Market Update & Important Indicators
The S&P 500 rose intraday, buoyed by gains among industrial and technology firms, as investors looked ahead at a busy week for economic data. The Dow Jones Industrial Average fell 0.2%, to 25,857 after notching its biggest one-week decline since mid-August. The S&P 500 climbed 0.2% and the Nasdaq Composite advanced 0.3%. Technology stocks advanced after losses in the sector had dragged the NASDAQ to its biggest one-week loss since March. Chip maker Nvidia was up 1.2% and Advanced Micro Devices jumped 8%. Shares of industrial companies gave major indexes another boost, with United Rentals rising 5.3% and heading toward its biggest one-day gain in more than a year after the company said it was acquiring equipment rental firm BlueLine Rental. Later this week, investors will get a fresh look at the state of inflation and consumer spending, with data on producer prices expected Wednesday, consumer prices scheduled for release Thursday and retail sales due Friday.
Europe shares rose 0.47% as gains for Italian stocks offset uncertainty over trade tensions and emerging market economies. The Stoxx Europe 600 rose 1.74 points to 375.51, while the DAX was up 0.2% and the CAC-40 advanced 0.3%. Italian banks gained on government reassurances that the country's budget will respect European fiscal rules. Banco BPM was the biggest riser, up 4.85%. "China's trade figures over the weekend showed the country's surplus with the U.S. is now at a record level," said David Madden at CMC Markets. "President Trump has threatened more tariffs, but nothing has been announced yet."
A new week didn't start a new trend for Asian stocks. The selling carried over, with declines of at least 1% seen in Hong Kong, China, India and Taiwan. Hong Kong's Hang Seng, the Shanghai Composite and Taiwan's Taiex fell 1.3%, 1.2% and 1.1%, respectively. Japan's Nikkei Stock Average up 0.3%. Shenzhen indexes set fresh multiyear closing lows and Hong Kong's Hang Seng Index is in danger of finishing in bear-market territory. But it wasn't all ugly. Japan, South Korea and Vietnam logged modest gains while the Philippines reversed an early 1% drop and nearly finished higher.
Aussie stocks held up better than most in Asia Pacific, rebounding from modest early declines. But slight gains faded by day's end, leaving the ASX All Ords down 3 points. That's the index's eighth-straight decline, matching the streak seen in January 2016. Telecoms pulled back 0.8% to outpace what was generally mild declines in most sectors. But energy and health-care stocks each rebounded 0.6%.
Base metal prices were mainly down on the London Metal Exchange. Nickel was up 0.4% to 12,324/t. Zinc fell 1.8% to record 2,379/t. The 3-month copper contract declined 0.4% to 5,892/t, while lead retreated 2.5% to record 2,007/t. Aluminium added 1.3% to 2,057/t and Tin finished 0.2% lower at 19,027/t.
In this issue
Explaurum (EXU) – Market Cap $50m, Spec Buy, TP $0.21ps:
Explaurum (EXU) has received an off-market takeover offer from Ramelius Resources (RMS) with a bid of one RMS share for every four EXU shares. This values EXU at A$59.2m (12.3cps or EV/Reserve of $122/oz) and represents a 66.2% premium to the last traded price of 7.4cps. Whilst the deal appears opportunist, taking advantage of share price weakness, we think it does make sense for RMS with its existing infrastructure synergies in the region at Edna May. Our EXU target price of $0.21ps considers the potential for EXU to develop the project as a standalone operation and applies considerable exploration upside at Tampia. The value upside for RMS is substantial in our view, and provides significant flexibility in ore sources at the Edna May operation which could transform and de-risk the project with higher production and a longer mine life. RMS’ bid price however lacks value for the exploration and production upside which we view as considerable given EXU’s recent near mine success at The Mace and Anomaly 8 Prospects. We see value in the proposal, we think RMS will have to come back to the table to sweeten the deal to win over EXU shareholders. Spec Buy maintained and target price of $0.21ps.
Recent Contacts & Presentations
Dimerix (DXB), Aspire Mining (AKM), Austal Limited (ASB), Macmahon Holdings Limited (MAH), Nickle Mines Limited (NIC), Carnarvon Petroleum Limited (CVN), Prodigy Gold (PRX), Ausdrill Ltd (ASL), Bionomics Ltd (BNO), Gold Road Resources (GOR), Encounter Resources Ltd. (ENR), OZ Minerals Limited (OZL), Melbana Energy (MAY), Botanix Pharmaceuticals Ltd (BOT), Novo Litio (NLI), Classic Minerals (CLZ), OZ Minerals (OZL), Saturn Metals (STN), Antipa Minerals (AZY), SRG Ltd (SRG) Bowen Coking Coal (BCB), Birimian (BGS), Breaker Resources (BRB), Galena Mining (G1A), Valmec (VMX),Bryah Resources (BYH), Calima Energy (CE1) Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF