Morning Notes

04/10/2017 Argonaut Morning Note

Market Update & Important Indicators
U.S. stocks extended gains intraday as upbeat car-sales data and a rise in airline stocks helped lift major indexes toward fresh records. Major auto makers posted solid sales gains in September, a boost to the industry after months of declining results. The gains helped lift broader indexes. The Dow Jones Industrial Average rose 72 points, or 0.3%, to 22630. The S&P 500 and the Nasdaq Composite gained 0.1%. The rise built on Monday's records, which came as data showed that U.S. manufacturing activity reached a 13-year high in September, exceeding expectations. That followed solid readings in China and Japan earlier in the week. The U.S. gold price traded higher overnight, firming slightly to close at 1,271.10 US$/oz.

European stock markets closed with small gains after trading in tight ranges, as investors absorbed developments in Catalonia after the weekend's chaotic independence vote. The Stoxx Europe 600 index rose 0.2% to end at 390.72, holding near its highest level since mid-June and rising for a ninth straight session. On Monday, the pan-European index rose 0.5%, boosted by a weaker euro, after the Catalan referendum descended into violent clashes between voters and police. Catalan leaders have said they are considering making a declaration of independence this week, given around 90% of the voters in Sunday's ballot supported a split from Spain. But Spain's central government has declared the vote illegal, and Justice Minister Rafael Catalá has warned that Madrid will do "everything possible" to prevent a secession. France's CAC 40 index rose 0.3% to finish at 5,367.41, while the U.K.'s FTSE 100 index tacked on 0.4% to end at 7,468.11. German stock markets were closed for trade in observance of German Unity Day. The DAX 30 on Monday scored a record closing high.

Asian shares were broadly higher, with Hong Kong's Hang Seng Index rising the most in percentage terms in more than 16 months, gaining 2.2%, led by strength in Chinese banks, which jumped after the PBOC cut their reserve ratios to stoke lending to small- and medium-sized enterprises. Elsewhere in the region, the Nikkei closed up 1.1% at its best level in more than two years, helped by a weaker yen. The Philippines' PSEi index touched its second-highest intraday level on record, before ending up 0.7%, while India's Sensex was up about as much.

Weakness in financial and resources companies kept the Australian share market in negative territory, snapping a run higher in the last three sessions. After leading the region the day before, the S&P/ASX 200 lagged to settle 0.5% lower at 5701.4. The major banks, drivers of the market on Monday, were each lower, while QBE Insurance stumbled 3.5% after it warned of a hit to earnings from the recent Atlantic hurricanes and Mexican earthquakes. Energy stocks fell following the overnight pullback in crude prices. Only the telecom sector was higher for the day, with Telstra recovering 0.3% and Vocus gaining 1.7% after naming its next chairman.

The London Metal Exchange’s 3-month copper contract traded higher overnight, gaining 0.4% to finish at $6,520/t. The other base metals also finished stronger. Nickel prices rose 2.2% to 10,533/t, while aluminium prices gained 1.5% to 2,114/t. Lead prices jumped 2.6% to close at 2,585/t, with Zinc prices added 1.2% to 3,314/t. Tin prices traded 0.5% higher at 20,954/t.

In this issue
Gold: Watermelon Seed Nugget Patch
The gold sector is alight with the prospects of an expansive gold nugget conglomerate horizon in the Pilbara region of Western Australia. The excitement stems from the discovery of an outcropping gold rich conglomerate by Novo Resources (TSX-V:NVO) at the Purdey’s Reward prospect (earning 50%) south of Karratha in July 2017. A bulk sample was rich in coarse, watermelon seed shaped nuggets. The prospective conglomerate outcrop has been traced over a ~10km strike littered with prospector workings. More recently, De Grey Mining (ASX:DEG) reported the occurrence of similar watermelon shaped gold nuggets adjacent to a conglomerate outcrop at Louden’s Patch, 100km to the east of Purdey’s. It is interpreted to be in the same geological unit and is coincident with historic alluvial workings. Last week Novo released a live stream showing the excavation of gold bearing rocks.

Recent Contacts & Presentations
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), Minotaur Exploration Ltd (MEP), Ausdrill Ltd (ASL), Neometals Ltd (NMT), PNX Metals Ltd (PNX), Northern Minerals Ltd (NTU), New Century Zinc Ltd (NCZ)

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