Market Update & Important Indicators:
The Dow Jones Industrial Average rose to within one point of 20000, as a solid jobs report added the latest fuel to stocks' postelection rally. The index repeatedly approached the mark Friday, rising as high as 19999.63 before paring gains. The Labor Department said December job growth slowed from the previous month, but wages posted their biggest annual gain in more than seven years. The report largely matched investors' expectations, supporting recent optimism about the U.S. economy. Hopes for a higher-growth, higher-rate environment under President-elect Donald Trump have powered a broad stock rally and helped push the dollar to its highest level in 14 years, while also sending government bond yields higher since the November election. The Dow Jones Industrial Average gained 65 points, or 0.3%, to 19964. The S&P 500 climbed 0.4% and the Nasdaq Composite added 0.6%. Investors have said stocks' postelection rally has been spurred by more than hopes for business-friendly policies under the new administration. Earnings for S&P 500 companies returned to growth in the third quarter, after five straight quarters of declines from the year-earlier period, according to FactSet.
European stocks ended slightly lower in choppy action on Friday after the closely watched U.S. jobs report painted a mixed of the country's job market. After the data, the Stoxx Europe 600 index trimmed its loss for the day to end 0.1% lower at 365.45. For the week, the benchmark closed 1.1% higher after entering bull-market territory on Tuesday.
Asian shares ended the first week of the year in the black–in sharp contrast to the first week of last year where a crash in Chinese stocks rattled global markets. Japan's Nikkei Stock Average ended up 1.8% for the week, while the Shanghai Composite advanced 1.6%. Korea's Kospi gained 1.1% and Hong Kong's Hang Seng index rose 2.3% for the week. This was in marked contrast to the first week of 2016, when the Shanghai market dropped 6.9% on the first day of trading, triggering circuit breakers. This kicked off a selloff in U.S. and European stocks with the Dow Jones Industrial Average losing as much as 467 points. On Friday, Asian shares finished mostly higher despite continued currency volatility. Singapore's FTSE Straits index and the Hang Seng index each added 0.2%. Korea's Kospi benefited from news that Samsung Electronics estimated that its fourth-quarter would deliver its biggest quarterly operating profit in almost three years.
Australian stocks Friday failed to get any additional lift from the country's first trade surplus in more than two years after they notched three straight days of gains, with investors content to wait for U.S. jobs data. The S&P/ASX 200 index closed flat at 5755.6 ahead of U.S. nonfarm payrolls data due later in the global trading day. The market gave a cautious reception to Australia's seasonally adjusted surplus of 1.24 billion Australian dollars (US$911 million) in November, even though economists had forecast a deficit of A$550 million. The surplus was mostly driven by rising commodity prices rather than higher export volumes, which are more relevant to gross domestic product.
On the London Metal Exchange, copper for delivery in three months closed up 0.2% at $5,590/t. The other base metals were mixed on Friday. Nickel prices fell 0.5% to 10,191/t, tin prices fell 0.4% to 21,073/t, whilst zinc prices were flat at 2,601/t. Bucking the trend, aluminium prices rose 0.7% at 1,721/t, whilst lead prices rose 0.2% at 2,040/t.
In this Issue:
Argonaut Metals & Mining
December Quarterly Preview
Argonaut provides a preview for the December Q 2016. In general, commodities performed well over the Q, despite the appreciation of the USD. Iron ore was the biggest mover, up 24% Q-on-Q, while base metals also performed well, with copper, zinc and lead all averaging significantly higher prices compared to the September Q. Heading into CY17, Argonaut still prefers zinc amongst the base metals and sees continued volatility in the gold price as Donald Trump is inaugurated as the US president. We retain a preference for domestic Australian mid-tier gold producers. Production forecasts and stock specific comments are detailed in Table 1 (page 2).
Argonaut Metals & Mining
Argonaut’s Best Undeveloped Projects 2016
Argonaut has completed its annual review of the best undeveloped metals and mining projects owned by ASX listed companies. Companies that were identified with the best undeveloped projects in our previous editions outperformed their respective peer groups and relevant indices, with many being acquired, financed or partnered. A notable outcome of our analysis is that we have been unable to identify a project meeting our criteria that resides in an ASX major or mid-tier, with all the projects in aspiring juniors or small-cap companies. Argonaut has applied the following selection criteria to identify the best undeveloped projects, which include:
1. Development stage between scoping study and pre-commercial production
2. An Internal Rate of Return (IRR) exceeding 25%
3. Profitable through all market/commodity price cycles
4. A high likelihood of achieving >$100m project valuation within 24 months
Recent Contacts & Presentations:
Emmerson Resources Ltd (ERM), Syntonic Ltd (SYT), MZI Resources Ltd (MZI), Resolute Mining Ltd (RSG), Capricorn Metals Ltd (CMM), Eve Investments Ltd (EVE), Australian Mines Ltd (AUZ), Heron Resources Ltd (HRR), St George Mining Ltd (SGQ), Threat Protect Australia Ltd (TPS), Paringa Resources Ltd (PNL), The Gruden Group Ltd (GGL), Primary Gold Ltd (PGO), Vault Intelligence Ltd (VLT), Botanix Pharmaceuticals Ltd (BOT) Orthocell Ltd (OCC), Strandline Resources Ltd (STA) Dragontail Systems Ltd (DTS), ABM Resources Ltd (ABU), Acacia Coal Ltd (AJC), Troy Resources Ltd (TRY), Hazer Group Ltd (HZR), Berkeley Energia Ltd (BKY), Sino Gas & Energy Holdings Ltd (SEH)