Morning Notes

13/02/2018 Argonaut Morning Note

Market Update & Important Indicators
U.S. stocks bounced higher Monday following two bruising weeks, lifted by a rally in shares of oil-and-gas companies. The Dow Jones Industrial Average jumped 411 points, or 1.6%, to 24602, following its largest one-week percentage decline in more than two years. The S&P 500 rose 1.4% and the Nasdaq Composite added 1.5%. Monday's gains were broad, lifting 10 of the S&P 500's 11 sectors higher for the day. Still, major stock indexes remain sharply lower for the month, following a heavy bout of selling that analysts and investors have attributed to failed bets on low stock market volatility, rising bond yields and concerns about a possible pickup in inflation. Investors have been questioning whether the declines, which have erased the S&P 500 and Dow industrials' gains for the year, reflect a short-term technical correction or the start of a more profound reassessment of the financial climate in light of less support from central banks. Shares of energy companies rose with oil prices Monday, giving major indexes a boost. The S&P 500 energy sector rose 1.8%, among the biggest gains of the broad index's 11 sectors, while U.S. crude oil rose 1.1% to $59.87 a barrel after sliding last week on worries about rising U.S. production. The U.S. gold price traded higher overnight, gaining 0.5% to finish at 1,322.50 US$/oz.

Europe's Stoxx Europe 600 index closed up 1.2% at 372.93, tracking a recovery in U.S. stocks after last week's sharp falls. Germany's DAX index ended up 1.45%, while France's CAC 40 was up 1.2% and the U.K.'s FTSE 100 up 1.2%. Spain's IBEX 35 closed up 1.4%, while gains in Italian stocks were less pronounced, with the FTSE MIB up 0.8% as investors stay wary before Italy's March 4 elections.

Shenzhen, home to smaller-cap stocks in China, led gains in Asia on Monday. The Shenzhen Composite jumped 2.6% and the startup-heavy ChiNext Price Index rose 3.5% after both logged declines of at least 6% in each of the past two weeks. South Korea's Kospi closed up 0.9%, helped by a 2.3% rise in Samsung, while Hong Kong's Hang Seng reversed gains late in the session to edged down 0.2%. Markets in Tokyo were shut for a holiday on Monday. Trading volumes are expected to be lower in many Asian stock markets this week due to the coming Lunar New Year holiday.

Australia's stock benchmark didn't partake in the gains seen across Asia, with the market hurt in part by the end-of-week skid in oil prices. The S&P/ASX 200 finished down 0.3% at 5820.7 after briefly getting positive territory ahead of the close. It's a fresh 4-month low for the index, now down 4% this year. The energy sector ended down 0.4%, well off session lows, thanks to oil prices rebounding some in Asia. That allowed financial to log an even-bigger decline at 0.6% with Australia's big banks hit by the start of hearings into the industry. NAB fared worst at 0.8% after outperforming its peers in recent sessions. But materials rebounded, with BHP Billiton and Rio Tinto each up 1.5% and Fortescue climbing 2.4%.

The London Metal Exchange’s 3-month copper contract traded higher overnight, finishing 1.1% stronger at $6,831/t. The other base metals finished mixed. Aluminium prices traded flat at $2,121/t, while lead prices fell 0.8% to close at $2,516/t. Zinc prices slid 0.1% to $3,409/t, while Tin prices bounced 0.3% to $21,190/t. Nickel prices closed 1.0% higher at $13,060/t.

In this issue
Paragon Care (PGC) | Walking the talk | BUY
Market Cap $206m | Current Price $0.76 | Valuation $1.20

A $70m capital raising underway will help fund a number of acquisitions and allow PGC to continue effecting its consolidation strategy. The new businesses are expected to be accretive to earnings and we believe the integration risks are mitigated to a degree by successful execution to date. We maintain a buy call on a $1.20 valuation (prior $1.15).

Recent Contacts & Presentations
Sino Gas & Energy Holdings Ltd (SEH), Australis Oil & Gas Ltd (ATS), Explaurum Ltd (EXU), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Melbana Energy Ltd (MAY), Genesis Minerals Ltd (GMD), Proteomics International Laboratories Ltd (PIQ), Ramelius Resources Ltd (RMS), MOD Resources Ltd (MOD), Greenland Minerals & Energy Ltd (GGG), Walkabout Resources Ltd (WKT), Marindi Metals Ltd (MZN), Volt Power Group Ltd (VPR), 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)

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