Morning Notes

09/03/2018 Argonaut Morning Note

Market Update & Important Indicators
U.S. stocks rose intraday, as the White House prepared to roll out widely debated tariffs on steel and aluminium imports. Major indexes wobbled around the flatline for much of the day, then climbed to session highs in the last hour of trading. Gains were broad, lifting all but one of the S&P 500's 11 sectors. The moves came as investors waited for further details on the Trump administration's proposed tariffs, which some fear could result in retaliatory measures from other countries. The president is expected to sign a decree this week laying out his plans, although many believe he will spare Canada and Mexico - two major trading partners for the U.S. - following debate within the White House and on Capitol Hill. The narrowing of the planned tariffs has helped stocks regain ground in recent sessions, putting major indexes on track for weekly advances. The Dow Jones Industrial Average added 94 points, or 0.4%, to 24895. The S&P 500 rose 0.4%, while the Nasdaq Composite advanced 0.4%. The U.S. gold price traded lower overnight, falling 0.2% to finish at 1321.60 US$/oz.

European stocks leapt to a one-week high after the European Central Bank offered a brighter assessment of economic growth in the eurozone, and as the euro retreated from intraday gains. The Stoxx Europe 600 index climbed 1.1% to 376.62, the best close since Feb. 28, FactSet data showed. All sectors rose, led by the consumer-goods group. France's CAC 40 index surged 1.3% to 5,254.10, its highest close since Feb. 7. Germany's DAX 30 index finished up 0.9% at 12,355.57, while the UK’s FTSE ended 0.6% higher at 7,203.

Asia-Pacific stocks rebounded, as markets in the U.S. and Europe stabilized overnight following weakness sparked by top White House economic adviser Gary Cohn's resignation. Stock prices have been volatile this week as investors tried to gauge what action will come from recent U.S. protectionist rhetoric. Hong Kong's Hang Seng Index, which saw seen some of the week's biggest declines, was up more than 1%. South Korea's Kospi index was up 1.3% and gains of at least 0.5% were logged in Taiwan and New Zealand. The Nikkei Stock Average faded in late trade and ended up 0.5% after finishing morning trading with a 0.8% gain. That market was aided early by an overnight pullback in the yen, after it rallied Wednesday in the wake of Mr. Cohn's resignation.

Gains built throughout the day for Australian stocks, allowing the S&P/ASX 200 to finish at session highs and reverse much of Wednesday's Cohn-fuelled selloff as regional equities rebounded. The index rose 0.7% to 5942.9, with sentiment helped by a much-stronger-than-expected January trade surplus. The banks were solid, with CBA the best performer at 1.4%. Still, a few stocks trading ex-dividend prevented the index from rising even more. The adjustment resulted in BHP Billiton falling 2%.

The London Metal Exchange’s 3-month copper contract traded lower overnight, slipping 1.7% to close at $6,833/t. The other base metals finished mixed. Tin prices closed up 0.9% to 21,629/t, whilst Zinc prices reduced by 0.9% to close at 3,227/t. Aluminium prices gained 0.5% to close at 2,086/t. Lead prices fell a further 1.4% to 2,336/t, whilst Nickel prices were weakest, dropping 2.4% to finish at 13,214/t.

In this issue
Matrix Composites & Engineering (MCE) | Leveraging existing expertise | HOLD
Market Cap $46m | Current Price $0.49 | Valuation $0.47

A pull back in MCE’s share price nearer to our $0.47 DCF valuation gives us cause to upgrade to a HOLD (prior SELL). We note that significant forecasting risk remains as the Company is in the infancy of its diversification away from the weak riser buoyancy market. However, we are encouraged by early success in penetrating new markets with LGS, growing SURF’s revenue contributions and securing work in civil & infrastructure, where the opportunity in bulk freight is particularly appealing.

Recent Contacts & Presentations
NTM Gold Ltd (NTM), Ausmex Mining Group Ltd (AMG), Matrix C&E Ltd (MCE), Austal Ltd (ASB), Decmil Group Ltd (DCG), Ventnor Resources Ltd, Ausdrill Ltd (ASL), Alice Queen Ltd (AQX), PNX Metals Ltd (PNX), Alliance Resources Ltd (AGS), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), 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)

Please read Argonaut's Important Disclaimers & disclosures

Log in to the client area below to download the full Morning Note PDF

Argonaut Morning Note