Market Update & Important Indicators
U.S. stocks pared steep losses to trade little changed Tuesday following a selloff in European equities and government bonds. The Dow had fallen by as much as 180 points in early trading, but subsequently pared losses. The moves in U.S. stocks followed a selloff in European markets. The selloff was exacerbated by short-term institutional investors looking to exit positions that bet European bond prices would go higher.
European bonds and stocks were hit with a renewed selloff Tuesday, as recent signs of a return to stability in the market proved short-lived. The latest wave of selling was sparked by Monday's weakness in the U.S. Treasury market, where 10-year yields surged to their highest closing level in more than five months as investors prepared for sales of new debt. The yield on Germany's 10-year benchmark bond climbed by 0.09 of a percentage point to 0.68%. Bonds across the euro area weakened by similar amounts.
Currencies in Southeast Asia fell and most bonds markets suffered losses too. For stocks, the effect of China's weekend rate cut appeared to wear off in the region and markets finished mixed, following a weak session in the U.S. The Shanghai Composite Index tacked on 1.6% to its 3% charge Monday, but investors elsewhere appeared to react to domestic factors, such as a weaker currency and what it implies for the prospect of further central-bank easing.
Metals on the LME finished higher across the board. Gold climbed 0.8% to US$1,192/oz, while Brent gained 3.0% to US$66.86/bbl. The AUD/USD is trading at 0.798.
In This Issue
Dacian (DCN) | SPEC BUY
Dacian Gold (DCN) released a Resource upgrade incorporating the Heffernans Deposit, boosting the overall project inventory by 709koz. This result exceeded Argonaut’s expectation and expanded the total Resource at Mt Morgans to 2.1Moz @ 2.6g/t. The project has the potential to become a 150koz producer, developed as a standalone or toll-treating operation. A comparison with the Frog’s Leg mine, which Evolution Mining (EVN) is purchasing, demonstrates Mt Morgans’ potential to attract corporate attention with further advancements (see Page 2). Whilst the project is moving steadily towards development, both Westralia and Jupiter offer significant exploration upside. DCN is one of Argonaut’s preferred gold development stocks given exposure to AUD denominated costs, exploration upside and proven management. SPECULATIVE BUY maintained.
Recent Contacts & Presentations
Rewardle (RXH), Alexium (AJX), Ausdrill (ASL), Tox Free (TOX), OBJ Limited (OBJ), Cash Converters (CCV), Decmil (DCG), TFS Corporation (TFC), Imdex (IMD), Mobile Embrace (MBE), Dacian (DCN), Saracen (SAR), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), MZI Resources (MZI), High Peak Royalties (HPR), Spookfish (SFI)