Market Update & Important Indicators
U.S. stocks rose intraday, putting the Dow Jones Industrial Average and S&P 500 on track for their first day of gains in four sessions. The indexes still showed signs of weakness, as stocks swung between small gains and losses earlier in the session. The bull market is struggling to regain some of its momentum, as investors continued to assess the implications of the Trump administration's protectionist trade agenda. President Donald Trump is now considering a package of anti-China measures, including tariffs on some imports, to pressure Beijing to end requirements that U.S. companies transfer technology to Chinese firms. Investors worry that more tariffs, along with aggressive responses from key U.S. allies such as the European Union, could crimp growth around the world and put a damper on earnings among U.S. conglomerates, manufacturers and other businesses — which had been crucial components to the rally's upswing last year. Despite the trade fears, money managers say the rosy economic outlook for the U.S. and abroad has largely kept stocks from tumbling further and helped boost indexes again on Thursday. The U.S. gold price traded slightly lower overnight, finishing down 0.1% at 1315.70 US$/oz.
European shares closed higher, with the Stoxx Europe 600 ending up 0.5% at 376.88, mirroring a rise in U.S. stocks as concerns about U.S. trade sanctions ease for now. Falls in the euro against the dollar after solid U.S. data helped, with auto stocks among the main gainers, lifted also by earlier upbeat eurozone car registration data. This helped German stocks outperform, with the DAX closing up 0.9%. France's CAC 40 ended up 0.7%, while Spain and the U.K. underperformed, with the IBEX 35 down 0.04% and the FTSE 100 up 0.1%.
Stocks in several Asia-Pacific markets came back from early declines as interest in cheap buying opportunities started to push back concerns over trade protectionism. Stock indexes in Japan and Hong Kong initially dropped by more than 1% following falls in major U.S. benchmarks overnight, but as investors perceived overselling they stepped in and pushed the Nikkei and the Hang Seng back into positive territory. However, shares in mainland China continued to fall. South Korea's Kospi index ended in positive territory.
Roughly 1% drops for Australia's big banks helped keep the country's stock benchmark in the red for a third session, though it finished near some of the day's better levels. The S&P/ASX 200 fell 0.2% to 5920.80 even as the materials sector rose 0.6%. That was more than offset by declines in the Big 4 banks and a 0.8% drop in energy stocks on weakness away from the oil patch. This current three-day slide follows a three-day winning streak; the index is up a net 0.3% during those six sessions.
The London Metal Exchange’s 3-month copper contract traded lower overnight, falling 1.0% to close at $6,920/t. The other base metals finished mixed. Tin prices closed 0.5% lower at 21,094/t, whilst Zinc prices added 0.3% to close at 3,233/t. Aluminium prices fell 0.3% to close at 2,063/t. Lead prices were stronger again, increasing 0.3% to 2,414/t, whilst Nickel prices pulled back 1.5% to finish at 13,576/t.
In this issue
Paringa Resource (PNL) | Deep value despite weather delays | BUY
Market Cap $111m | Current Price $0.35 | Target Price $1.50
Paringa Resources (PNL) released a construction update of its Poplar Grove thermal coal mine citing minor delays from a significant flooding event. The site was impacted by the worst flooding in the Western Kentucky region in 20 years. The impact will likely push production back four weeks from late-August to September/October 2018. Importantly, the sites levy system mitigated any major impact to installed infrastructure or the mine box cut. PNL is trading at a deep discount to Argonaut’s $1.50/sh target price, and despite delays, it is just six months from first production. Recently announced US tariffs and declining US coal inventories should buoy domestic coal demand and prices. BUY maintained.
Recent Contacts & Presentations
Cooper Energy Ltd (COE), Medibio Ltd (MEB), Botanix Pharmaceuticals Ltd (BOT), Salt Lake Potash Ltd (SO4), Golden Mile Resources Ltd (G88), NTM Gold Ltd (NTM), Ausmex Mining Group Ltd (AMG), Matrix C&E Ltd (MCE), Austal Ltd (ASB), Decmil Group Ltd (DCG), Ventnor Resources Ltd, Ausdrill Ltd (ASL), Alice Queen Ltd (AQX), PNX Metals Ltd (PNX), Alliance Resources Ltd (AGS), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), Sino Gas & Energy Holdings Ltd (SEH), Australis Oil & Gas Ltd (ATS), Explaurum Ltd (EXU), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Melbana Energy Ltd (MAY), Genesis Minerals Ltd (GMD), Proteomics International Laboratories Ltd (PIQ)