Morning Notes

16/05/2018 - Argonaut Morning Note

Market Update & Important Indicators:

U.S. stocks fell and bond yields rose intraday amid mixed data from key global economies and as trade negotiations between the U.S. and China continued. In the U.S., data have also been coming in somewhat below expectations in recent months.  The Dow Jones Industrial Average declined 220 points, or 0.9%, to 24679, on track to break an eight-session winning streak. The S&P 500 dropped 0.7%, and the Nasdaq Composite fell 1%.  Through Monday, the blue-chip index had risen 974 points, or 4.1%, since May 3 as stocks appeared to be regaining their footing after several months of rocky trading. But declines pushed the Dow industrials back into negative territory for the year. A number of factors, including trade concerns, geopolitical tensions, signs of a pickup in inflation and peaking corporate earnings, have kept some investors on the sidelines. 

European stocks ended a volatile session slightly higher, as traders digested a mixed bag of economic data and a deluge of corporate news. Italian stocks advanced as talks between two antiestablishment parties continued. The Stoxx Europe 600 index rose 0.1% to close at 392.37, after swinging between small gains and losses throughout the day.   Italy's FTSE MIB index rose 0.3% to 24,297.17 as traders continued to watch developments in Italian politics. Germany's DAX 30 index fell 0.1% to 12,970.04, while France's CAC 40 rose 0.2% to 5,553.16. The U.K.'s FTSE 100 index ended 0.2% higher at 7,722.98 the indecisive trading action came after a raft of economic data. Eurozone gross domestic product numbers met expectations, while German economic sentiment figures missed forecasts. In the U.K., the unemployment rate remained at a 42-year low.

Asian markets saw some of the widest selling in stocks since the global rally kicked off a week and a half ago after the goldilocks U.S. jobs report. Benchmarks in New Zealand, Australia and Taiwan finished at session lows while Japan, South Korea and Hong Kong ended near theirs. Tech stocks were a noted weak point in a number of the markets. But small caps led gains in China, where indexes ended at session highs with the ChiNext jumping 1.5%. The Philippines' benchmark jumped 1.7% following a three day weekend and Friday's 2.4% bounce. Set to match the PSEi on the downside was Indonesia, where the JSX was down 1.7% on fresh weakness in the rupiah. South Korea's tech-heavy index dropped by 0.7%. Hong Kong's Hang Seng Index fell 1% while Japan's Nikkei Stock Average finished down 0.2%.

A steady slide into the close was seen for Australian stocks as Asia Pacific equities worsened as trading progressed, ending more than a week of broad gains. For the S&P/ASX 200, the 0.6% drop to 6097.8 was only its fifth decline in 22 sessions. It also followed Monday's challenge of 10-year highs set in January. Resource stocks finally cooled some -- energy fell 1% -- while Telstra again weighed, falling a further 5.6%. Meanwhile, NAB fell 3.4% while going ex-dividend. IT was the only sector up. 

The London Metal Exchange’s 3-month copper contract fell 0.8% to 6,856/t. The other base metals were mainly mixed overnight. Lead prices added 1.7% to 2,374/t, whilst zinc prices decreased 0.9% to 3,036/t. Aluminium finished 1.7% higher at 2,316/t. The Nickle price gained 3.1% overnight to 14,431/t. Tin Prices gained only 0.1% to record 21,018/t.

In this issue:

Sandfire Resources (SFR) | Smells like a discovery at Morck’s Well | Recommendation under review:                                                                                Market Cap $1,305m | Current Price $8.68 | Target Price under review

On the ninth anniversary of the original DeGrussa discovery (14th May 2009) Sandfire Resources (SFR) could be on the cusp of its third discovery in the Doolgunna region. Aircore (AC) drilling has intercepted supergene and oxide copper mineralisation in three holes at the Morck’s Well prospect, ~22km southwest the 100% owned Degrussa mine. Morck’s Well looks to be on the same stratigraphic horizon as the Monty deposit and the prospective Homestead (100% SFR) to Vulcan (Enterprise JV) trend. It is on the recently entered farm-in joint venture (JV) with Auris Minerals Limited (ASX: AUR) and Fe Limited (ASX: FEL), whereby SFR can earn a 70% interest via a minimum exploration spend of $2m in the first 2 years and $1.5m in cash or scrip. SFR will follow up with ground EM to refine massive sulphide targets and RC drilling below AC intercepts.

Recent Contacts & Presentations:

Bowen Coking Coal (BCB), Phosphagenics Limited (POH) Great Boulder Resources (GBR), Orthocell (OCC), Northern Minerals (NTU), ABM Resources Ltd (ABU), Vital Metals Ltd (VML), Todd River Resources Ltd (TRT), Pacific Energy Ltd (PEA), Carnarvon Petroleum Ltd (CVN), Australian Mines Ltd (AUZ), Australian Finance Group (AFG), Paladin Energy Ltd (PDN), Cooper Energy Ltd (COE), Medibio Ltd (MEB), Botanix Pharmaceuticals Ltd (BOT), Salt Lake Potash Ltd (SO4), Golden Mile Resources Ltd (G88), 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)

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