Market Update & Important Indicators
U.S. stocks were little changed Thursday, headed toward a quiet end to a turbulent first quarter for markets around the world. A rebound in oil prices, easy monetary policy and better-than-expected U.S. economic data left major indexes poised to end the quarter higher despite losses from the first six weeks of the year, when stocks fell sharply amid concerns about the global economy and an unclear course for the world's central banks. The Dow industrials were headed toward a first-quarter increase of 1.5%, while the S&P 500 was poised for a 0.8% gain. Many of the sectors hit the hardest at the start of the year, including materials companies, have led the recovery in recent weeks, while oil prices have gained more than 40% from their 2016 lows.
European stocks closed sharply lower, deepening losses for the first quarter, with bank shares under pressure while a rise in the euro weighed on exporters. The Stoxx Europe 600 fell 1.1% to 337.54. No sector gained; oil-and-gas, telecom and utilities struggled the most. After Thursday's downbeat action, the pan-European index ended the first quarter of 2016 with a 7.7% decline, its worst since a 8.8% drop in the third quarter of 2015. For the month, it was a better story for the Stoxx 600, logging a 1.1% gain in March, for its first monthly advance since November last year.
China stocks ended slightly up Thursday as investors weighed new liquidity, a strengthening yuan and fresh concerns over how the country's markets are operated. China's Shanghai Composite ended up 0.1%, and the smaller Shenzhen Composite Index rose 0.3%. MSCI Inc., which compiles the global stock benchmarks tracked by trillions of dollars, has been considering whether to add China's mainland-listed shares to its influential indexes. Chief among its concerns is how China sets investment quotas for foreign investors, how China restricts them from moving money in and out of the country, and how China recognizes the ownership of shares traded through Hong Kong brokerage firms.
Copper prices closed lower in London, tracking a fall in oil prices. The London Metal Exchange's three-month copper contract was down 0.5% at $4,881 a metric ton at the PM kerb close, hitting a new four-week low. Oil slumped Thursday, after data from the U.S. Department of Energy refocused investor attention on the market's global oversupply woes.
In this Issue
Gascoyne (GCY) | Simple and sound | SPEC BUY
Gascoyne Resources (GCY) completed a Pre-Feasibility Study (PFS) on its Dalgaranga Project, located in WA. The PFS ticks many boxes with high margins, quick pay-back, significant production and a 6-year project life. The study demonstrated Dalgaranga as a technically simple project with outstanding metallurgical properties and low start-up capex. Whilst the economics of the project is already robust, a full evaluation of near mine targets and regional exploration success could translate to longer life and / or expanded scale which will likely see increased corporate attention. A maiden Reserve of 10.1Mt @ 1.4g/t for 442koz was declared, above our expectation of ~400koz. Argonaut maintains a positive view on the stock given the quality of the project, modest valuations and management ownership (~20%). We maintain a SPECULATIVE BUY recommendation with an A$0.53 target price (was A$0.48) following the study.
Recent Contacts & Presentations
Evolution Mining (EVN), St Barbara (SBM), Troy Resources (TRY), Explaurum (EXU), Sino Gas & Energy (SEH), Western Areas (WSA), Finders Resources (FND), Carnarvon Petroleum (CVN), Threat Protect Australia (TPS), Austal (ASB), Paragon Care (PGC), Salt Lake Potash (SO4), Peet (PPC), Department 13 (D13), Actinogen Medical (ACW)
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