Market Update & Important Indicators
U.S. stocks slipped Monday after major indexes finished last week with a trifecta of records. A flurry of earnings reports released before the opening bell sparked swings in individual stocks. With nearly 200 S&P 500 companies on this week's earnings calendar, according to FactSet, analysts and investors expect corporate news to continue to drive much of the action in the coming days. While some sectors like the insurance industry are expected to report weaker than expected results than in previous years, partially because of damage from hurricanes earlier this year, many are looking through the one-time hits and still expecting robust growth into 2018. The Dow Jones Industrial Average fell less than 0.1%. The S&P 500 lost 0.2% and the Nasdaq Composite edged down 0.4%. All three indexes closed at fresh highs Friday. The U.S. gold price traded higher overnight, rebounding 0.2% to finish at 1,282.00 US$/oz.
Spanish stocks fell Monday as the political standoff between Madrid and the Catalan region wore on, but a drop in the euro appeared to provide a lift to other European markets. The Stoxx Europe 600 index ended 0.2% higher at 390.74, for a second straight session of gains. In Madrid, the IBEX 35 gave up 0.6% to 10,161.40 for its lowest close since Oct. 10. Germany's DAX 30 index rose 0.1% to end at 13,003.14 and France's CAC 40 added 0.3% to 5,386.81. In London, the FTSE 100 ended slightly higher at 7,524.45. Italy's FTSE MIB rose 0.1% to 22,379.16 after voters in two regions in the northern part of the country backed more autonomy.
In Asia, Japan's Nikkei Stock Average rose 1.1%, rounding out its longest-ever winning streak with a 15th session of consecutive gains, after Japanese Prime Minister Shinzo Abe won a national election by a landslide. While polls had largely been in Mr. Abe's favor, his election win raised investor hopes of continued market-friendly monetary policies and economic reforms. Japan's economy has grown continuously for the past year-and-a-half, the longest stretch for more than a decade. Hong Kong's Hang Seng Index reversed its opening gains to trade down 0.6% as investors turned cautious on Chinese banks ahead of their earnings releases this week and declines in property stocks weighed on the index.
Steady, but modest, afternoon selling resulted in Australian stocks ending an 8-day winning streak, the longest since mid-2016. In underperforming most of the region and finishing at session lows, the S&P/ASX 200 fell 0.2% to 5894 after rising 4% the prior 2 weeks. Except for NAB, the major banks were lower while miners were also weak and Vocus surrendered an early advance to finish down 0.4%. But AWE surged 7.7% in the wake of positive test results at a gas discovery in Western Australia.
The London Metal Exchange’s 3-month copper contract traded lower overnight, falling 0.2% to finish at $6,952/t. The other base metals also finished lower. Aluminium prices lost 1% to close at 2,124/t, whilst tin prices dropped 1.4% to 19,657/t. Zinc prices slipped 0.6% to 3,152/t, while Lead prices lost 0.1% to 2,459/t. Nickel prices were flat overnight, closing at 11,671/t.
In this issue
Saracen Mineral Holdings (SAR) | Bursting out of the gate in Q1 | HOLD
Market Cap $1,077m | Current Price $1.34 | Target Price $1.35
Saracen (SAR) released September Q results with group production of 80.3koz, in line with the June Q, with an 11% decrease in all-in sustaining costs (AISC) to A$1,008/oz. Annualised production is tracking at 321koz, well above the 300koz guidance for FY18. However, SAR is resisting an early upgrade, taking a wait-and-see approach on the performance from the high/grade nuggetty Kailis pit which comes on line in the current Q. Cash and bullion increased by $15.3m QoQ to $60.5m. Argonaut maintains a HOLD recommendation and a $1.35 target price.
Recent Contacts & Presentations
Gascoyne Resources Ltd (GCY), Southern Cross Electrical Ltd (SXE), MOD Resources Ltd (MOD), Meteoric Resources NL (MEI), Emmerson Resources Ltd (ERM), Gage Roads Brewing Ltd (GRB), Otto Energy Ltd (OEL), Whitebark Energy Ltd (WBE), MZI Resources Ltd (MZI), Gascoyne Resources ltd (GCY), NTM Gold Ltd (NTM), Novo Resources Ltd (NVO:TSX), Alice Queen Ltd (AQX), Melbana Energy Ltd (MAY), TOX Free Solutions Ltd (TOX), Artemis Resources Ltd (ARV), Apollo Consolidated Ltd (AOP), Vault Intelligence Ltd (VLT), Fleetwood Corp Ltd (FWD), DTI Group Ltd (DTI), Calima Energy Ltd (CE1), Austal Ltd (ASB), Indoor Skydive Australia (IDZ), OZ Minerals Ltd (OZL), NorWest Energy Ltd (NEW), Berkut Minerals Ltd (BMT), Draig Resources Ltd (DRG)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
