Market Update & Important Indicators:
U.S. stocks pulled back after Friday's rally capped their best quarter of the year. Stocks briefly pared losses after a gauge of U.S. manufacturing rebounded in September. The Institute for Supply Management said its manufacturing index increased last month, after a contraction in activity in August. The results bring hope for manufacturers that have been hurt by weak business spending and sluggish economic growth. Stocks that investors consider bond proxies because they tend to pay steady dividends, such as utilities, were among the biggest decliners. The utilities sector of the S&P 500 lost 1.2% after falling 6.7% in the third quarter — its biggest quarterly drop since 2009. Real-estate shares fell 1.6% Monday. Energy shares fell even as U.S. crude oil hung onto last week's rally, settling up 1.2% at $48.81 a barrel Monday. An agreement by the Organization of the Petroleum Exporting Countries to cut oil production sparked a lift in oil prices last week.
London's export-heavy FTSE 100 index, which tends to benefit from a weaker currency, rose 1.2%, leading gains in European stock markets. In addition, data showed the U.K. manufacturing sector continued to expand in September. Even with German markets closed for a holiday, investors continued to follow headlines around Germany's largest lender. The Wall Street Journal had reported in September that the U.S. Justice Department proposed Deutsche Bank pay $14 billion to reach a settlement related to its dealings in mortgage securities ahead of the financial crisis.
Asian shares were broadly higher Monday, tracking Friday's gains on Wall Street after Deutsche Bank seemed to catch a break from the U.S. Department of Justice. Japan's Nikkei Stock Average rose 0.9%. In Hong Kong, the Hang Seng Index was higher by about 1.1%. The South Korean and Malaysian markets were shut for holidays Monday, while Chinese markets were shut for the weeklong National Day break. Japanese banks are as eager to lend as they were during a 1980s asset-price bubble, suggested the Bank of Japan's latest September tankan survey, the index measuring lending attitude came to plus 25, the highest since the plus 26 level seen in December 1989. Meanwhile, Japan's domestic sales of new cars, trucks and buses increased 3.7% from a year earlier in September, the Japan Automobile Dealers Association said Monday.
A rebound by major banks helped drive Australia's stock market higher on Monday, as investors brushed off worries about the financial health of Deutsche Bank, Germany's biggest lender. A jump in energy shares driven by higher oil prices added to broad gains for the local market. Reversing Friday's decline, the S&P/ASX 200 closed 42.6 points, or 0.8%, higher at 5478.5–the highest closing level since Aug. 26. Activity was lighter than usual because of public holidays in parts of the country. The Reserve Bank of Australia's policy committee is scheduled to meet on Tuesday, although economists are expecting the central bank will again leave the benchmark cash rate at a record low 1.5%. It will be the first meeting since Philip Lowe took the helm as governor of the bank.
On the London Metal Exchange, copper for delivery in three months was down 1% at $4,819/t. Aluminium was up 0.2% at $1,669/t, zinc was up 1.1% at $2,404/t, lead was down 1.4% at $2,091/t, tin was down 0.5% at $20,060/t and nickel was down 2.2% at $10,300/t.
In this Issue:
OZ Minerals (OZL) | Prominent Hill kept in the dark | HOLD
Market Cap $1,824m | Current Price $6.02 | Target Price $6.10
OZ Minerals (OZL) has entered into its fifth day without power at the Prominent Hill mine after strong storms damaged South Australia’s electrical infrastructure last week. In an announcement this morning, OZL stated that power is expected to be restored to the site over the next seven to 10 days. As a result of the extended outage, Prominent Hill is expected to miss 2016 gold production guidance of 125-135koz and hit the lower end of copper guidance of 115-125kt. Argonaut maintains a HOLD recommendation with a revised target price of $6.10 (from $6.15).
Recent Contacts & Presentations:
Dakota Minerals Ltd (DKO), Breaker Resources NL (BRB), Bard1 Life Sciences Ltd (BD1), Alto Metals Ltd (AME), Birimian Limited (BGS), Antipa Minerals Ltd (AZY), Vault Intelligence Ltd (VLT), Noxopharm Ltd (NOX), Gage Roads Brewing Co. (GRB), West African Resources (WAF), Cedar Woods Properties Ltd (CWP), Sino Gas & Energy Holdings Ltd (SEH), Salt Lake Potash Ltd (SO4), Kalina Power Ltd (KPO), 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)