Market Update & Important Indicators:
Gains in financial shares lifted stocks Friday in the wake of better-than-expected earnings reports from three big U.S. banks. Financial stocks in the S&P 500 rose as much as 1.5% after J.P. Morgan, Citigroup and Wells Fargo reported earnings that beat analysts' estimates. Some investors and analysts said that Friday's reports provided an encouraging picture of the lenders' health, though they weren't strong enough to offset broader concerns about the slow pace of economic growth or the challenges posed to the financial sector by low interest rates. Investors are hoping for a rebound in corporate profits, which are projected to fall for the sixth-consecutive quarter, according to analysts polled by FactSet. The Dow Jones Industrial Average rose 0.2%, while the S&P 500 inched up less than 0.1% and the Nasdaq Composite also gained less than 0.1%. Major indexes posted their second-consecutive week of declines, with the blue-chip index falling 0.6%, while the S&P 500 slipped 1% and the Nasdaq lost 1.5%. On the economic front, U.S. retail sales met analysts' expectations, rising 0.6% in September from the previous month, the Commerce Department said Friday.
European stocks finished higher Friday, as bank shares rose and mining stocks got a lift from upbeat inflation news out of China. The Stoxx Europe 600 bounced up 1.3% to finish at 339.95. Financial stocks were among the leading advancers. The moves erased the market's weekly loss, leaving the pan-European index up 0.1% for the week.
Thailand's stock market traded sharply higher Friday, rebounding from steep losses seen all week as the country's monarch lived his last days. Traders reacted positively to Prime minister and junta chief Prayuth Chan-ocha's assurances that king's expected heir, Crown Prince Maha Vajiralongkorn, would succeed his father. This immediately lifted concerns about a messy succession, analysts said. Other Southeast Asian benchmark indexes were broadly stable Friday, with Singapore's Straits Times Index up 0.4% and the Philippines' PSEi adding 1.1%. Elsewhere in Asia, Japan's Nikkei Stock Average gained 0.5% and Korea's Kospi rose 0.4%. Australia's S&P/ASX 200 closed generally flat. The Shanghai Composite reversed its losses and finished up about 0.1% after China's consumer price index rose 1.9% from a year earlier in September, while the producer price index gained 0.1%. The more upbeat data helped Hong Kong's Hang Seng Index reverse four straight sessions of declines to close up 0.9%, with financial stocks doing the major lifting.
Australian shares held broadly steady Friday, with weakness in mining stocks and the big banks offset by modest gains elsewhere. After a choppy session, the S&P/ASX 200 slipped 1.5 point to 5434.0 for a third straight day in the red. That left the index down 0.6% for the week, its first decline in the past four weeks. For the day, 2.18 billion shares were traded with a value of 4.34 billion Australian dollars (US$3.28 billion), Commonwealth Securities said.
The London Metal Exchange's three-month copper contract closed down 0.8% to $4,675/t. Other base metals were mixed on Friday. Aluminium fell 1.0% to $1,672/t and tin fell 0.2% to $19,486/t. Zinc rose 0.8% to $2,246/t, nickel rose 0.6% to $10,447/t and lead rose 0.2% to $1,984/t.
In this Issue:
Independence Group (IGO) | Reserves and Resources Update | HOLD
Market Cap: $2.3b | Current Price $3.81 | Target Price $3.75
Independence Group (IGO) released its annual Reserve and Resource (R&R) update to the end of June 2016. Key movements include a 0.5Moz increase in Resources and 0.6Moz decrease in Reserves at Tropicana gold (100% basis) and a 24% increase in Reserves at Jaguar (by tonnage net of depletion). Nova and Stockman R&Rs remain unchanged, while decreases at Long were roughly in line with mine depletion. IGO has budgeted A$33m for near mine and regional exploration in FY17.
Orbital (OEC) | Remainder of REMSAFE acquired | HOLD
Market Cap $76m | Current Price $0.93 | Valuation $0.95
The acquisition of the balance of the REMSAFE business for scrip is a positive outcome for OEC. Apart from neatening the business structure, the deal incentivises the vendor, keeps cash within the business, and looks attractively priced. We continue to factor in strong growth from REMSAFE in the coming years and our valuation of $0.95 (prior $0.85), at ~15x our FY18F EBITDA, reflects this potential. As noted at the time of the FY16 results, we believe delivery of some of the earnings promise is required to support further share price gains. Hold maintained.
Recent Contacts & Presentations:
Antipa Minerals Ltd (AZY), Vault Intelligence Ltd (VLT), Noxopharm Ltd (NOX), Gage Roads Brewing Co. (GRB), West African Resources (WAF), Cedar Woods Properties Ltd (CWP), Sino Gas & Energy Holdings Ltd (SEH), Salt Lake Potash Ltd (SO4), Kalina Power Ltd (KPO), Austal Limited (ASB), Agrimin Ltd (AMN), Stavely Minerals Ltd (SVY), MGC Pharmaceuticals Ltd (MXC), Vital Metals Ltd (VML), Tox Free Solutions Ltd (TOX), Swick Mining Services Ltd (SWK), Davenport Resources Ltd (DAV), 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)
Please read Argonaut's Important Disclaimers & disclosures