Market Update & Important Indicators
Global stocks fell as an uncertain global economic picture kept investors cautious. Downbeat economic readings in the U.S. and Europe curbed investors' appetite for stocks and other riskier assets, pushing down major indexes that posted their highest closing levels of the year last week. Every sector of the S&P 500 fell. Utilities, one of the year's biggest gainers, were off, leading the declines. Health-care shares also dropped more than the broader market. Central banks have stabilized markets after a rocky start to the year, but U.S. equity valuations remain high and concerns around China and oil prices will continue to be in focus this year, said Mike Amey, managing director and portfolio manager at Pimco. Downbeat economic news from the U.S. and Europe also added to investors' concerns. The U.S. trade deficit widened to a six-month high in February, the Commerce Department said.
European stock markets suffered broad-based losses as an unexpected plunge in German manufacturing orders and worries about global growth hurt sentiment. The Stoxx Europe 600 index slumped 1.9% to end at 328.15, the lowest close since late February. German stocks led the declines in Europe, with the DAX 30 index down 2.6% at 9,563.36 for its lowest close since March 10. The weakness came after data showed total orders for the country's important manufacturing sector fell 1.2% in February, missing estimates of a small gain.
Stocks in Japan dropped sharply Tuesday, as the yen surged to its strongest level against the U.S. dollar since October 2014 and bank stocks plunged amid worries about the fallout from negative interest rates. The Nikkei Stock Average closed down 2.4% at 15732.82, marking its lowest finish since Feb. 12. It wasn't all bad news on Tuesday in the Asia region: China has become unlikely bright spot among major global share markets, as investors grow less pessimistic about its economy. Recent data suggest improvement in China's manufacturing activity and property market. The Shanghai Composite Index finished up 1.5% at 3053.07, its highest close since Jan.8.
Copper futures closed slightly higher in London, rebounding from losses earlier in the session. The London Metal Exchange's three-month copper contract was up 0.3% at $4,775 a metric ton at the PM kerb close, having hit a new one-month low earlier in the session at $4,751 a ton. Among the other base metals, aluminum closed down 0.9% at $1,522 a ton, zinc was down 2.2% at $1,812.50 a ton, nickel was up 1.3% at $8,480 a ton, lead was down 1.2% at $1,697 a ton and tin was down 1.7% at $16,350 a ton.
In this Issue
Argonaut Metals and Mining: March Q Preview
Argonaut provides a preview for the March Q 2015. High volatility has been the theme for 2016 year-to-date, with ASX resources plummeting in early January, before staging a strong recovery into March. AUD gold continues to be a strong performer, averaging A$1,630 for the Q. Iron Ore has surprised most, spiking above US$60/dmt in March. In the near to medium term, Argonaut prefers zinc amongst the base metals and sees continued strength in AUD domiciled gold. We do not believe current iron ore prices are sustainable and should soften through 2016.
Key Picks
· Independence Group (IGO) – Target price $3.70. Deep value against our valuation with two world class assets in Tropicana gold and Nova nickel/copper
· MZI Resources (MZI) – Target price $0.70. Keysbrook ramp-up on track with potential to exceed nameplate production. Upside exists from expansion options
· St Barbara (SBM) – Target price $2.30. Investor sentiment will continue to improve as the Company delivers FCF and enhances its balance sheet.
Recent Contacts & Presentations
Evolution Mining (EVN), St Barbara (SBM), Troy Resources (TRY), Explaurum (EXU), Sino Gas & Energy (SEH), Western Areas (WSA), Finders Resources (FND), Carnarvon Petroleum (CVN), Threat Protect Australia (TPS), Austal (ASB), Paragon Care (PGC), Salt Lake Potash (SO4), Peet (PPC), Department 13 (D13), Actinogen Medical (ACW)
