Market Update & Important Indicators
U.S. stocks pulled back as investors retreated to assets perceived as safe. The S&P 500 slipped from near its record high after three days of gains. Financial shares in the S&P 500 fell 0.9%, and the KBW Nasdaq Bank Index of large U.S. commercial lenders lost 1.4%. Last week's dismal jobs report made investors anticipate a slower pace of U.S. interest rate increases, weighing on financial companies, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.
European stocks fell Thursday, marking a second straight decline as a pullback in crude-oil futures off multi-month highs weighed on energy shares. The Stoxx Europe 600 fell 1% to 341.25. A drop in the oil-and-gas group helped to lead sector decliners.
Asian markets mostly fell on Thursday amid continuing uncertainty over the pace of the U.S. economic recovery and ahead of looming major political events, such as a British referendum over whether or not to remain in the European Union. Japan's Nikkei Stock Average fell 1.0%, while South Korea's Kospi ended down 0.1% and New Zealand's NZX-50 lost 0.3%. Markets were closed Thursday in mainland China and Hong Kong for the Dragon Boat Festival, and will remain closed on the mainland Friday. Concerns about the U.S. economy have grown quickly since the release on Friday of dismal U.S. jobs growth figures for May. While the initial negative markets reaction has run its course, uncertainty remains over the significance of the data for the economy. In Japan, financial stocks were dragging down the market.
Australian shares ended slightly down Thursday as declines in the country's big banks countered gains by energy and mining stocks. The session was the third in a row in which shares finished little changed. Although bank stocks recovered from their session lows in afternoon trading, they have remained out of favour this week after the Reserve Bank of Australia decided to hold its key cash rate steady and a neutral policy statement signalled further easing wasn't imminent. Still, resources stocks continued to advance, particularly oil and gas companies, after crude-oil prices extended gains above US$50 a barrel in Asia trading. The S&P/ASX 200 finished down 8.1 points, or almost 0.2%, at 5361.9.
Copper futures closed lower in London, as a stronger dollar put pressure on the metal and investors showed their nerves about the state of the global economy. The London Metal Exchange's three-month copper contract was down 1.4% at $4,516 a ton at the PM kerb close, a four-month low. Among the other base metals, aluminium closed down 1.6% at $1,570 a ton, zinc was up 0.3% at $2,064 a ton, nickel was down 0.3% at $8,893 a ton, and lead was down 1.9% at $1,697 a ton.
In this Issue
Gascoyne Resources (GCY) | Exploration Update | SPEC BUY
Market Cap $126.3m | Current Price $0.50 | Valuation $0.65
Gascoyne’s (GCY) exploration campaign at its Dalgaranga Project is gathering momentum, with recent results at Gilbeys confirming the tenor of the orebody (width and grade) and first RC results at Hendricks demonstrating the potential for a satellite deposit. The stock is news flow rich with a pipeline of exploration targets (see below) being tested. Ongoing drilling success could translate to a Reserve update, potentially during the September Q. Argonaut remains attracted to GCY’s technical simplicity, lower funding requirement, management ownership (~15%) and the potential for organic growth through Glenburgh. Speculative Buy maintained. We lift our target price to A$0.65 (was A$0.53) following lowered equity dilution assumption (~9% total shares) and an A$15m increase in nominal exploration valuation (to A$25m). The stock is one of the few trading below our target price in the gold space.
Recent Contacts & Presentations
Gascoyne Resources (GCY), Botanix (BNE), Sino Gas & Energy (SEH), Altura Mining (AJM), Navitas (NVT), Gage Roads (GRB), Bionomics (BNO), Invigor Group (IVO), Marindi (MZN), Cardinal Resources (CDV), Galaxy Resources (GXY), Cooper Energy Limited (COE), Evolution Mining (EVN), LWP Technologies (LWP), Walkabout Resources (WKT)
Please read Argonaut's Important Disclaimers & disclosures