Market Update & Important Indicators
U.S. stocks edged higher Friday, but capped their first weekly decline in four weeks, as escalating tensions in Iraq added to investor concerns about valuations and sluggish economic growth. The Dow rose 41.55 points, or 0.2%, to 16775.74. The S&P 500 added 6.05 points, or 0.3%, to 1936.16. The Nasdaq advanced 13.02 points, or 0.3%, to 4310.65. Energy shares in the S&P 500 posted the strongest gains among the index's 10 sectors Friday as the Middle East tensions fuelled the biggest weekly rise in oil prices so far this year. The preliminary Thomson-Reuters/University of Michigan consumer sentiment index for June fell to 81.2, bucking economists' forecast for an increase to 83.0 from May's final reading of 81.9.
European stocks fell Friday, as an escalation of violence in Iraq sent energy prices soaring, while investors assessed the prospect of a sooner-than-later interest-rate increase in the U.K. The Stoxx Europe 600 fell 0.2% to 347.07, though it pared an intraday loss of 0.9%. Oil producers were among the strongest advancers, with Statoil ASA rising 2%, Eni SpA higher by 1.7%, Repsol SA up 1.1%, and Royal Dutch Shell PLC tacking on 0.8%. Germany's DAX 30 index fell 0.3% to 9,912.87, and France's CAC 40 index declined 0.2% to 4,543.28. Meanwhile, U.K. stocks were hit by the prospect of higher interest rates. The U.K.'s FTSE 100 index dropped 1% to 6,777.85 after Bank of England chief Mark Carney said an interest-rate increase may come sooner than the markets anticipate.
Japanese stocks swung into positive territory on Friday, shrugging off concerns over Iraq, while Hong Kong stocks hit their highest level this year. Stocks started the day lower, as the region took a negative lead from Wall Street where shares fell on Thursday after retail sales missed expectations and news reports showed Iraq edging toward all-out sectarian conflict. Japan's Nikkei Share Average ended up 0.8% at 15097.84 after the yen weakened during Asian trade. A falling yen benefits exporters in Japan because it makes its goods cheaper to overseas buyers. Stocks were also higher in China, with banks gaining after data showed that lending surged in May, a potential boost to the sluggish economy. In addition, retail sales data that came out on Friday exceeded expectations, rising 12.5% in May from a year earlier, compared with a 12.1% increase forecast.
Copper futures closed higher on the London Metal Exchange Friday, boosted by solid economic data from China. China's industrial output in May was up 8.8% on the year, accelerating slightly from an 8.7% increase in April, according to data provided by the National Bureau of Statistics. Fixed-asset investment in non-rural areas rose 17.2% in January to May and lending picked up in May. Oil futures posted their largest weekly gain since December as a Sunni insurgency in Iraq jolted the market, fuelling fears of reduced oil output from one of the world's largest crude producers. Gold gained 0.3% to $1,277.5/oz. The AUD is buying US$0.94.
In This Issue
Argonaut’s Stock Coverage & Recommendations
Chasing the butterfly
Recent gold M&A activities on the ASX have largely focused on opportunistic acquisition of funded / partly funded projects (see Table 2, page 3). The announced Merger Implementation Agreement between Papillion (PIR) and B2Gold (BTO:CN) is highly encouraging as it marks the first transaction on a high quality, unfunded ASX asset in 2014. PIR’s Fekola’s project is in a class of its own on the ASX given scale, grade and mine life. A successful merger will see the quality of gold development projects on ASX deteriorate. Longer term, the ability for ASX juniors to replicate the success of PIR depends on genuine exploration success. Argonaut identifies Troy Resources (TRY, TP $1.80), Orbis (OBS, unrated) and Renaissance (RNS, Spec Buy) as preferred gold development exposures following a successful PIR / BTO merger.
Recent Contacts & Presentations
Northern Star (NST), MacPhersons (MRP), Doray (DRM), Kula (KGD), Crusader (CAS), Saracen (SAR), Troy (TRY), Pacifico (PMY), Manas (MSR), Drake (DRK), Gage Roads (GRB), NRW Holdings (NWH), Macmahon (MAH), Nido Petroleum (NDO), Azonto Petroleum (APY), Sino Gas & Energy (SEH), Global Construction (GCS), Resources and Investment (RNI), Papillon (PIR), Sun Resources (SUR), Commodities Group (COZ), Nextdc (NXT), Core Exploration (CXO), Inca Minerals (ICG)