Morning Notes

05/12/2017 Argonaut Morning Note

Market Update & Important Indicators
The Dow Jones Industrial Average jumped after the Senate passed a tax bill over the weekend, setting the stage for lawmakers to attempt to push a final bill to the White House before Christmas. The blue-chip index rose 0.6%, heading toward a record close. The S&P 500 added 0.3%, and the Nasdaq Composite slipped 0.5% as technology stocks pulled back. Investors dumped assets that many consider havens, such as U.S. Treasurys and gold, while lifting the dollar. The Senate passed revisions to the U.S. tax code Saturday after Republicans overcame internal divisions, moving one step closer to pushing through $1.4 trillion in tax cuts. The House and Senate still need to reconcile competing versions of the tax plan, something GOP leaders hope to do by Christmas. Cuts to the corporate tax rate could boost earnings growth and help the long U.S. stock rally keep going, investors and analysts say. Shares of small-capitalization companies rose, too, lifting the Russell 2000 by 0.2%. Smaller, more domestically focused companies, which tend to pay a higher effective tax rate than large multinationals, could particularly benefit from a tax overhaul. The U.S. gold price traded lower overnight, slipping 0.3% to close at 1,275.40 US$/oz.

European stocks closed with strong gains Monday, with German blue-chips surging by the most in a month. The Stoxx Europe 600 advanced 0.9% to end at 387.47, erasing last week's drop of 0.7%. Germany's DAX 30 index leapt 1.5% to finish at 13,058.55, nabbing its biggest daily rise since Nov. 1, according to FactSet data. France's CAC 40 put on 1.4% to close at 5,389.29, while the U.K.'s FTSE 100 bulked up 0.5% to end at 7,338.97.

Asia-Pacific stock markets struggled to gather momentum Monday after pockets of selling last week, notably in tech. Buying built ahead of the midday break in some markets, notably Hong Kong and China, but selling resumed afterward. Japan slid to session lows ahead of the close. The weaker yen didn't help the Nikkei, which closed down 0.5%. The afternoon softness extended to Hong Kong, where the Hang Seng lost nearly half its morning gains before stabilizing; it recently sat 0.5% higher on the day. It fell every day last week, its first five-session slide in 13 months. After declines last week, benchmarks in Korea and Taiwan rose 1.1% and 0.5% respectively, while the large-cap CSI 300 in China was recently up 0.7%.

Australia's stock benchmark was unable to hold slight late-day gains in a muted session as continued weakness in the financial sector countered gains by miners and energy companies. With a flurry of selling at settlement, the S&P/ASX 200 slipped 4.2 points to 5985.6 after briefly topping the elusive 6000 mark early in the day. The major banks each fell amid continued fallout from last week's launch of a sweeping judicial review of the industry; Westpac and ANZ fell more than 1%. Meanwhile, miners rose some 1.5%. Elsewhere, G8 Education slumped 23%, wiping out 2017 gains, after cutting earnings guidance and Crown Resorts fell 1.8% as a shareholder lawsuit was filed.

The London Metal Exchange’s 3-month copper contract traded higher overnight, adding 1.05% to finish at $6,833/t. The other base metals finished mostly higher. Aluminium prices gained 1.2% to 2,059/t, whilst Lead prices bounced 3.1% to close at 2,547/t. Zinc prices jumped 2.8% higher, closing at 3,267/t, whilst Nickel prices rebounded 1.6% to 11,230/t. Tin prices bucked the trend, closing 0.8% lower at 19,525/t.

Recent Contacts & Presentations
PharmAust Ltd (PAA), Alice Queen Ltd (AQX), Jervois Mining Ltd (JRV), St George Mining Ltd (SGQ), Overland Resources Ltd (OVR), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM), Gascoyne Resources Ltd (GCY), Southern Cross Electrical Ltd (SXE)

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