Lithium stocks under pressure following Goldman's comments: ASX down 0.47% at noon

Market Reports

by Lauren Hayes

The Australian market is still unnerved over concerns about a possible US recession. Energy is weighing down the benchmark over fears demand for oil will be impacted by a global recession in 2023. Utilities is the only outperformer. At noon, the S&P/ASX 200 is 0.47 per cent or 34 points lower at 7,195.20.

Lithium stocks are coming under pressure after Goldman Sachs said it expects lithium prices to fall over the second half of 2023 and into 2024 as the supply and demand outlook rebalances. Goldman Sachs has initiated coverage on several players. The company has a sell recommendation and $1 price target on Core Lithium (ASX:CXO), which has sent the stock down 6 per cent today. Conversely, Goldmans has a Buy rating on Allkem (ASX:AKE), with a $15.20 price target, along with Mineral Resource (ASX:MIN). It has neutral ratings on Pilbara Minerals (ASX:PLS), Independence Group (ASX:IGO) and Liontown (ASX:LTR).

The SPI futures are pointing to a fall of 54 points.

Best and worst performers

The best-performing sector is S&P/ASX 200 Utilities, up 0.97 per cent. The worst-performing sector is S&P/ASX 200 Energy, down 2.48 per cent.

The best-performing large cap is Evolution Mining (ASX:EVN), trading 4.29 per cent higher at $2.92. It is followed by shares in Newcrest Mining (ASX:NCM) and Northern Star Resources (ASX:NST).

The worst-performing large cap is IGO (ASX:IGO), trading 3.28 per cent lower at $15.02. It is followed by shares in South32 (ASX:S32) and Pilbara Minerals (ASX:PLS).

Asian news

Asia-Pacific shares are so far mixed in early trade. The Nikkei 225 in Japan is down 0.92 per cent and the Topix is 0.91 per cent lower. South Korea’s Kospi has lost 0.61 per cent and the MSCI has fallen 0.23 per cent.

Healthcare, defensives among the leaders

All US sectors were somewhat bunched in Wednesday’s trading. However, some of the recent rotational winners finished stronger again. Healthcare extended some recent rotational gains with upside across hospitals, managed care, pharma, and medtech. Defensive stocks also outperformed with signs of strength across food, HPCs, grocers, bond proxy REITs and utilities. Housing-linked retailers finished ahead amid the latest LOW-US updates. Energy was in line with the broader market despite crude selloff. Mega Cap tech mixed, though AAPL-US and TSLA-US weaker amid some demand fears. Solars, fintech, profitless tech companies also underperformed to close the day. Travel and leisure space closed broadly lower, particularly online travel agencies (ABNB-US downgrade) and airlines despite some positive commentary from LUV-US. Chinese internet also went down after China shares failed to rally after the latest reopening updates.

Things to think about while waiting for the Fed (including some better news on inflation)

While risk off has been the theme this week, there are still a lot of moving pieces ahead of the PPI release on Friday, CPI next Tuesday and the Fed announcement next Wednesday. Better inflation headlines with Manheim used-vehicle value index down 0.3 per cent month to month and 14.2 per cent year to year in November, dropping below 200 level for the first time since August 2021. Oil and broader commodity complexes are under pressure as of late. Mortgage rates are down for a fourth straight week, the longest stretch since 2019, though refi and purchase applications soft and Toll Brothers reported a larger than expected drop in orders. Bank updates have highlighted a resilient consumer, however, spending is slowing and credit normalisation is a big theme for 2023. There is more big tech/growth scrutiny amid worries about Apple iPhone and Tesla demand. Economic normalisation was underpinned by strong travel demand commentary from Southwest. There is outflow pressure on real estate PE funds and continues to play into broader liquidity concerns.

Company news

Immutep (ASX:IMM; NASDAQ:IMMP) a clinical-stage biotechnology company developing novel LAG-3 immunotherapies for cancer and autoimmune disease, today announced the successful scale-up of the manufacturing of its lead product candidate eftilagimod alpha (“efti” or “IMP321”), a first-in-class soluble LAG-3 protein, with the completion of a 2,000L manufacturing run. Marc Voigt, CEO of Immutep said: “Following compelling results from the TACTI-002 Phase II trial and promising initial clinical data from INSIGHT-003 recently presented at SITC 2022, we are pleased to announce this significant achievement reaching commercial scale in efti’s manufacturing by WuXi Biologics, an important long-term partner of Immutep. With potential registrational trials in multiple indications for our first-in-class soluble LAG-3 protein, including our ongoing randomised TACTI-003 Phase IIb trial in 1st line head and neck cancer, this represents an important step towards potential commercial production of efti.” Shares are trading 1.4 per cent higher at 36 cents.

Corazon Mining (ASX:CZN) has discovered spodumene pegmatites at their Miriam Project in Western Australia. The company has found widespread indicators of pegmatite throughout the Project area. Shares are trading 24 per cent higher at 3 cents.

Synertec Corporation (ASX:SOP) provided an update to its novel and proprietary Powerhouse technology, which has successfully been integrated with Santos’ production and operating systems and is supplying 100 per cent of power, emission-free, to a remote cluster of eight gas wells spread across an area of approx. 10 square kilometres, replacing the existing bank of fossil-fuelled generators. Synertec Managing Director, Michael Carroll, commented: “We see a significant local and global addressable market for our Powerhouse technology where remote locations operating industrial equipment can benefit from portable, stable base load renewable power supply. As the world continues to transition to a carbon-free future, technologies such as Powerhouse will allow our customers to achieve their decarbonisation goals.” Shares are trading 13 per cent higher at 22 cents.

Imagion Biosystems (ASX:IBX), a company dedicated to improving healthcare through the earlier detection of cancer, announced positive clinical data reported at a breast cancer conference in San Antonio. In response to the news, Bob Proulx, CEO, stated: “There is evidence in real patients that our nanoparticle technology could improve upon conventional medical imaging methods is a major milestone for the Company.” Shares are trading 12 per cent higher at 3 cents.

Commodities and the dollar

Gold is trading at US$1782.70 an ounce.
Iron ore is 2.1 per cent lower at US$107.45 a tonne.
Iron ore futures are pointing to a 0.1 per cent fall.
One Australian dollar is buying 67.16 US cents.

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