Morning Notes

10/03/2015 Argonaut Morning Note

Market Update & Important Indicators

U.S. stocks rose Monday, rebounding from Friday's selloff, as investors continued to grapple with the prospect of higher interest rates. The rally followed a sharp selloff on Friday, when a strong jobs report raised expectations that the Federal Reserve may increase interest rates soon. Investors on Monday, however, shook off those worries and the Dow added 139 points (or 0.8%) to 17,996, while the S&P 500 climbed 0.4% to 2,079.

Investors have been piling into U.S. assets, and the dollar, in expectations that stronger data would move the Federal Reserve to raise interest rates. At the same time, central banks in the eurozone and Japan have been easing policy to juice growth and ward off deflation, which has weighed upon their respective currencies. On Monday, the European Central Bank began its bond-buying program, which is expected to weaken the common currency. The euro slipped 0.1% against the dollar to $1.0853, just above its lowest level since September 2003.

European stocks fell in early trading on Monday, tracking a selloff in the U.S. after Friday's positive jobs report further fuelled expectations the Federal Reserve will raise interest rates this year. The Stoxx Europe 600 was 0.7% lower in early trade, having closed at a fresh seven-year high on Friday. Europe's stock markets have racked up strong gains so far this year after the European Central Bank in January announced a massive bond-buying stimulus program, which began yesterday.

Stocks across Asia fell Monday on concerns that the Federal Reserve would increase interest rates sooner rather than later, dragging down benchmarks by more than 1% in India, Indonesia and Australia. China's mainland shares bucked Monday's regional trend however, as investors stepped up buying of financial stocks on domestic media reports that banks will be allowed to venture into the stockbroking business. The Shanghai Composite Index jumped 1.9% to 3302.41. The Nikkei Stock Average was down 1.0% to 18,791, with investors also assessing the latest reading of the domestic economy. Gross domestic product expanded an annualized 1.5% in the quarter over the preceding three-month period, compared with a preliminary estimate of 2.2% growth. The economy grew by just 0.4% on an annualized basis in the October-December quarter, after contracting during the previous two quarters.

Copper closed up a strong 2.2% on the LME overnight, with most other base metals following suit. However Brent crude dipped 2.0% to $58.56/bbl, while gold inched down 0.2% to $1,167/oz.

In This Issue

AWE Limited (AWE)
AWE’s Perth Basin Senecio-3 flow test, of the never before tested Kingia interval, achieved an average gas flow rate of 12.3 mmscf/d with no stimulation. This is a stellar result which has moved the well past the threshold of commerciality into NPV positive territory. In addition, the gas was mainly methane with ~2% CO2 making it pipeline quality with very little processing required. The Senecio-3 well is located within 7km of the existing, underutilised Dongara gas plant and can easily be tied-in and monetised. AWE is investigating options to accelerate tie-in to the Dongara facility.

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