Market Update & Important Indicators:
The Dow Jones Industrial Average slid nearly 300 points intraday after the Trump administration made good on its plan to impose tariffs on steel and aluminium imports. Investors broadly sold off shares of big manufacturers and globe-spanning corporations over concerns that trade tariffs imposed on steel and aluminium products from Canada, Mexico and the European Union will ignite a trade war that could hurt corporate profits, push up inflation faster than expected and possibly disrupt the synchronized global growth upswing that fuelled much of the market's historic climb last year. The Dow industrials slid 252 points, or 1%, to 24,416 in recent trading. The S&P 500, which was also weighed down by weak earnings from discount retailers Dollar General and Dollar Tree, shed 0.8%. The Nasdaq Composite fell 0.3%, as shares of tech companies fared better than peers. The US Gold price declined 0.2% to 1,297.90US$/oz.
Investors yanked European stocks into the red, with a selloff in German and Spanish stocks leading the broader market lower on the final day of trading in May. In Germany, Deutsche Bank shares skidded and auto makers came under pressure as the U.S. imposed tariffs on European steel and aluminium. In Spain, Prime Minister Mariano Rajoy faced the possibility of being forced out of office. Germany's DAX 30 index tumbled 1.4% to end at 12,604.89, led by a selloff in shares of Deutsche Bank. The index closed at its lowest since late April, FactSet data showed. Spain's IBEX 35 sank 1.3% to end at a two-month low at 9,465.50. Losses in those market helped drag down the Stoxx Europe 600 Index 0.6%, ending at 383.06. The pan-European benchmark ended the month of May down 0.6%, a far cry from April's jump of 3.9%. Italy's FTSE MIB index ended with a mild loss of 0.1% at 21,784.18. In the fixed-income market, the country's 2-year bond yield fell 80 basis points to 0.96%, according to Tradeweb.
Wednesday's pain widely became gains for Asian stocks, though most remain lower for the week. Many are also logging declines for May, though an end-of-session rally in Chinese stocks allowed the Shanghai Composite to strongly rebound from Wednesday's 19-month closing low to log a slight monthly gain with a 1.8% advance. Most Asian markets rose, with China's Shenzhen A-Share index rising 1.5%, Hong Kong's Hang Seng up 1.4% and Japan's Nikkei 225 up 0.8%. Despite the rally, most Asian bourses recorded declines in May. Indian shares rose, tracking gains in other regional markets as well as hopes of better growth data. The S&P BSE Sensex climbed 1.2% to 35,322.38.
Australia's stock benchmark did enough to log a second-straight monthly gain, getting a lift from a region-wide market rebound after Wednesday's broad selloff. The S&P/ASX 200 rose 0.45% to 6011.9, giving it a 0.5% advance for May. Energy stocks jumped 2.3% on the overnight bounce in oil prices, leaving that sector with a 0.2% gain after last week hitting its latest three-year high. Materials rose 1.5%, but health care fell 0.5%.
Base metal prices were mostly up on the London Metal Exchange. The aluminium price gained 1.1% to 2,289/t, while the lead price increased 1% to 2,446/t. The 3-month copper contract climbed 0.2% recording 6,845/t. The nickel price gained only slightly by 0.6% to 15,158/t. Tin gained 0.1% to close at 20,630/t. Zinc lost 0.9% finishing at 3,098/t.
In this issue:
Sino Gas and Energy (SEH) |SEH receives and all cash offer from Lone Star
Market Cap $497m | Current Price $0.24 | Valuation $0.24 (Under Review)
SEH has received an all-cash takeover offer from Lone Star. The bid values the business at A$530m or A$0.25 which we believe is on the low side considering the progress SEH has made in unlocking value in its gas projects. This bid and acceptance by the SEH Board are likely to signal to the market the company is in play, and we expect other bids to emerge which may be more representative of SEH un-risked value. SEH’s JV partner’s (CNEML) parent has defaulted on a bond payment which potentially rules out a natural acquirer for SEH and may explain the smaller discount offered by Lone Star. Argonaut maintains a BUY recommendation, with a risked target price $0.24/share target price (under review) and an un-risked valuation of A$0.48
Recent Contacts & Presentations
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), 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)