Market Update & Important Indicators:
The Dow Jones Industrial Average slumped intraday, but pared some of its earlier losses, as investors weighed global trade negotiations, central bank moves and the latest round of corporate earnings results. The blue-chip index fell 0.3%, to 24,099, after dropping as much as 355 points earlier in the session. The S&P 500 added 0.3%, and the technology-heavy Nasdaq Composite rose 0.6%. The major indexes eked out small gains in April on the back of strong corporate earnings after being rocked by a bout of volatility earlier in the year. First-quarter earnings have largely topped expectations, but investors haven't rewarded beats at the same pace as in recent quarters. The U.S. Gold price fell by 0.86% overnight to finish at 1,303.60 US$/Oz.
European stocks posted a modest loss, as most of the region's markets were closed for the May Day holiday. The Stoxx Europe 600 index snapped a three-day win streak and ended marginally lower, down about 0.1% at 385.03, after finishing Monday trade up 0.2%. The U.K.'s FTSE 100 index rose by 0.1% to 7,520, and marked its highest close since Jan. 31, according to FactSet data. Stock markets were closed across most of Europe in observance of May Day or Labor Day, including in France, Germany, Spain and Italy.
Asia-Pacific equities turned higher, as earnings season for the banking sector began. Most markets in the region were closed for the Labor Day holiday. In Japan, the Nikkei Stock Average reversed modest early declines to end up 0.2%. Hitachi gained 6% and SoftBank added 0.7% after reporting earnings. The Japanese benchmark index was helped by a weaker yen. The stock moves came as U.S. President Donald Trump gave the European Union and some nations outside the bloc more time to negotiate deals that would exempt them from U.S. steel and aluminium tariffs. The tariffs are already in effect against China, Japan, Russia and others. U.S. and Chinese officials are meeting later this week to discuss trade.
Australian stocks logged a solid start to the new month as banks drove the benchmark index to a fresh seven-week closing best. Now up five out of the last six sessions, the S&P/ASX 200 gained 0.5% to 6015.9. The four largest banks accounted for a big chunk of the day's gain by points, led by a 2.4% advance for ANZ after its first-half results. Commonwealth Bank also picked up 1.9% despite a critical report released by the prudential regulator. Rio Tinto lagged, slipping 0.2%, after legal action was widened against the miner and former executives.
The London Metal Exchange’s 3-month copper contract fell 0.9% to 6707/t. The other base metals were mixed overnight. Lead prices fell by 1.2% to 2,294/t, whilst zinc prices declined 2.6% to 3,043/t. Aluminium finished only 0.2% higher at 2,260/t. Tin Prices gained 0.1% to record 21,340/t.
In this issue:
Gage Roads (GRB) | Momentum | BUY
Market Cap $77m | Current Price $0.088 | Valuation $0.090
Summer has been good to GRB, with a solid March quarter following the strong lead into Christmas. Own brand growth across all channels (independent bottle shops, national retailers and on-premise) demonstrates growing awareness of Gage Roads’ products. The events-based marketing strategy is working well, boosting confidence in the “return to craft” strategy. Our blended valuation climbs to $0.090 (prior $0.080) and we maintain a BUY call (upgraded yesterday) based on the expectation of margin and earnings growth in coming years, and the attractiveness of the craft beer segment of the liquor market.
Independence Group (IGO) | March Q results – A mixed result | SELL
Market Cap $3,034m | Current Price $4.92 | Target Price $4.15
Independence Group (IGO) released its March quarterly report with mixed results from the group’s assets. Nova achieved nameplate throughput of 1.5Mt and generated $52m free cashflow (FCF), however it is trending below the lower end of production guidance. Tropicana production was down 23% on planned lower milled grades and lower recoveries. Mining at Jaguar materially impacted mill feed resulting in 28% and 59% respective decreases in Zn and Cu production. Long Ni production was steady Q-on-Q at 1.4kt Ni in ore. Overall group underlying FCF was $56.5m (vs 11.6m in the December Q) and net debt decreased by $47.5m to $72.6m. SELL maintained with a $4.25 target price.
Recent Contacts & Presentations
Orthocell (OCC), Northern Minerals (NTU), 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), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), Sino Gas & Energy Holdings Ltd (SEH)