Market Update & Important Indicators
US stocks have powered higher as the latest bailout proposal from Greece lifted hopes for a breakthrough with creditors this weekend. The Dow Jones Industrial Average gained 211.79 points (1.21 per cent) at 17,760.41 on Friday. The broad-based S&P 500 jumped 25.31 (1.23 per cent) to 2,076.62, while the tech-rich Nasdaq Composite Index surged 75.30 (1.53 per cent) to 4,997.70. Stocks were in positive territory all day after Athens's latest rescue plan conceded ground on major sticking points including tax and pensions. The proposal was welcomed by French and Italian officials, while German officials were more circumspect.
The eurozone's major stock markets surged around three per cent on hopes that Greece and its creditors were close to a deal to keep it in the euro after Athens' latest proposals. Sentiment was also soothed by another sharp rebound on the troubled Chinese stock market after a month-long rout, dealers said. In Paris the CAC 40 index leapt 3.07 per cent to close Friday at 4,907.07 points, while Madrid gained 3.08 per cent, Lisbon 3.04 per cent and Milan three per cent. Frankfurt's DAX 30 climbed 2.90 per cent to close at 11,315.63 points, having also briefly risen above three per cent earlier. Outside the eurozone, London climbed 1.39 per cent to 6,673.38 points. The euro closed at $US1.1152, up from $US1.1036 late on Thursday.
Most Asian markets rose for a second day after Greece submitted new debt reform plans and fears over a Chinese rout subsided as Shanghai stocks surged again. Shanghai rallied 4.54 per cent, or 168.47 points, to 3,877.80 after surging almost six per cent on Thursday as Chinese authorities beefed up measures to staunch a sell-off that has wiped trillions off mainland markets. The index ended a roller-coaster week 5.18 per cent higher. Hong Kong rose 2.08 per cent, or 508.49 points, to 24,901.28, adding to a near four per cent advance in the previous session. Sydney added 0.38 per cent, or 21.0 points, to 5,492.0 and Seoul put on 0.17 per cent, or 3.36 points, to 2,031.17. But Tokyo lost 0.38 per cent, or 75.67 points, to end at 19,779.83, giving up early gains.
The Australian market looks set to open higher after US and European stocks surged as the latest bailout proposal from Greece lifted hopes for a breakthrough with creditors. At 0755 AEST on Monday, the September share price index futures contract was up 35 points at 5,472. In local economic news on Monday, the Australian Bureau of Statistics releases May's lending finance figures. In equities news, Mirrabooka Investments is expected to post full year results, while Warrnambool Cheese and Butter has its annual general meeting. In Australia, the market on Friday the benchmark S&P/ASX200 index was up 21 points, or 0.38 per cent, at 5,492 points. The broader All Ordinaries index was up 21.8 points, or 0.4 per cent, at 5,478.1 points.
Oil prices are barely changed as the International Energy Agency forecast that global demand will grow more slowly next year. US benchmark West Texas Intermediate for delivery in August edged down four cents to $US52.74 a barrel on the New York Mercantile Exchange on Friday. Brent North Sea crude for August, the international benchmark, rose to $US58.73 a barrel in London, a gain of 12 cents from Thursday's close. The International Energy Agency, in its first estimates for 2016, forecast that global oil demand would grow by 1.2 million barrels per day next year, compared with 1.4 million barrels a day this year. Meanwhile it said global oil output grew by 550,000 barrels a day in June alone, to 96.6 million barrels a day, up on average by 3.1 million barrels from a year ago.
Metals on the LME were all down with Nickle and Lead the biggest loosers falling 2.1% to US$11,218/t and 1.1% to US$1,788/t respectivly. Gold was up 0.3% to US$1163/oz and Brent decreaed 1.4% to US$57.90/bbl. The AUD/USD is trading at 0.743.
In This Issue
TRY | BUY
Troy Resources (TRY) provided the market with an update on the commissioning of its high grade Karouni Project in Guyana. Most components of the processing plant and associated infrastructure have been constructed and mining / stockpiling of ore (~40kt @ 2.3g/t) has also advanced according to plan. However, the assembly of the Outotec mill and thickener will delay commissioning by ~4-5 weeks (wet commissioning early September). Argonaut sees this development as non-recurring, with a small financial impact of ~US$5m. During this period, the Company will continue to build up the Smarts (~5g/t) and Hicks stockpiles (to >150kt by end of August), which will benefit future production and lower operational risks. The Company’s cash position (estimated to be ~A$53-57m, excluding bullion) provides a comfortable buffer for this delay. The stock remains cheap, trading on a Fully Funded (FF) EV at <2.5x FCF for Karouni alone. Argonaut maintains a BUY call and revises our valuation to A$0.68 (was A$0.70).
Recent Contacts & Presentations
Tox Free Solutions (TOX), GR Engineering (GNG), Austal (ASB), Northern Star (NST), Sandfire (SFR), Regis (RRL), Kingsrose (KRM), Medusa (MML), Orbital (OEC), Alexium (AJX), Rewardle (RXH), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Carnarvon Petroleum (CVR)
Please read Argonaut's Important Disclaimers & disclosures
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