Market Update & Important Indicators:
Stocks hovered around the flat line ahead of key signals on monetary policy. Stock moves have been muted in recent days after climbing to record highs last week. Many investors are focused on upcoming meetings of the European Central Bank on Thursday and the Federal Reserve on March 14-15, when the Fed is widely expected to nudge borrowing costs higher. Ultra-loose monetary policy has underpinned years of stock market gains, but stocks have been relatively resilient to recent signals that the Fed may be moving faster than previously expected. "The Fed is hiking for the right reasons: growth is accelerating and inflation is approaching the central bank's target," said Valentijn Van Nieuwenhuijzen, head of multi-asset at NN Investment Partners. The ADP National Employment Report on Wednesday pointed to continued strength in the labor market ahead of Friday's monthly jobs report — the last major piece of economic data the Fed will consider before making a call on interest rates next week. The jobs report showed 298,000 jobs were added in February, beating consensus estimates of around 189,000. Most investors believe the figure would have to come in dramatically below expectations to knock the Fed off course.
European stocks eked out small gains in a choppy session on Wednesday, with mixed economic data from the region and the European Central Bank meeting later in the week keeping investors from placing any big bets. The Stoxx Europe 600 ended 0.1% higher at 372.58, after swinging between small gains and losses throughout the day. The index moved a small leg higher in afternoon action after U.S. private-sector payrolls data showed stronger-than-expected job creation in the world's largest economy. The solid data has further cemented expectations the Federal Reserve will raise interest rates next week. European investors closely watch U.S. data, as stronger economic conditions across the pond also drive sentiment in Europe.
Japan's Nikkei Stock Average fell 0.5% after Japanese economic growth data were revised higher, but less than economists had forecast. Stocks largely shrugged off China's unexpected swing to a trade deficit, its first in three years. The country's trade figures are traditionally volatile in the first two months of the year due to the Lunar New Year holidays. Some investors also focused on policy details from the new U.S. administration, which some believe are needed to justify the high price tag currently on stocks.
Australian shares ended a choppy session lower Wednesday, pulled down by declines in the materials sector on weakness in commodity prices. After rising in the previous two days, the S&P/ASX 200 edged 1.7 points lower to close at 5759.7 as further losses by mining stocks and weakness in utilities offset modest gains in the energy sector and most big banks. Overnight, copper prices retreated after a sudden jump of supply into the London Metal Exchange's warehouses. Gold also fell to a one-month low as the prospect of an increase in short-term U.S. interest rates continued to weigh, although prices edged higher Asian trade. Chinese iron-ore futures similarly ticked higher in Asia, although a rally in prices for the steelmaking ingredient has lost steam of late.
The London Metal Exchange's three-month copper contract closed down 0.13% at $5,766/t. The other base metals were mixed on Wednesday. Aluminium prices rose 0.1% 1,868/t, lead prices rose 1.0% at 2,252/t, tin prices rose 19,395/t, and zinc prices rose 0.5% at 2,700/t. Nickel prices bucked the trend falling 4.2% at 10,142/t.
In this Issue:
Dacian Gold (DCN) | Clearing the last hurdle to production | BUY
Market Cap $363m | Current Price $1.89 | Target Price $3.00
Dacian Gold (DCN) has completed a $110m equity raising comprising a Placement and Institutional Entitlement Offer to raise $92.2m, followed by a 1:3.1 fully underwritten Retail Non-Renounceable Entitlement Offer to raise approximately $17.6m at a price of $2.00 per share. Proceeds from the equity raise will be used to fund the construction of the Mount Morgans Gold Project and for exploration and working capital. The equity raising, coupled with the existing $150m debt facility announced in late 2016, sees DCN fully funded to first production in early CY18. Ore mining will commence in November with first gold production in 1QCY18. We believe DCN has successfully overcome the funding risk hurdle and is now on track to deliver first gold within 12 months whilst maintaining an aggressive exploration program. We maintain our BUY recommendation and target price of $3.00ps ($3.35 prior).
Recent Contacts & Presentations:
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), Sovereign Metals Ltd (SVM), Kin Mining (KIN), Vital Metals Ltd (VML), Mincor Resources (MCR), Dacian Gold (DCN), Leaf Resources Ltd (LER), Alchemy Resources Ltd (ALY), MZI Resources Ltd (MZI), Seafarms Group Ltd (SFG), Marindi Metals Ltd (MZN), Rift Valley Resources Ltd (RVY), Botanix Pharmaceuticals Ltd (BOT), Thundelarra Ltd (THX), DTI Group Ltd (DTI) OpenDNA Limited (OPN), Metro Mining Ltd (MMI), Tox Free Solutions Ltd (TOX).