Morning Notes

11/08/2017 Argonaut Morning Note

Market Update & Important Indicators:

Financial markets tumbled for a third straight day, as disappointing earnings and an exchange of threats between North Korea and the U.S. pushed investors out of stocks. The declines have jolted markets from a period of calm, when stock indexes around the world climbed to records and volatility remained historically low. U.S. stocks have rallied this year with few interruptions, something many investors have attributed to the improving health of U.S. companies and steady global economic growth. However, rising geopolitical tensions, a batch of tepid earnings reports and economic data showing sluggish inflation and productivity growth have raised the prospect of a more prolonged pullback. The moves sent the Dow Jones Industrial Average down 205 points, or 0.9%, to 21844. The CBOE Volatility Index, a measure of investors' expectations for swings in the S&P 500, soared 35% - on track for its second-biggest one-day jump of the year. The VIX has hovered near record lows this year. After a largely steady rally that led the Dow industrials to nine straight records through Monday, many investors and analysts have cautioned that a selloff was simply overdue. The U.S. gold price had another strong night, jumping 0.7% to finish at 1,285.80 US$/oz.

European stocks fell, with caution still lingering as tension between U.S. and North Korea escalated. The Stoxx Europe 600 fell 1% to 376.05, led by losses in the industrial group. The utility and health-care sectors were the only ones showing gains. The pan-European benchmark on Wednesday fell 0.7% in a selloff prompted by tensions between the U.S. and North Korea escalated. Germany's DAX 30 lost 1.2% to 12,014.30. The index briefly dipped to 11,993.73, trading below the 12,000 level for the first time since April. France's CAC 40 index fell 0.6% to 5,115.23, while in London, the FTSE 100 moved down 1.4% to 7,389.94.

Selling in Asia was led by some of this year's best-performing markets. The Hang Seng Index was down 1.1%. Financial stocks led the way; HSBC was off 1.6%, as were major Chinese-based companies. Other Asian markets fell notably at about the same time as Hong Kong. Taiwan's Taiex was down 1.3%. As in Hong Kong, financials were weak in Taiwan, as were some big-name tech stocks. In China, the small-cap-heavy ChiNext index started with a bang, rising nearly 1%, but fell 0.5%. Meanwhile, Japanese stocks were little changed as the yen was flat against the dollar. The Nikkei Stock Average ended down 0.04% at 19729.74. The Malaysian benchmark stocks index rebounded from an afternoon low to close flat, even as markets in the region are weighed down by lingering tensions between the U.S. and North Korea.

After early gains which bucked further selling elsewhere in the region, Australian stocks ultimately succumbed to wide downside bias even while outperforming for a second day. The S&P/ASX 200 fell 0.1% to 5760.9, its fifth decline in seven sessions, after earlier rising as much 0.5% in the morning.

The London Metal Exchange's three-month copper contract closed lower overnight, dropping 0.5% at $6,423/t. All other base metals finished higher. Aluminium prices rose 0.6% to 2,032/t, whilst lead prices jumped 0.7% to 2,345/t. Tin prices were also higher, rising 0.5% to 20,398/t, whilst zinc prices jumped 0.2% to 2,926/t. Nickel prices were the strongest overnight, rising 2.1% to finish at 10,938/t. This was the fourth-straight rise for the base metal and its highest closing price since March 2017.

Recent Contacts & Presentations:

Rift Valley Resources Ltd (RVY), Panoramic Resources Ltd (PAN), Doray Minerals Ltd (DRM), Wellard Limited (WLD), Bryah Resources Ltd (BYH), Auris Minerals Ltd (AUR), Gage Roads Brewing Co Ltd (GRB), Stavely Minerals Ltd (SVY), Orbital Corporation Ltd (OEC), 4Ds Memory Ltd (4DS), Kin Mining NL (KIN), Pharmaust Limited (PAA), Botanix Pharmaceuticals Ltd (BOT), Dimerix Ltd (DXB), Metro Mining Ltd (MMI), Paringa Resources Ltd (PNL), Independence Group NL (IGO), MZI Resources Ltd (MZI), Transerv Energy Ltd (TSV), Emmerson Resources Ltd (ERM), Antipa Minerals Ltd (AZY), Echo Resources Ltd (EAR), Sovereign Metals Ltd (SVM)

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