel, and crude oil. The prices of each were higher overnight, and this translated into strong gains for the local Materials (XMJ) and Energy (XEJ) sectors.

There wasn't too much that missed out today, and good or bad, you'll find the usual reporting of the major sector and stock-specific moves, major broker views, as well as all of the key upcoming economic data, in tonight's Evening Wrap.

Also, I have detailed technical analysis on the S&P/ASX 200, as well as Silver and Gold in ChartWatch.

Let's dive in!

Today in Review

Thu 19 Sep 24, 5:11pm (AEST)

Markets

ASX 200 Session Chart

The S&P/ASX 200 (XJO) finished 49.8 points higher at 8,191.9, 0.72% from its session low and just 0.10% from its high. In the broader-based S&P/ASX 300 (XKO), advancers beat decliners by a very solid 188 to 87.

Materials (XMJ) (+2.3%) was the best performing sector today, likely in response to rising commodities prices on Wednesday in the wake of the Feds big interest rate cut – including gains across base and precious metals, as well as crude oil.

Also doing well today was the Utilities (XUJ) (+-%) sector. It picked up, or rather, Origin Energy ORG (+2.8%) picked up where it left off yesterday. The sector is dominated in terms of market capitalisation by ORG and counterpart AGL Energy AGL (+1.57%) which also did pretty well today. Utilities are seen as fairly stable dividend yield payers, somewhat like a bond, so when market yields fall – their yield appears more attractive to investors.

The list of best performing sectors wouldn’t be complete lately with mentioning the Real Estate Investment Trusts (XPJ) (+1.3%) sector. We’ve discussed many times in this Wrap how this long duration sector also tends to outperform during times of falling interest rates.

Today's best performing stocks from the best performing ASX sectors

There wasn’t a great deal that one could say did it tough today, but I do note modest losses in typically defensive sectors like Health Care (XHJ) (-0.52%), Communication Services (XTJ) (-0.25%), and Consumer Staples (XSJ) (-0.06%). Why would one play defence when the Fed is cutting rates?

One sector we don’t often talk about much, Industrials (XNJ) (-1.3%), was actually the worst performing sector today. It was dragged lower mainly due to sharp drops in two of its major constituents – ALS ALQ (-8.6%) which issued a disappointing trading update – and Atlas Arteria ALX (-3.6%) which disappointed with its dividend announcement.

Today's worst performing stocks from the worst performing ASX sectors

ChartWatch

S&P/ASX 200 (XJO)

Not much more for a trend follower to do...

The last time we covered XJO was in ChartWatch in the Evening Wrap on 17 September.

In that update, we noted that the benchmark index of Aussie shares was “a clean slate technically”. This meant strong demand-side candles, price action, trends, and its respect of critical static and dynamic demand zones.

Really, I said, all we were waiting for was a clear run from the FOMC meeting (done), and the BOJ meeting (tomorrow). So, with one of the two key major risk events down for the week – today’s record high and close suggest the demand side is willing to put some of its cash to work.

The supply side? Judging by those “clean slate” technicals, and today’s white candle with its close near the high of the session – they are nowhere to be found.

As is usually the case with record highs, there are no clear overhead points of supply to peg as potential targets. I don’t do prognostications, my trend following approach assumes this rally will go on as long as it does.

I’ll know when it’s experiencing trouble – that is, when supply side candles (i.e., black-bodies and or upward pointing shadows), and price action (i.e., falling peaks and or falling troughs) begin to manifest building excess supply.

I can discuss potential points of demand, though. I expect the first is the old supply zone between 8117 and 8149. Beneath that, the short term uptrend ribbon is generally a reliable zone of dynamic demand. I propose the short term trend is some version of OK as long as we continue to close above that. Alternatively, I’d be pretty sure something is very wrong on a close below 7918.

There’s not much else for a trend follower to do now but do what a trend follower does…📈

Silver & Gold Futures (Front month, back-adjusted) COMEX

Last candle must stay white, close near high

Just a couple of quickies here as we only covered these two in ChartWatch in last Friday’s Evening Wrap…but they’re two of the more interesting charts for me over the last 24-hours.

In that last update, we pondered the improving technicals in silver, and the prospect that it could be “setting up better for a new push towards the Feb 2021 high”.

Precious metals love lower interest rates. Last night a key interest rate was lowered. Wednesday’s price action showed significant volatility, but the candle did end up with a downward pointing shadow that showed excess demand did kick in around the old 30.65 point of supply – that is, 30.65 now acting as a point of demand.

Today’s candle is the key though – it’s the kicker. If it can stay this way (because it’s still live), I think it would demonstrate a strong test and hold of 30.65 and therefore facilitate that move towards 32.425-33.505 we discussed last time.

But it must close white, and it must close at or very near to the session’s high.

Gold Futures (Front month, back-adjusted) COMEX

Gold is showing similar volatility around the FOMC result, Wednesday’s candle shadows pointing up and down shows moderate indecision. Today’s candle, however, is developing well so far as a demand-side show. Also, so far it appears to be holding 2570.40.

This is still a very strong trend for me, and as long as the price continues to close above the short term uptrend ribbon, the gold uptrend is very much intact..

Economy

Today

• AUS Employment Change August

  • +47,500 vs +25,800 forecast and +58,200 in July

  • Unemployment rate was steady at 4.1%, as was participation rate at 67.1% (a record high)

  • Full time positions did dip slightly, but have shown strong growth in prior months, most of today's gain was a result of 50,600 new part time positions created

  • Overall, it is another big beat for Aussie jobs numbers, demonstrating the local economy is showing substantial resilience against higher interest rates, nagging inflationary pressures, and the prospect of a slowing global economy

  • The data is likely to leave the RBA on hold at its next meeting on Tuesday, rather than follow the lead from several of its international counterparts! 🚫

Later this week

Thursday

• 21:00 UK Bank of England (BOE) Official Bank Rate (no change at 5.0% forecast)

Friday

• 11:00 CHN Peoples Bank of China (PBOC) 1 & 5-year Loan Prime Rate (no change at 3.35% and 3.85% forecast)

• TBA Bank of Japan (BOJ) Policy Rate (no change at 0.25% forecast)

Latest News

Markets

How does the ASX 200 perform after the first Fed rate cut?

Thu 19 Sep 24, 2:46pm (AEST)

Economy

Go big, go early! How markets responded to the Fed’s big rate cut

Thu 19 Sep 24, 1:44pm (AEST)

Director Transactions ape bga

Insider Trades: 15 ASX 200 directors bought and sold shares last week

Thu 19 Sep 24, 11:13am (AEST)

Short Selling acl boe

The 10 most shorted ASX stocks plus the biggest risers and fallers – Week 37

Thu 19 Sep 24, 10:05am (AEST)

Technical Analysis a2m a4n

ChartWatch ASX Scans: Austal, Codan, Coles Group, National Australia Bank, Nick Scali, A2 Milk, Ampol, BHP Group, Data#3

Thu 19 Sep 24, 9:00am (AEST)

Market Wraps

Morning Wrap: ASX 200 to fall, S&P 500 gives back gains after 50 bp Fed rate cut

Thu 19 Sep 24, 8:36am (AEST)

More News

Interesting Movers

Trading higher

• +13.0% Qoria (QOR) - Qoria secures major distribution deal in the UK, bounced off long term uptrend ribbon 🔎📈

• +12.4% Sims (SGM) - Trading Update, closed back above long term downtrend ribbon 🔎📈

• +9.8% Strike Energy (STX) - Domestic Gas Policy Update

• +9.3% Bannerman Energy (BMN) - No news, generally stronger ASX uranium sector today, no move in US U-stocks Weds, nor in the U-price, possibly some well-received project news from Lotus (LOT) stoking sector confidence, Morgan Stanley also reaffirmed its positive view on the sector in general as retained Paladin's (PDN) Overweight rating and increased the company's price target (see Broker Notes section for more info)

• +9.2% Zip Co. (ZIP) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +8.7% Lotus Resources (LOT) - Letlhakane Study shows long life, high value, and see BMN for general ASX U-sector vibes today!

• +8.1% Paladin Energy (PDN) - Ditto LOT

• +7.7% Sayona Mining (SYA) - Amendment to Investor Presentation September 2024

• +7.7% Electro Optic Systems (EOS) - No news

• +7.2% Appen (APX) - No news, consistent with recent volatility, rise is consistent with prevailing short term uptrend, long term trend is transitioning from down to up 🔎📈

• +7.1% Droneshield (DRO) - No news, bounced off long term uptrend ribbon 🔎📈

• +6.7% Iperionx (IPX) - No news, generally stronger metals sector, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.6% Nuix (NXL) - No news, rise is consistent with prevailing short and long term uptrends 🔎📈

• +6.2% Peninsula Energy (PEN) - Ditto ASX U-sector

• +6.1% Deep Yellow (DYL) - Ditto ASX U-sector

• +6.0% Metals X (MLX) - No news, ditto stronger ASX metals stocks today…rise is consistent with prevailing short and long term uptrends 🔎📈

Trading lower

• -8.6% ALS (ALQ) - ALS Trading update

• -7.2% DUG Technology (DUG) - No news, fall is consistent with prevailing short term downtrend, closed below long term trend ribbon 🔎📉

• -6.3% Imdex (IMD) - No news.

• -5.0% EML Payments (EML) - No news, fall is consistent with prevailing short and long term downtrends 🔎📈

• -4.8% Kingsgate Consolidated (KCN) - Production Guidance and Outlook and Annual Financial Report 30 June 2024, fall is consistent with prevailing short and long term downtrends 🔎📈

• -4.1% Adriatic Metals (ADT) - Notice of Operations Update Presentation Date Correction

• -4.0% Pantoro (PNR) - Date of AGM and Closing Date for Nomination of Directors

• -3.9% Polynovo (PNV) - Ceasing to be a substantial holder

• -3.6% Atlas Arteria (ALX) - Announcement of the H1 2024 Distribution, fall is consistent with prevailing short and long term downtrends 🔎📈

Broker Notes

• ANZ Group (ANZ)

  • Retained at underperform at Macquarie; Price Target: $26.50

• APA Group (APA)

  • Retained at outperform at Macquarie; Price Target: $8.23

• Bendigo and Adelaide Bank (BEN)

  • Retained at underperform at Macquarie; Price Target: $9.50

• BHP Group (BHP)

  • Upgraded to overweight from equal-weight at Morgan Stanley; Price Target: $47.50 from $44.65

• Boss Energy (BOE)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.00 from $4.25

• Bank of Queensland (BOQ)

  • Retained at underperform at Macquarie; Price Target: $5.00

• Commonwealth Bank of Australia (CBA)

  • Retained at underperform at Macquarie; Price Target: $95.00

• CSL (CSL)

  • Retained at buy at Citi; Price Target: $345.00

• Deterra Royalties (DRR)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.70 from $3.65

• Evolution Mining (EVN)

  • Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $4.25 from $4.15

• Fortescue (FMG)

  • Upgraded to equal-weight from underweight at Morgan Stanley; Price Target: $17.45 from $16.65

• Genesis Minerals (GMD)

  • Initiated at buy at Bell Potter; Price Target: $2.55

• Hipages Group (HPG)

  • Retained at equal-weight at Morgan Stanley; Price Target: $1.40 from $1.05

• IGO (IGO)

  • Retained at underweight at Morgan Stanley; Price Target: $4.90 from $4.55

• Iluka Resources (ILU)

  • Retained at equal-weight at Morgan Stanley; Price Target: $6.85 from $6.60

• Incitec Pivot (IPL)

  • Retained at accumulate at Ord Minnett; Price Target: $3.35

• Judo Capital (JDO)

  • Retained at underperform at Macquarie; Price Target: $1.60

• Lynas Rare Earths (LYC)

  • Retained at underweight at Morgan Stanley; Price Target: $5.15 from $4.95

• Mineral Resources (MIN)

  • Retained at overweight at Morgan Stanley; Price Target: $55.50 from $70.00

• National Australia Bank (NAB)

  • Retained at underperform at Macquarie; Price Target: $32.50

• New Hope Corporation (NHC)

  • Retained at sell at Goldman Sachs; Price Target: $3.80

  • Retained at hold at Jefferies; Price Target: $4.80 from $5.00

• Nickel Industries (NIC)

  • Retained at overweight at Morgan Stanley; Price Target: $1.00 from $0.95

• Northern Star Resources (NST)

  • Downgraded to underweight from equal-weight at Morgan Stanley; Price Target: $14.35 from $15.05

• Paladin Energy (PDN)

  • Retained at overweight at Morgan Stanley; Price Target: $12.40 from $12.00

• Pilbara Minerals (PLS)

  • Upgraded to equal-weight from underweight at Morgan Stanley; Price Target: $2.95 from $2.70

• Platinum Asset Management (PTM)

  • Retained at hold at CLSA; Price Target: $0.90

  • Retained at sell at Goldman Sachs; Price Target: $1.00

• Rio Tinto (RIO)

  • Retained at overweight at Morgan Stanley; Price Target: $135.50 from $137.00

• Regis Resources (RRL)

  • Downgraded to equal-weight from overweight at Morgan Stanley; Price Target: $2.05 from $2.00

• Reliance Worldwide Corporation (RWC)

  • Retained at buy at Citi; Price Target: $5.85

• South32 (S32)

  • Retained at equal-weight at Morgan Stanley; Price Target: $3.20 from $2.95

• Sandfire Resources (SFR)

  • Retained at equal-weight at Morgan Stanley; Price Target: $8.25 from $7.95

• Sims (SGM)

  • Retained at buy at Citi; Price Target: $13.00

• Syrah Resources (SYR)

  • Retained at equal-weight at Morgan Stanley; Price Target: $0.30 from $0.25

• Treasury Wine Estates (TWE)

  • Retained at buy at Goldman Sachs; Price Target: $15.20

• Westpac Banking Corporation (WBC)

  • Retained at underperform at Macquarie; Price Target: $26.00

• Whitehaven Coal (WHC)

  • Retained at overweight at Morgan Stanley; Price Target: $8.35 from $9.70

• Xero (XRO)

  • Retained at buy at Citi; Price Target: $158.20

  • Retained at outperform at CLSA; Price Target: $178.00 from $167.00

  • Retained at overweight at JP Morgan; Price Target: $145.00

  • Retained at marketweight at Wilsons; Price Target: $131.63

Scans

Top Gainers

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Top Fallers

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52 Week Highs

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52 Week Lows

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Near Highs

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Relative Strength Index (RSI) Oversold

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