Market Update & Important Indicators
U.S. stocks erased sharp gains Tuesday, though technology shares held up better than broader indexes. Stocks turned lower in afternoon trading, after a steep morning rally. Traders pointed to worries about the outlook for European Central Bank policy, though the U.S. declines started after European stocks closed broadly higher. Investors broadly expect the ECB to introduce new stimulus, and traders are closely following the outlook for European policy makers.The technology sector still outperformed, with the tech-heavy Nasdaq Composite Index down 20 points, or 0.4%, to 4645. Apple Inc. and Amazon.com Inc. rose 0.6% and 1.4%, respectively, after upgrades from Wall Street analysts.
European stocks rose in a volatile session Monday, as investors weighed the implications of a renewed slump in oil prices. The Stoxx Europe 600 closed 0.6% higher, helped by gains in health-care stocks amid a flurry of deals in the sector as Shire and Roche both announced acquisitions. Early in the session the benchmark had risen as much as 1%, but gave up all its gains as U.S. markets opened, with traders focusing on the latest signs that huge energy price declines in recent months have further to run. Germany's DAX and France's CAC 40 both climbed more than 1%, but the U.K.'s oil and commodity-heavy FTSE 100 ended flat.
Falling oil prices have weighed on already low inflation expectations for economies across the globe but have added pressure on the ECB in particular to take action. The global oil-price benchmark ended Monday below $50 a barrel for the first time in nearly six years and has fallen more than 17% since the start of 2015.
Hong Kong stocks bucked the region's declines thanks to a rally in shares of Cheung Kong Holdings and Hutchison Whampoa. The companies surged 15% and 13%, respectively, after Li Ka-shing, Asia's richest person, late Friday said he would restructure the two firms, creating one company that houses all his Hong Kong real estate and another that would own his ports, energy, retail and telecommunications assets. The blue-chip Hang Seng Index rose 0.5% to 24026.46. Japan's stock market was closed in observance of Coming of Age Day, a national holiday honoring passage into adulthood.
LME metals all finished lower with nickel and copper down 3% and 2.6% respectively. Gold was flat at US$1230.5/oz while WTI crude dropped 0.4% to US$45.89/bbl. The AUD is buying US$0.817.
Thought for the day
ASX Gold medium term cost outlook
As the December Q reporting season commences, Argonaut provides a medium term (6-12) month outlook for ASX gold stocks compared to their respective September Q / December Q performances.
Overall, Argonaut is anticipating a sustained or increasing cost profile in the medium term. Deteriorating asset quality is likely to become a feature, offsetting impacts from a lower AUD and declining fuel prices.
However, Argonaut notes a few names going against this trend, including:
• Troy (TRY) – Casposo production will step up further with the higher grade INCA II vein online March Q 2015. The high grade Karouni Project (AISC US$602/oz, June Q 2015) will further expand the Company’s margins.
• Saracen (SAR) – With Whirling Dervish transitioning to a single fleet / digger and grades stepping up in H2, SAR’s cost profile will significantly improve. Furthermore, a 1.8Mt stockpile on the ROM pad by end of FY15 will ensure low costs in FY16.
• Doray (DRM) – Production improvement, specifically enhanced dilution control, as well as the high grade Stage II open pit will see DRM deliver more ounces at lower costs
Recent Contacts & Presentations
Northern Star (NST), Doray Minerals (DRM), Troy Resources (TRY), Gold Road Resources (GOR), Saracen Mineral Holdings Limited (SAR), Beadell Resources Limited (BDR), Resolute Mining Limited (RSG) , RTG Mining (RTG), MACA Limited (MLD), Alexium International Group Limited (AJX), Decmil Group Limited (ACG), Pacific Energy Limited (PEA), Otto Energy Limited (OEL), Peninsula Energy Limited (PEN), Sandfire Resources NL (SFR), Bannerman Resources Limited (BMN)