Market Update & Important Indicators:
The Dow Jones Industrial Average reversed course intraday as a rebound in technology shares failed to offset investor fears of more U.S. tariffs on Chinese goods. The blue-chip index lost 81 points, or 0.3%, to 25,334 in recent trading, after rising roughly 75 points earlier. The S&P 500 declined 0.1% and the technology-heavy Nasdaq Composite rose 0.4%. News that some administration advisers are urging President Trump to sharply increase tariffs against China renewed fears of a global trade fight hitting the markets. The
White House said it is planning on making an announcement later Wednesday on China. Trade worries have weighed on the stock market in recent months, keeping the Dow industrials and S&P 500 off the highs they hit in January. Shares of industrial companies shed 1.3% Wednesday, with heavy-equipment maker Caterpillar losing 3.7%. The US gold price was down 0.6% to record 1,215.50 US$/oz.
The Stoxx Europe 600 index ended down 0.5% at 389.84 as concerns about trade tensions between the U.S. and China hurt mining stocks while auto makers fell after Volkswagen reported another earnings hit from the diesel-emissions scandal. The high weighting of miners leaves the U.K.'s FTSE 100 as the worst performing index, down 1.2%. Germany's DAX fell 0.5% as Volkswagen shares lost 3.7%. France's CAC 40 fell 0.2%, Italy's FTSE MIB slid 1.9% while Spain's IBEX 35 was down 0.7%. The U.S. Federal Reserve announced a decision at 1800 GMT to stand pat on interest rates. The Bank of England is widely expected to raise interest rates by 25 basis points on Thursday.
The Shanghai Composite Index dropped 1.8% after some White House advisers urged President Donald Trump to sharply increase the tariffs proposed on some Chinese imports. The U.S. has already imposed 25% tariffs on $34 billion worth of Chinese imports and is on schedule to levy similar tariffs on an additional $16 billion of goods, probably this week or next. But the new recommendations would see tariffs as high as 25% on an additional $200 billion of Chinese imports, up from the 10% tariffs originally proposed for those goods. Chinese equities have felt the brunt of trade concerns, with the Shanghai Composite Index down 14.6% on the year. Elsewhere in Asia, Hong Kong's Hang Seng was also down, falling 0.8%, while Japan's exporter-heavy Nikkei was up 0.9% as the yen weakened against the dollar.
In a muted session, Australian stocks finished slightly lower to trail a number of markets in Asia Pacific as the heavily weighted banks weighed. A late retreat left the S&P/ASX 200 down 4.5 points at 6,275.7 after yesterday's 1.8-point gain. Collectively, the Big Four banks knocked about 14 points off the index, more than offsetting gains from mining and industrial stocks. Elsewhere, Janus Henderson skidded 7.8% to its lowest level in more than a year following its second-quarter report. Rio Tinto finished up 0.6% ahead of its just-out first-half report.
Base metal prices were down on the London Metal Exchange. Nickel was the biggest mover, down 3.2% to 13,493/t. The 3-month copper contract fell 2.1% and zinc fell 2.3%. Smaller losses were seen in aluminium that fell 1.5% to 2,030/t. Lead lost 1.3% to 2,113/t, as tin lost 1.2% to 19,925/t.
In this issue:
Saracen Mineral Holdings (SAR) | Group Reserves increase by 20% | HOLD
Market Cap $1,534m | Current Price $1.88 | Target Price $1.85
Saracen Mineral Holdings (SAR) has increased group Reserves by 20% to a record high of 2.5Moz contained. Carosue Dam (Karari and Whirling Dervish) reserves increased by 64% to 1.0Moz and Thunderbox increased by 7% to 980koz, after mining depletion of 105koz and 121koz respectively. The change to paste fill mining at Karari, which unlocks previously sterilised pillars, adds 115koz of reserves within this mine. Total group resources decreased by 5% to 8.6Moz contained, despite depletion of 438koz and the sale of 501koz from the King of the Hills and Red October assets.
Decmil (DCG) | Pipeline potential | BUY
Market Cap $163m | Current Price $0.94 | Valuation $1.35
There were no big surprises in DCG’s FY18 result, with revenue of $342m (we had $350m) and group EBITDA from continuing operations of $4.7m (we had $2.4m). Eyes were on the outlook though, where DCG has maintained guidance for revenue of at least $500m (underpinned by a solid order book and large potential pipeline). We expect the efforts to diversify into new sectors and geographies to pay off from FY19, make little change to our earnings forecasts, and maintain a valuation of $1.35. A positive macro view and valuation upside continues to support a BUY recommendation.
Recent Contacts & Presentations:
Antipa Minerals (AZY), SRG Ltd (SRG) Bowen Coking Coal (BCB), Birimian (BGS), Breaker Resources (BRB), Galena Mining (G1A), Valmec (VMX),Bryah Resources (BYH), Calima Energy (CE1) Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1), Peel Mining (PEX), Catalyst Metals (CYL), Vault Intelligence (VLT), Doray Minerals (DRM), Nzuri Coppoer (NZC), Bowen Coking Coal (BCB), Phosphagenics Limited (POH) Great Boulder Resources (GBR), 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)