Market Update & Important Indicators
U.S. stocks advanced, bucking declines overseas, as investors looked ahead to a decision by the Federal Reserve on interest rates next week. Thursday's moves follow significant swings in global stock benchmarks over the past week, as uncertainty over the timing of the first increase in U.S. interest rates in almost 10 years and China's growth outlook continue to rattle investors. The Dow and the S&P 500 both rose ~0.5% to 16,330 and 1,952 respectively.
Australian stocks reversed the previous day's strong gains in a broad sell-off that followed Wall Street's lead on Wednesday. The fall was led by sharp declines in energy shares after a drop in crude-oil prices and by bank stocks handing back some of their recent recovery. The S&P/ASX 200 ended 2.4% lower at 5095.0 after rallying 3.8% in the past two days.
China-style volatility spread to Japan stocks, with the Nikkei Stock Average reversing sharp gains from the previous day, as the U.S. Federal Reserve wavers on a September rate increase. The Nikkei Stock Average finished down 2.5%, after a 7.7% jump Wednesday, which was its biggest daily gain in nearly seven years. The Shanghai Composite Index finished down 1.4% at 3197.9 amid continued worries about economic growth.
In Europe, the Stoxx Europe 600 ended the session down 1.2%, snapping a three-session rally. China growth concerns and possible US interest rate hikes where attributable for the decline.
Metals on the LME were up with the exception of zinc which fell 0.2% to US$0.82/lb. Nickel had the strongest gains, putting on 3.6% to US$4.72/lb. Gold was up marginally to US$1111/oz and Brent gained 2.5% to US$48.75/bbl. The AUD/USD is trading at 0.707.
In This Issue
Dacian Gold | SPEC BUY
Dacian Gold (DCN) released additional drilling results from Ganymede (Jupiter) and the footwall BIF at Westralia. Updated Mineral Resources for both Westralia and Jupiter, incorporating these results, are expected in the coming weeks. In addition, a Scoping Study, factoring in both open pit and underground operations feeding a purpose built plant is expected. Argonaut’s valuation under a toll-treating scenario is higher than a standalone operation but this doesn’t capture the certainty and operational flexibility afforded to plant ownership, particularly if additional discoveries are made. Given scalable inventory and proximity to infrastructure, DCN is likely to attract corporate attention. DCN remains one of Argonaut’s preferred gold development stocks given AUD denominated costs, exploration upside and proven management. Argonaut maintains a SPEC BUY recommendation and A$0.70 target price.
Minerals exploration | Wallets growing cobwebs
ABS data to June 2015 shows that minerals exploration metres drilled has fallen to levels last seen more than a decade ago. This is across geographies and commodities, although gold has held up best. We have likely seen the worst, although a recovery in exploration metres drilled will be slow, and an improvement in the margins for exploration service providers even slower while surplus capacity exists.
Recent Contacts & Presentations
AWE Limited (AWE), Ausdrill (ASL), GR Engineering (GNG), Medusa (MML), Resolute (RSG), Rift Valley (RVY), 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), FAR Limited (FAR), Central Petroleum (CTP), Senex Energy (SXY)