Morning Notes

12/07/2018 Argonaut Morning Note

Market Update & Important Indicators

U.S. stocks slumped as concerns over escalating trade tensions and falling oil prices outweighed optimism about the upcoming earnings season. The Dow Jones Industrial Average lost 0.9%, while the S&P 500 declined 0.7% and the technology-heavy Nasdaq Composite dropped 0.4%. The indexes are on track to break a four-session winning streak and remain modestly higher for the week. The Trump administration said late Tuesday that it would assess 10% tariffs on an additional $200 billion in Chinese goods. The tariffs, which wouldn't come into effect for at least two months, cover a variety of Chinese products including consumer goods. China called the move "totally unacceptable" in a statement attributed to an unnamed ministry spokesman and vowed to roll out unspecified countermeasures. Despite the sharp declines, many investors remain bullish on the energy sector, which has seen the largest increase in earnings estimates for the second quarter, according to Factset. Some investors, though, are worried that product-specific tariffs could lead to price increases for U.S. consumers and put pressure on the Federal Reserve to raise interest rates. And the latest round of economic data showed firming inflation, as a gauge of U.S. business prices rose in June. The producer-price index, a measure of the prices businesses receives for their goods and services, rose 3.4% from the year before, the largest annual increase since November 2011, the Labor Department said Wednesday. The US gold price fell 1.1% to 1,241.0 US$/oz.

Europe shares stayed in the red in afternoon trading as trade fears and tensions between the U.S. and Germany at the NATO summit weighed on the region's main indices. The Stoxx Europe 600 fell more than 1%, or 4.57 points to 381.68 while the DAX and CAC-40 also dropped more than 1%.

Stocks and commodity prices fell sharply as concerns over escalating trade tensions threatened to erase the week's gains. Hong Kong's Hang Seng dropped 1.3% amid losses in tech companies and China's Shanghai Composite Index fell 1.8%, snapping a three-day winning streak. Japan's Nikkei fell 1.2% and South Korea's Kospi was down 0.6%.

Australian stocks didn't escape the selling seen across the region as trade tensions between the world's two biggest economies continue to escalate. The S&P/ASX 200 fell 0.7% at 6215.6, led by a 3.8% slump in utilities after a consumer watchdog recommended a sweeping overhaul of the electricity market. That's the biggest decline in 3 years. Mining and energy each fell 1%. Meanwhile, Australia's 4-biggest banks recovered from their worst levels of the day after a fairly upbeat speech from the prudential regulator but were still down 0.5-0.8%. Only consumer stocks managed to finish in the green.

Base metal prices were down on the London Metal Exchange. The largest declines were seen in lead and the 3-month copper contract that lost 5.3% and 3.0%, respectively. Zinc finished 2.6% lower at 2,586/t, while nickel and tin both lost 1.9% to finish at 13,785/t and 19,456/t respectively. The price of aluminium declined 0.9% to 2,098/t. 

Recent Contacts & Presentations:

Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1), Peel Mining (PEX), Catalyst Metals (CYL), Vault Intelligence (VLT), Doray Minerals (DRM), Nzuri Coppoer (NZC), 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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