Market Update & Important Indicators
U.S. stocks fell as investors broadly retreated from risk Tuesday afternoon. The Dow declined 105 points (-0.6%) and the S&P500 fell 14 points (-0.7%). Investors have been cautious ahead of a series of upcoming events this month, including the U.S. election, the rest of the third-quarter earnings season and meetings of the Federal Reserve and Bank of England later this week.
The CBOE Volatility Index, which measures investors' expectations for stock swings in the next 30 days, rose 13% to 19.32 and was on track to close at its highest level since June 27, shortly after the Brexit vote. Tuesday's declines extended a weak stretch for U.S. stocks. The Dow fell for a third straight month in October, its longest monthly losing streak since 2011. The index declined 1.6% in the three months through Monday and hasn't hit a new high since mid-August.
European stocks ended sharply lower on Tuesday, as several major companies turned in disappointing financial results and as investors fretted over the U.S. presidential election. The FTSE declined 0.5%, the DAX was off 1.3% and the CAC fell 0.9%. The Stoxx Europe 600 index ended close to its intraday low, down 1.1% at 335.33.
Asian markets were mixed Tuesday after the release of encouraging economic data from China and the decision by the Bank of Japan to largely hold its policies steady. Hong Kong's Hang Seng Index was up 0.9% and the Shanghai Composite was 0.7% higher. The Hang Seng China Enterprises Index, which tracks large mainland Chinese companies trading in Hong Kong, was up 1.5%. All three indexes were buoyed by better-than-expected data on Chinese manufacturing activity. China's official manufacturing purchasing managers index rose to 51.2 in October from 50.4 in September, adding to signs that the world's second-largest economy is stabilizing.
Base metals, with the exception of nickel, were stronger on the LME overnight, although oil prices declined. WTI fell 0.4% to $46.67/bbl, while Brent declined 1.0% to $48.14/bbl. The political uncertainty in the U.S. helped gold add 0.8% to $1,288/oz.
In this Issue
Northern Star (NST) | The Price of faith in mine life | BUY
Market Cap $2,468m | Current Price $4.11 | Target Price $4.43
Northern Star (NST) delivered a lower Sept Q, producing 110koz @ AISC A$1,091/oz (-15% on production, +3% on costs vs the Jun Q). Group production was impacted by the sale of Plutonic and unplanned downtime of the Jundee pebble crusher. All other operations either exceeded June Q output or were broadly in-line. Free cashflow from operations was $24m (down from A$64m in Jun Q), impacted by lower gold sales (-21% q-o-q). Despite the production setback, NST maintained its full year guidance of 485-515koz. We have reviewed our model factoring in an extension to mine life at Jundee. We upgrade to BUY (from SELL) and increase our valuation to $4.43 (prior $3.45).
Recent Contacts & Presentations
Austal Limited (ASB), Agrimin Ltd (AMN), Stavely Minerals Ltd (SVY), MGC Pharmaceuticals Ltd (MXC), Vital Metals Ltd (VML), Tox Free Solutions Ltd (TOX), Swick Mining Services Ltd (SWK), Davenport Resources Ltd (DAV), Orthocell Ltd (OCC), BC Iron Limited (BCI), ALT Resources Ltd (ARS), Gascoyne Resources Ltd (GCY), Dacian Gold (DCN), Orocobre Ltd (ORE), Alchemy Resources Ltd (ALY), Acacia Coal Ltd (AJC), Minotaur Exploration Ltd (MEP), Northern Minerals Ltd (NTU), Walkabout Resources Ltd (WKT), Antipa Minerals Ltd (AZY), Noxopharm Limited (NOX), Botanix Pharmaceuticals Ltd (BOT), Emerald Resources NL (EMR)