Market Update & Important Indicators
U.S. stocks tumbled after weak manufacturing data in China fueled investors' worries about the world's second-largest economy. After calmer sessions on Friday and Monday, traders and investors said they were hoping last week's volatility had passed. However, signs of turbulence returned Tuesday. Still, newly released economic data in the U.S. has remained rather buoyant. Last Friday, the Commerce Department said U.S. consumer spending rose in July, and last Thursday a reading of gross domestic product showed a stronger second-quarter expansion than initially estimated.
Asian markets fell, pressured by disappointing manufacturing data that fueled concerns about growth in China and its neighboring economies. Stocks in Shanghai, which were at the epicenter of a global selloff, closed 1.2% lower at 3166.62. The market fell nearly 5% in the morning before paring losses and trading sideways in the afternoon. Analysts say Beijing-backed funds have been buying shares in recent sessions, which has cushioned losses. In Hong Kong, the Hang Seng Index finished down 2.2%, dragged lower by Chinese firms. The Hang Seng China Enterprises benchmark fell nearly 3%. The region is extending a turbulent stretch, as fears over a slowdown in China have weighed on commodities and worries about a devalued Chinese yuan–interpreted by some as a sign of Beijing's concern about slow growth–have triggered steep declines in stocks around the globe.
LME metals, with the exception of tin, closed lower in London, after poorer-than-expected manufacturing data out of China saw worries about future demand flare up again. Gold rose 0.5% to US$1,140/oz, while brent dropped 8.5% to US$49.56/bbl. The AUD depreciated further against the USD, buying US$0.70.
In This Issue
Paringa Resources (PNL) | SPEC BUY
Paringa Resources (PNL) is set to accomplish several key milestones on the Buck Creek thermal coal project in H2 CY15, including; attaining sales agreements, financing agreements, release of the Buck Creek No. 1 Mine Bankable Feasibility Study (BFS) and completion of the Buck Creek No. 2 Mine Scoping Study. The investment case for PNL remains strong. It has the largest undeveloped block of high quality thermal coal, in the highest growth coal basin in the US with forecast strong margins and significant corporate appeal from neighbouring coal majors (e.g. Alliance Resource Partners). Most recently, the Company identified the potential for reduced capex on No. 2 via box-cut and drift access. SPEC BUY maintained with a $0.85 target price.
Central Petroleum Limited (CTP) | NEGI Pipeline is Central to Central’s strategy | Initiation | Buy TP A$0.32
Central Petroleum Limited (CTP) is an oil and gas explorer and producer focused on gas production in the Northern Territory (NT) and central Queensland. CTP is positioning itself to take advantage of the looming uncertainty associated with east coast gas market supply, as long term supply contracts expire ~2016 and the start-up of Curtis Island LNG Projects places further restrictions to domestic gas supply.
Key to CTP’s strategy is the strongly supported Council of Australian Governments (COAG) led Northern Territory Eastern Gas Interconnect (NEGI) pipeline which will transport gas from the NT into the eastern seaboard market which is predicted to be critically gas short in the coming decade. Approval for NEGI will allow CTP to monetise its gas Reserves and Resources within its large acreage holding in the Amadeus and Georgina Basins.
Recent Contacts & Presentations
Medusa (MML), Resolute (RSG), Rift Valley (RVY), Troy (TRY), Tox Free Solutions (TOX), GR Engineering (GNG), Austal (ASB), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Karoon Gas (KAR), Austex Oil (AOK), UIL Energy (UIL), Tlou Energy (TOU), FAR Limited (FAR), Cooper Energy (COE), Central Petroleum (CTP), Senex Energy (SXY)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
