Overseas Market Report – Stocks Lower; Data, Oil Prices, Fed Meeting Eyed
U.S. stocks closed mostly lower Tuesday but off session lows, as weak oil prices drove a selloff in energy and materials shares.
Weak U.S. economic data also weighed on sentiment a day before the Federal Reserve is expected to release an updated policy statement and economic projections.
U.S. retail sales were off 0.1% in February and January's data was revised down from a 0.2% gain to a 0.4% decline. Lower gas prices and lower auto dealer sales contributed to the decline.
The producer price index was off 0.2% last month as lower food and gas prices weighed. Excluding those volatile categories, producer prices were up 0.1%. Core prices are now up 0.9% year over year.
At close the Dow was up 0.1%, while the S&P 500 was down 0.2% and the NASDAQ was down 0.5%.
For Australian ADRs listed on the NYSE, BHP Billiton fell 188 cents (-7.00%) to $24.97, ResMed slipped 29 cents (-0.49%) to $58.78, Telstra Corporation lost 29 cents (-1.45%) to $19.66, Spark New Zealand dropped 18 cents (-1.56%) to $11.35 and Westpac declined 51 cents (-2.07%) to $24.12.
At 8:00 AM (AEDT), the 10-year Treasury note yield was 1.96% and the 5-year yield was 1.49%.
Shares of Valeant (VRX) plunged after the firm sharply cut its earnings guidance and warned of a possible "event of default". Management said it is still working on filing its annual report as it continues to investigate its relationship with specialty pharmacy Philidor. If the firm fails to file its annual report, it could potentially breach its bond covenants. Management also said it now expects to earn between US$1.30 and US$1.55 a share in the first quarter, instead of the US$2.35 to US$2.55 per share it had previously expected.
European markets were lower Tuesday.
The FTSE 100, Germany's DAX and the French CAC 40 were down 0.6%, 0.6% and 0.8%, respectively.
Asian shares finished mixed.
The Shanghai Composite ended up 0.2% after a late rally. The Nikkei 225 and Hang Seng were each off 0.7%. India's Sensex was down 1%.
Australian Market Report- Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 6 points lower at 5,099.
Tuesday 15 March – close. The local market opened lower today on the back of little changes on Wall Street overnight. The negativity continued throughout the day, weighed down by broad-based losses amongst the miners and big lenders. Most sectors posted losses with the exception of telecommunication services. The Australian dollar fell against most major currencies.
The All Ordinaries slumped 73.80 points to 5,168.60 while the S&P/ASX 200 fell 74.10 points to 5,111.40.
In This Issue
Argonaut Research | Regis (RRL) | HOLD
Regis (RRL) released maiden Reserves on its Gloster and Baneygo deposits:
• Gloster – 7.0Mt @ 1.0g/t for 226koz Au
• Baneygo – 3.6Mt @ 1.16g/t for 136koz Au
The Reserves are estimated at a A$1,400/oz gold price and the quantums are in-line with Argonaut’s expectation (~340koz modelled). RRL continues to demonstrate mine life extensions through reinvigorated exploration programs and accretive acquisitions. Recent results from Tooheys Well, located just 2.5km south of Garden Well, are amongst the best seen from Australian domiciled gold producers in recent times. Argonaut revises its recommendation to HOLD (was SELL) with an unchanged valuation of A$2.30.
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Argonaut Research | Berkeley Energia (BKY) | BUY
Berkeley Resources (ASX:BKY, LON:BKY) has begun development of its 100% owned Salamanca uranium project in Spain with the realignment of power and roads to enable mining of the Retortillo deposit. Whilst these are early stage activities, they formalise the Company’s ability to commence development under the permits and approvals attained to date. Argonaut maintains a BUY recommendation with a $2.10 target price.
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Asciano announced that it has entered into binding documentation with the Brookfield Consortium and Qube Consortium in relation to the Joint Consortium Scheme including an implementation deed and sale agreements in relation to Patrick's container terminal business (Ports) and the Bulk & Automotive Port Services business. Under the Scheme Implementation Deed, it is proposed that a vehicle (BidCo) owned directly or indirectly by CPPIB, GIP, CIC Capital, GIC and bcIMC (Rail Consortium), will acquire 100% of the issued capital of the Company at $9.15 cash per Company share. The $9.15 Scheme Consideration represents the $9.28 per share announced on 23 February 2016, reduced by the amount of the interim dividend of $0.13 per share declared by the Company on 24 February 2016 which is payable on 24 March 2016. AIO added 12 cents to $8.99.
Recent Contacts & Presentations
Troy Resources (TRY), Medusa Mining (MML), Red 5 (RED), OBJ (OBJ), Sino Gas & Energy Holdings (SEH), Ausdrill (ASL), Danakali (DNK), Matrix (MCE), OBJ Limited (OBJ), Tox Free Solutions (TOX), Energia Minerals (EMX), Berkeley Energia (BKY) , Finders Resources (FND), 4DS Memory Ltd (4DS) , Bionomics Ltd (BNO), Resolute Mining (RSG), Avanco Resources (AVB), Rift Valley Resources (RVY), Kilbaran Resources (KNL), Pantoro (PNR)
Please read Argonaut's Important Disclaimers & disclosures