Market Update & Important Indicators:
Earnings results from dozens of big U.S. corporations pulled major stock indexes in different directions intraday. Some of the biggest insurance companies dragged the broader financial sector lower after reporting quarterly earnings. Meanwhile solid profits from consumer goods companies including Clorox pulled the consumer staples sector higher. The result was that Major U.S. stock indexes struggled to find direction the day after the Dow Jones Industrial Average rose above 22000 for the first time. The milestone marked its 32nd record of the year, as stocks benefited from a buoyant global economy, a weaker dollar and a solid earnings season. The blue-chip index rose less than 0.1% or 10 points to 22026. The S&P 500 and Nasdaq Composite both declined 0.2%. The U.S. gold price rose slightly overnight, jumping 0.1% to finish 1,267.90 US$/oz.
European equities finished slightly higher, aided by earnings-driven jumps for retailer Next, defence supplier Cobham and lender UniCredit. The Stoxx Europe 600 closed up 0.1% at 378.93 after a choppy session, putting the benchmark on track for a weekly gain of 0.2% with one trading session still to go. But some strategists are sounding downbeat, as the index stays well below its mid-May closing high around 396. More earnings reports were delivered. The Stoxx 600 had been in the red earlier, but it pared losses as U.K. blue-chip shares flipped higher. The U.K.'s FTSE 100 leapt 0.9% to end at 7,474.77.
In Asia, South Korean stocks led the way lower, with the Kospi down 1.7% after recently topping highs set in 2011. A big pressure point was index giant Samsung Electronics, which fell 2.5%. For the market at large in Korea, the prospect of higher corporate and personal income taxes under the country's new leadership is also weighing on sentiment, said Andrew Bresler, deputy head of sales trading for Asia-Pacific at Saxo Capital. South Korea's government is planning to raise taxes on wealthy individuals and large companies, the first increase in the country's corporate-tax rate since 1991. The stock slide also fuelled morning declines in the country's well-performing currency. The dollar was recently up 0.3% versus the won amid potential trade tensions between the U.S. and South Korea. Japan's Nikkei and Hong Kong's Hang Seng fell 0.3% while Taiwan's Taiex declined 0.5% after hitting 27-year highs a day earlier.
Australian stocks pulled back for a second day as commodity and many bank stocks again dropped. However, the decline was matched by broader weakness in the region as some profit-taking took hold. Down throughout the session, the S&P/ASX eased 0.2% to 5735.10. An overnight pullback in iron-ore prices also impacted miners throughout the day.
The London Metal Exchange's three-month copper contract was unchanged overnight finishing at $6,352/t. The other base metals were mixed. Nickel prices rose 0.3% to 10,335/t, whilst lead prices jumped 0.7% to 2,345/t. Tin prices also gained overnight, jumping 0.2% at 20,770/t. Falling for the day, aluminium prices shed 0.4% to 1,894/t, whilst zinc prices were weaker by 0.2% at 2,782/t.
In this Issue:
Northern Star Resources (NST) | The stars are aligning
Market Cap $2800m | Current Price $4.67
Northern Star (NST) delivered a substantial update to its Resources and Reserves plus a corporate review which forecasts growth to 600kozpa and beyond by FY20. NST’s total reserves have increased to 3.5Moz (from 1.9Moz in FY16) which increases mine life to around 6-7 years, from 3.5 previously. We also see longer term visibility for mine life extensions out to 10 years from the combined M+I resource of 6.3Moz which increased by +28% YoY. Going forward NST sees production rising to 550-600kozpa in FY19 and ~600kozpa longer term. Armada contributed minimal ounces to R&R in this update, however we expect additional ounces to be added from this and the newly discovered Zodiac lode. We will be looking for additional detail on how these growth options will be achieved at the upcoming Investor Day on August 7. NST remains our key pick in the gold space and we re-iterate our BUY recommendation and our target price of $5.25.
Recent Contacts & Presentations:
Wellard Limited (WLD), Bryah Resources Ltd (BYH), Auris Minerals Ltd (AUR), Gage Roads Brewing Co Ltd (GRB), Stavely Minerals Ltd (SVY), Orbital Corporation Ltd (OEC), 4Ds Memory Ltd (4DS), Kin Mining NL (KIN), Pharmaust Limited (PAA), Botanix Pharmaceuticals Ltd (BOT), Dimerix Ltd (DXB), Metro Mining Ltd (MMI), Paringa Resources Ltd (PNL), Independence Group NL (IGO), MZI Resources Ltd (MZI), Transerv Energy Ltd (TSV), Emmerson Resources Ltd (ERM), Antipa Minerals Ltd (AZY), Echo Resources Ltd (EAR), Sovereign Metals Ltd (SVM), Calidus Resources Ltd (CAI), Great Boulder Resources Ltd (GBR), Finders Resources Ltd (FND)
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