Market Update & Important Indicators
Wall Street stocks have dropped after a solid US July jobs report lifted expectations the Federal Reserve will soon raise interest rates. The US economy added 215,000 jobs in July with unemployment holding steady at a seven-year low rate of 5.3 per cent. The report brought the average monthly jobs gains to 235,000 over the past three months, heightening expectations the Fed could raise its near-zero federal funds rate as early as next month.
Europe's main stock markets edged down as investors digested disappointing data out of the eurozone, a mixed US jobs report and the likelihood of an imminent US interest rate rise. “Disappointing French and German industrial production figures, posted before European markets started trading, have ensured a dominance of red on trading screens," IG trading group market analyst Alastair McCaig said on Friday. Later on Friday trading was impacted by US jobs data for July, which showed the economy adding slightly fewer jobs than expected, with unemployment holding steady at 5.3 per cent.
Asian stocks closed mixed as investors awaited the release of US jobs data while the Bank of Japan held fire on a fresh round of stimulus. Analysts widely expect Bank of Japan policymakers to act later in the year. BoJ chief Haruhiko Kuroda said he would consider expanding its record 80 trillion yen ($A873.41 billion) annual asset-buying scheme if weak oil prices keep holding back inflation. "A lot of the move is coming from individual stocks," Tokyo-based Mizuho Asset Management Co's Seiichiro Iwamoto told Bloomberg News, referring to Friday's rise in Japanese equities. "It's still too early for the Bank of Japan to increase easing. It'll likely come around October."
The Australian market looks set to open flat after Wall Street fell following a slightly weaker-than-expected jobs report. At 0855 AEST on Monday, the September share price index futures contract was down two points at 5,403. The US added 215,000 jobs in July, below the gain of 229,000 economists had expected. Locally, in economic news on Monday, the Australian Bureau of Statistics releases June lending finance data. In equities news, National Australia Bank, Ansell, JB Hi-Fi and Bendigo and Adelaide Bank are among the companies releasing results.
Crude oil prices have fallen again as the main US futures contract concluded its sixth straight week of losses, in a market awash with worry about the global oversupply. Gene McGillian of Tradition Energy said the continued retreat was being driven in particular by worries about oversupply and declining demand out of China. "There has been some renewed talk that crude oil prices are back down to levels that will prove unsustainable, but we don't see any corresponding shift in the underlying fundamentals that would tip the global supply/demand balance to a deficit, at least in the near term," Citi Futures said in a client note.
Iron ore fell 0.7% to US$56.40/dmt and Gold rose 0.5% to US$1,094/oz. Metals on the LME were down with the exception of Lead which gained 1.4% to US$1,721/t. Tin fell 1.3% to US$15,325/t. The AUD/USD is trading at 0.735. Brent trades at US$48.38/bbl.
In This Issue
Gold Road | SPEC BUY
Gold Road (GOR) released results from a Pre-Feasibility Study (PFS, Stage 1) on its 100% owned Gruyere Project in Western Australia. A 7.5Mtpa option was selected (in-line with Argonaut modelling), producing ~250koz pa. The PFS (Stage 2) will be updated after incorporating an updated Resource model (expected in the September Q). The study does not factor in further upside from regional targets (e.g. Monteith, drilling underway) or potential underground operations. Gruyere’s scale, geometry, long life (10-15 years), and favourable metallurgical properties, combined with a low sovereign risk jurisdiction, will ensure the asset attracts market and corporate attention. Following the recent capital raising, GOR is well funded (~A$50m cash) to the completion of a BFS and to continue its high intensity exploration programs. SPEC BUY maintained. Argonaut revises its valuation to A$0.70 (was A$0.75) incorporating a marginally lower production profile.
Recent Contacts & Presentations
Austal (ASB), Resolute (RSG), Pacifico (PMY), Kingsgate (KCN), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Karoon Gas (KAR), Austex Oil (AOK), Central Petroleum (CTP), Senex Energy (SXY), Newmont, Coventry (CYY)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
