Market Update & Important Indicators:
U.S. stocks rose Monday, led by gains in commodity-linked shares as crude oil prices touched one-month highs. Shares of mining and chemical companies in the S&P 500 rose 1.1% Monday, while energy shares gained 0.7% as oil climbed again after posting its best week since April. Retail companies are providing the bulk of earnings reports in the S&P 500 over the next two weeks, according to FactSet. Fed-funds futures, used by investors to place bets on central bank policy, show a less-than-50% probability of a rate rise by December, according to CME Group. Expectations for more central bank accommodation should continue to support equities, analysts said, even amid mixed economic data and relatively high valuations on U.S. stocks.
China stocks surged Monday as traders viewed Chinese credit data in the best possible light and on hopes of an imminent formal announcement of a Shenzhen-Hong Kong trading link. Hong Kong's Hang Seng Index gained 0.8% with the Shanghai Composite Index hitting a seven-month high, while small-cap stocks in Shenzhen rallied. The Shanghai Composite gained 2.4% in late afternoon trade Monday, while the small-cap focused ChiNext Composite Index rose 3.3%. The Nikkei Stock Average was down 0.3%. South Korean stock markets were closed for a holiday. China's rally was partly fuelled by a surge in brokerage stocks, in turn propelled by renewed hopes for the launch of Shenzhen-Hong Kong Stock Connect within 2016. Hong Kong Economic Journal reported Monday that the trading link could be announced as soon as this week and that it would be officially launched in December. The China Securities Regulatory Commission said last Friday that it had formed a special work team with its Hong Kong counterparts to prepare to launch the link. The Nikkei benchmark was relatively unscathed despite Japan's gross domestic product for the April-June quarter expanding at an annualized 0.2%, missing expectations for a 0.7% rise. April-June exports also fell, by 5.9% in real, annualized terms, after a modest 0.4% rise in the previous quarter.
Australian shares edged higher Monday as gains by the banks in the wake of a trading update from one of the country's biggest lenders countered weakness in mining stocks. Building on gains Friday, the S&P/ASX 200 closed up 9.1 points, or 0.2%, at 5540.0. The index now sits 4.6% higher so far in 2016. The "Big Four" banks, among the largest stocks in the ASX 200, together contributed more than 5 points to the index's gain Monday. The materials subindex dropped by 1.5% after prices for nickel and other industrial metals came under pressure at the end of last week following disappointing Chinese data on fixed asset investment and industrial production that pointed to a cooling economy and weaker demand for commodities from the giant metals consumer.
Copper prices rose in tandem with other metals as the week began on the back of a falling U.S. dollar. The London Metal Exchange's three-month copper contract settled 0.1% higher at $4,767/t at the PM kerb close on Monday. Other base metals also rose. Aluminium was up 1.4% at $1,666/t; zinc was up 1.2% at $2,260/t; nickel was up 2.0% at $10,467/t, lead was up 1.6% at $1,858/t; and tin was up 0.2% at $18,225/t.
Recent Contacts & Presentations:
Vimy Resources (VMY), West African Resources (WAF), Dacian Gold (DCN), Pilbara Minerals (PLS), Independence Group (IGO), Rio Tinto (RIO), Silver Lake Resources (SLR), Lynas Corporation (LYC), Evolution Mining (EVN), Regis Resources (RRL), Xanadu Mines (XAM), Mincor Resources NL (MCR), Carbine Resources Ltd (CRB), Antipa Minerals (AZY), Energia Minerals Ltd (EMX), Pantoro Limited (PNR), Boss Resources Ltd (BOE), Metro Mining Ltd (MMI), Metal Bank Ltd (MBK), Actinogen Medical (ACW), St. George Mining Ltd (SGQ), Resapp Health Ltd (RAP), Orecorp Limited (ORR), Dimerix Limited (DXB), Genesis Minerals Ltd (GMD), Dakota Minerals Ltd (DKO)