Overseas Market Report – U.S. Stocks Plunge as Investors Seek Safe Havens
U.S. stocks sank on Monday as falling oil prices, growth worries and uncertainty about Fed actions led to widespread selling.
Investors sought out safe havens, sending the price of gold close to a nine-month high and the yield on U.S. Treasury bonds lower.
Oversupply fears sent the price of oil futures lower on Monday for the third straight session.
At the close the Dow and S&P 500 were off 1.1% and 1.4% respectively, while the NASDAQ was down 1.8%.
There was limited U.S. corporate news on Monday, but there will be more earnings reported later in the week.
Shares of Chesapeake Energy (CHK) plummeted after it was reported that the firm had hired a restructuring expert and that it was exploring options on how to deal with its debt load.
For Australian ADRs listed on the NYSE, BHP Billiton gained 13 cents (0.58%) to $22.71, ResMed lost 38 cents (0.66%) to $57.04, Telstra Corporation added 4 cents (0.20%) to $19.93, Spark New Zealand slipped 10 cents (0.90%) to $11.05 and Westpac declined 12 cents (0.56%) to $21.13.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 1.74% and the 5-year yield was 1.15%.
European markets were also sharply lower on Monday.
The FTSE 100, the French CAC 40 and Germany's DAX were off 2.7%, 3.2% and 3.3%, respectively.
In Asia, the Nikkei 225 was up 1.1% on the day while Chinese markets were closed for Lunar New Year. India's Sensex fell 1.3%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 64 points lower at 4,859.
Monday 8 February – close. The local market opened lower today on the back of losses on Wall Street overnight with fears of a US rate rise looming. However, the negativity was short-lived as stocks bounced back within a whisker of the flat-line by close, bolstered by mining stocks. There were mixed results from the sectors; utilities and materials gained most significantly while financials were the biggest laggard. The Australian dollar gained against most major currencies.
The All Ordinaries fell 3.50 points to 5,022.10 while the S&P/ASX 200 fell 0.80 points to 4,975.40
In This Issue
Argonaut Research| Gold Road (GOR) | BUY
Gold Road (GOR) released a Pre-Feasibility Study (PFS) on its 100% owned, 5.6Moz Gruyere Project. A maiden Reserve of 3.2Moz @ 1.22g/t (estimated at A$1,400/oz) was also announced. The outstanding results reaffirmed the project’s status as one of the best undeveloped gold projects in Australia, given scale (265koz pa), low cost (AISC A$960/oz) and long project life (12 years). These attributes, combined with a low risk jurisdiction and a competitive cost environment will ensure the project continues to attract corporate and market attention. A plethora of regional targets to test, highly prospective geology, early encouraging results and a A$10m exploration budget could offer the potential for a multi-million ounce discovery while delivering steady newsflow during CY16. With the project de-risked further with the delivery of a PFS, Argonaut upgrades the stock to a BUY (was SPEC BUY) with A$0.73 target price (was A$0.70).
Argonaut Research| Dacian (DCN) | SPEC BUY
Dacian Gold (DCN) released additional drilling results from its ongoing program at Mt Morgans. The headline results (see below) were amongst the best seen to date and demonstrate the under-explored nature of the Jupiter deposits. These results are likely to contribute positively in the upcoming Resource update, expected June Q CY16. DCN remains one of Argonaut’s preferred emerging gold producers given AUD denominated costs, exploration upside and proven management. Given scalable inventory, proximity to infrastructure and high margins, DCN will also attract corporate attention. The Company is catalyst rich and well-funded with A$24m cash and nine rigs drilling. SPEC BUY maintained with A$1.25 target price (was A$1.10).
AGL Energy (AGL)
AGL Energy announced that Moody's credit rating agency had initiated coverage and assigned an investment grade credit rating of Baa2 with a stable outlook. In assigning the rating, Moody's indicated that the Company's strong retail market position and the low cost position, scale and operating track record of its generation fleet enables the Company to navigate the challenges presented by the evolving energy market in Australia. The solid financial metrics indicate a high degree of financial flexibility for the Company at this rating level. AGL added 33 cents to $18.80.
Westfield announced a dividend of US$ 0.12550000 cps for the quarter ending 31 December 2015, with an ex-date of 11 February 2016, record date of 15 February 2016 and a payment date of 29 February 2016. WFD lost 12 cents to $9.96.
Recent Contacts & Presentations
Troy Resources (TRY), Northern Star Resources (NST), Regis Resources (RRL), Medusa Mining (MML), Doray Minerals (DRM), Beadell Resources (BDR), Red 5 (RED), Kingsgate Consolidated (KCN), OBJ (OBJ), Sino Gas & Energy Holdings (SEH), TFS Corporation (TFC), Paragon Care (PGC), Austal (ASB), Orbital Corporation (OEC),Energia Minerals (EMX), Berkeley Energia (BKY) , Finders Resources (FND), 4DS Memory Ltd (4DS) , Bionomics Ltd (BNO)