Market Update & Important Indicators:
The Dow Jones Industrial Average capped its election-week rally with another record and its biggest weekly gain in nearly five years. The blue-chip index rose 0.2% to 18847.66. The index's weekly gain is 5.4%, its biggest jump since December 2011. The S&P 500 fell 0.1% Friday while the Nasdaq Composite added 0.5%. Both indexes rose 3.8% for the week. After two high-volume trading days marked by sharp stock swings, Friday was markedly calm, traders said. Industrial companies and banks have led the surge in recent sessions, as investors poured money into stocks they believe could benefit from possible increased government spending, decreased regulation and a pickup in inflation under a Trump administration. Industrial companies in the S&P 500 are up 8% this week, while the financial sector is up 11%. Biotechnology companies also jumped as some analysts and investors said drug-pricing restrictions would have been more likely under Democrat Hillary Clinton. The Nasdaq Biotechnology index slipped Friday but logged a weekly gain of roughly 14%. At the same time, money rotated out of some of the biggest market winners since the financial crisis, including some technology companies.
European stocks reversed gains to close lower Friday, as mining shares were knocked down while a surge in the pound helped push London-listed shares into the red. The Stoxx Europe 600 index fell 0.4% to end at 337.50, giving up an earlier gain of 0.7%. For the week, the Stoxx 600 finished up 2.6% as health-care and infrastructure shares bounced up on expectations those sectors could benefit from polices crafted by the incoming Trump administration in the U.S., including plans to spend on upgrading infrastructure.
Emerging markets in Asia sold off sharply on Friday after U.S. Treasury yields rose overnight. Indonesia's Jakarta Composite Index was off 3.0%, the PSEi in the Philippines tumbled 2.9% and Malaysia's FTSE Bursa Malaysia KLCI sank 1%. In Shanghai, stocks entered a technical bull market on Friday, closing 20% higher than a low reached on Jan. 28. Broad-based gains, in particular brokerage stocks in the afternoon, helped to consolidate the market's strength. Infrastructure-related stocks jumped, while smaller-cap shares in Shenzhen lagged. The Shanghai Composite gained 0.8% Friday. Elsewhere, Hong Kong's Hang Seng Index was down 1.4%, South Korea's Kospi closed 0.9% lower and Taiwan's Taiex fell 2.1%. Japan's Nikkei bucked the regional selloff, rising 0.2%, even as the yen gained 0.3% against the dollar.
A second day of gains Friday for Australian stocks in the wake of Donald Trump's victory in the U.S. presidential election helped the local market to its sharpest weekly gain in four months, as investors picked up bank and resources shares. Action in Australia tracked Wall Street, as investor worries about what a Trump presidency could mean for the global economy shifted to a focus on the stimulus effects of his policy platform. That meant a second day of gains for energy, mining and financial sectors, but further pressure on utilities and real-estate stocks as bond yields jumped. A late push helped the S&P/ASX 200 finish at the session high, up 0.8% at 5370.7.It rose 3.7% for the week, snapping a four-week run lower.
The London Metal Exchange three-month copper contract closed down 0.1% at $5,549/t. Other base metals also closed lower. Aluminium prices fell 1.5% to $1,745/t, zinc fell 2.9% to $2,458/t, tin fell 1.9% to $21,493/t, nickel fell 4.7% to $11,165/t, and lead fell 2.7% to $2,097/t.
In this Issue:
Paladin Energy (PDN) | Balance Sheet Concerns | Under Review
Market Cap: $223m | Current Price $0.12 | Target price Under Review
Paladin Energy (PDN) has announced that it is unlikely to complete the strategic transactions with CNNC Overseas Uranium Holdings (COUH) and MGT Resources for the respective divestments of 24% of the Langer Heinrich Mine (LHM) and 75% of the Manyingee deposit. Definitive agreements for the sale of LHM are yet to be executed. While Argonaut still expects the transaction to be completed, this delay increases uncertainty. The declining uranium price (UxC quoted spot US$18.50/lb) may put COUH is a position to renegotiate the non-binding price of US$175m for 24%.
TFS Corporation (TFC) | Shorts to get a wedgie? | BUY
Market Cap $546m | Current Price $1.40 | Valuation $3.30
There is a 37.1m share short interest in TFC: ~10% of shares on issue and equivalent to ~50 days’ trading. This is unwarranted. The last couple of years has seen the Company consistently deliver against operational and financial goals, and TFC is set to benefit in FY17 from a jump in operational cash flow on the back of a much bigger, largely on balance-sheet, harvest. The AGM presentation confirms TFC’s momentum and, in our view, the reasons to short the stock will get tested this financial year. Buy maintained.
Recent Contacts & Presentations:
Orthocell Ltd (OCC), BC Iron Limited (BCI), ALT Resources Ltd (ARS), Gascoyne Resources Ltd (GCY), Dacian Gold (DCN), Orocobre Ltd (ORE), Alchemy Resources Ltd (ALY), Acacia Coal Ltd (AJC), Minotaur Exploration Ltd (MEP), Northern Minerals Ltd (NTU), Walkabout Resources Ltd (WKT), Antipa Minerals Ltd (AZY), Noxopharm Limited (NOX), Botanix Pharmaceuticals Ltd (BOT), Emerald Resources NL (EMR), Metals of Africa Ltd (MTA), Stavely Minerals Ltd (SVY), Australis Oil & Gas Ltd (ATS), Davenport Resources Ltd (DAV), TFS Corporation Limited (TFC), Emmerson Resources Ltd (ERM), Syntonic Ltd (SYT)