Morning Notes

10/11/2017 Argonaut Morning Note

Market Update & Important Indicators
Investors' concerns over the prospects of a tax overhaul sent stocks sliding intraday. Major indexes pared declines in the second half of the trading day, after the Dow Jones Industrial Average had fallen as many as 253 points while investors parsed developments in a tax overhaul they have been anticipating since the election of President Donald Trump. The Senate plan to push through a different tax proposal than what the House released last week has caused some investors to question Republicans' ability to get a bill through to the White House. The Dow Jones Industrial Average shed 124 points, or 0.5%, to 23339. The S&P 500 was recently down 0.5%, while the Nasdaq Composite dropped 0.7%. The U.S. gold price traded higher overnight, adding 0.3% to finish at 1,284.40 US$/oz.

Europe's benchmark stock index logged its biggest daily loss in more than four months, as an early selloff gathered pace in the afternoon after U.S. stocks opened with losses. There were big moves in stock prices for certain companies reporting results, including for Burberry Group, whose shares tumbled by the most in five years. The Stoxx Europe 600 ended down 1.1% at 390.07, marking its biggest one-day percentage loss since June 29, according to FactSet data. On Wednesday, the regional benchmark slipped less than 0.1%. Germany's DAX 30 index closed 1.5% lower at 13,182.56, while France's CAC 40 gave up 1.2% to 5,407.75. The U.K.'s FTSE 100 dropped 0.6% 7,484.10.

In Asia, Tech-heavy Asian stock markets fell in afternoon trading. Japan's Nikkei Stock Average reversed a 2% gain to end the session 0.2% lower, after breaching 23000 for the first time since January 1992. The market's shift lower came as the yen rebounded. China reported higher-than-expected inflation figures for October, pointing to a firmer pickup in global demand. Hong Kong shares rose to a fresh 10-year high, amid strong China financials, despite a very volatile session. In early afternoon trade, as regional stocks narrowed gains while the Nikkei reversed into deep losses, the Hang Seng Index at one point pared most of the morning session's rise, before recovering to end the session up 0.8% at 29,136.

Australian shares continued to march higher, as broad strength cemented the S&P/ASX 200's break above the 6000-point mark. Finishing near the day's highs, the index rose another 0.6% to 6049.4 to the highest level since early 2008. The heavily weighted major banks lodged a third-straight session of solid gains, although NAB sank 3.4% as it traded ex-dividend. OZ Minerals was up a strong 2.5%, while BHP Billiton and Rio Tinto added 0.5% each following a rebound in Chinese iron-ore futures. The energy sector bucked the trend, faltering after oil's overnight decline.

The London Metal Exchange’s 3-month copper contract traded lower overnight, falling 0.7% to finish at $6,808/t. The other base metals finished mostly lower. Aluminium prices lost 0.7% to close at 2,076/t, whilst Zinc prices shed 0.2% to 3,229/t. Lead prices rose 0.3% to 2,511/t, but Nickel prices slipped 3.2% to close at 12,247/t on speculation that China’s top producer of stainless steel will cut prices. Tin prices were lower overnight, losing 0.2% to close at 19,520/t.

In this issue
Decmil (DCG) | Re-initiation | BUY
Market Cap $224m | Current Price $1.29 | Valuation $1.40

We re-initiate with a buy call and a $1.40 valuation. We believe FY17 was the low point and expect future newsflow to be positive. From sole exposure to WA resources, recent diversification now provides DCG with multiple, Australia-wide opportunities to benefit from the growing spend across the infrastructure, resources and renewables sectors.

Recent Contacts & Presentations
Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM), 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)

Please read Argonaut's Important Disclaimers & disclosures

Log in to the client area below to download the full Morning Note PDF

Argonaut Morning Note