Market Update & Important Indicators:
The Dow Jones Industrial Average gained 60 points Wednesday, following a 5-day losing streak. On Wednesday, major benchmarks opened higher but turned sharply lower in afternoon trading. Nine of the 11 sectors in the S&P 500 slumped, while the utilities and telecommunications—two areas generally considered safety plays because of their hefty dividends–climbed. The blue-chip index was down 1.8% in the last hour of trading, on track for its longest losing streak since March 2017, when the market fell for eight straight days. Overnight, the S&P 500 gained 0.2% and the Nasdaq Composite fell 1.7%. Despite a relatively strong start to the earnings season, even companies that have topped expectations haven't been rewarded at the same pace as in recent quarters, and some analysts have warned solid results may already be priced into the market. The US gold price fell overnight by 0.1% to finish at 1,322.60 US$/oz.
European stocks ended lower, erasing earlier gains, after U.S. 10-year Treasury yields jumped to the psychologically important 3% level, which is seen as a headwind for equities. The Stoxx Europe 600 index edged down 0.02% to close at 383.11. The pan-European benchmark traded around its highest level earlier in the day, but lost momentum in the final hours of the trading day. Germany's DAX 30 index fell 0.2% to 12,550.82, while France's CAC 40 index ended 0.1% higher at 5,444.16. The U.K.'s FTSE 100 was down by 0.6% to 7,379. The London benchmark was boosted by the energy sector as oil prices rose.
The Shanghai Composite jumped 2% in its best day in two months, and Hong Kong's benchmark fell 1.0%. Taiwan's Taiex fell a further 1.1%, while the Kospi dropped 0.4%. Elsewhere, benchmarks in the Philippines and Indonesia fell more than 1% and Malaysia's FBM KLCI shed 0.8% on the sharp overnight pullback in aluminum prices. But gains of at least 0.5% were logged in Japan and India.
A continued rebound by the banks helped drive broad gains among Australian stocks, taking the S&P/ASX 200 to a fresh one-month high on Tuesday. Finishing near the session peak, the index logged a gain of 0.6% to 5921.6, ahead of yesterday’s public holiday. The four biggest banks again managed solid gains, with Commonwealth Bank, ANZ and NAB each up by 1.1%. The materials sector was the only drag as it faltered in what has been a strong month for commodity prices, with Rio Tinto and Fortescue each down more than 2% and South32 slumping 9.6%, while Beach Energy was flat after narrowing its full-year production target.
Base metals were mixed overnight. The 3-month copper contract and lead were relatively unchanged, finishing at 6,970 US$/t and 2,302/t respectively. The aluminium price gained 0.9% to finish at 2,249/t, while the nickel price gained 1.2% to finish at 14,086/t. The biggest loss was seen in the zinc price, which declined 2.1% to 3,129 US$/t.
In this issue:
Western Areas (WSA) | MREP provides new opportunities | HOLD
Market Cap $1,026m | Current Price $3.62 | Target Price $3.30
Western Areas (WSA) released March Q results producing 4.8kt nickel in concentrate, below Argonaut’s forecast of 5.5kt. Mill production was impacted by lower feed grades, which were down ~3% Q-on-Q. Cash and receivables increased by $5m to $154m at 31 March, benefiting from an 8% increase in nickel prices. WSA announced the completion of commissioning of the Mill Recovery Enhancement Project (MREP) this week which should lift overall plant recoveries by 3-5%. This project opens up new opportunities for WSA including nickel sulphate production for the expanding battery market, exploitation of lower quality resources (i.e. New Morning) and licencing the technology to third parties.
Botanix (BOT) | March 2018 quarterly update| SPEC BUY
Market Cap $63m | Current Price $0.125 | Valuation $0.20
BOT posted a positive quarterly update as it progresses its drug trial programs for its cannabidiol (CBD) based drug development program. BOT completed its first study of a treatment for moderate to severe acne using CBD as the active pharmaceutical ingredient (API) with positive results. The BTX 1503 Phase 1b study achieved the program goals in that BTX 1503 has been proven to be safe and reduced the number of inflammatory and non-inflammatory acne lesions by an average of 47% after four weeks of treatment. BOT has stated that this result was better than any other FDA approved topical acne product for which data is available after four weeks of treatment. BOT had at the end of the quarter $15.1m of cash in the bank which makes it fully funded for the next part of the CBD development program.
Recent Contacts & Presentations:
Gold Road Resources (GOR), Global Energy Ventures (GEV), Advanced braking technology (ABV), Fortescue Metals Group (FMG), Helix Resources (HLX), Pantoro Limited (PNR), Alt Resources Ltd (ARS), Coziron Resources Ltd (CZR), 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)
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