Market Update & Important Indicators:
U.S. stocks slipped intraday as fresh trade threats between the U.S. and China stoked caution among investors. Signs that the U.S. trade fight with China was set to escalate this week capped stock gains and sent the dollar lower. The Trump administration is planning to unveil new tariffs on $200 billion in Chinese goods, with President Trump saying Monday that he would make an announcement after the end of the trading day. Chinese officials have said they could pull out of trade talks if President Trump carries out his plans. The Dow Jones Industrial Average fell 93 points, or 0.4%, to 26062, extending declines after Mr. Trump said he would make his announcement later in the day. The S&P 500 was down 0.6% and the Nasdaq Composite dropped 1.3%, hurt by a decline in shares of technology companies. So far, the U.S. stock market has managed to hold its ground and remain near all-time highs, in part because trade developments have been incremental and the economic impact on the U.S. has so far been minimal, analysts said. Even with Monday's decline, the S&P 500 is off less than 1% from a record. Shares of technology-focused companies retreated Monday, weighing on the Nasdaq. The US gold price advanced 0.7% to 1201.10 US$/oz.
European shares closed just higher as gains for retailers offset trade tensions. The Stoxx Europe 600 ended the session 0.1%, or 0.46 points, higher at 378.31, though the DAX fell 0.2% and the CAC 40 backtracked 0.1%. Swedish fashion retailer Hennes & Mauritz rose nearly 17% after third-quarter sales grew as it continues to revamp its logistics infrastructure. Shares in Casino Guichard-Perrachon jump 7.6% after the French grocer's parent company Rallye signed a EUR500 million credit line maturing in 2020.
Asian stocks were lower across the board, with Hong Kong's Hang Seng down 1.3% after a winning streak, led lower by technology, consumer and health care shares. The Shanghai Composite fell 1.1% to its lowest close since November 2014, while South Korea's Kospi fell 0.7%. Analysts pointed to muted trading volumes across the region resulting from Typhoon Mangkhut and a holiday in Japan, where markets were closed. The moves followed news that the U.S. economic conflict with China is set to escalate this week, as the Trump administration plans to unveil new tariffs on $200 billion in Chinese products entering the U.S. and Beijing debates new ways to retaliate against U.S. corporations. Chinese officials said if President Trump carries out his plans early this week, talks could be scuttled.
Australia's stock market was the best performer in the region for most of the day, as other Asia-Pacific indexes struggled with U.S.-China trade worries. The ASX 200 rose 0.3% to 6185. Energy and financial stocks logged solid gains and telecom rose 1.5%. But materials fell slightly and health care fell 0.9%. Weighing today were plunges for elder-care providers due to a planned government probe into the sector.
Base metal prices were mostly down overnight on the London Metal Exchange. Larger losses were seen in nickel which was down 3.3% to 12,158/t. Zinc and the 3-month copper contract slipped 0.7% and 0.5% respectively. Lead advanced 1.7% to close at 2,065/t.
In this issue:
Core Exploration (CXO) | Core Strength | SPEC BUY
Market Cap $27m | Current Price $0.04 | Target Price $0.10
Core Exploration (CXO) is developing the Finniss Lithium Project in the Northern Territory, Australia. The project benefits from high grades (one of the highest in Australia), simple metallurgy, low capex and close proximity to port facilities in Darwin (~88km), which in-turn, benefits from a short shipping route to China. The June 2018 Pre-Feasibility Study (PFS) outlined a relatively short mine life, based on current resources, however our site visits last month confirmed material exploration potential which should see the mine life increased from ~2 years to 5-10 years. CXO has two offtake agreements with key downstream Chinese lithium refiners with combined prepayment offers of US$55m and an equity placement of $3m (to be finalised). Subsequently, the majority of the estimated PFS capex ($53.5m) plus working capital could be funded through these partnerships. Speculative Buy recommendation
Orient Express – Nickel – Inventory Decline Supports Price Recovery:
Nickel prices have recently undergone some downward pressure due to concern about demand a slow-down from stainless steel producers. We highlighted this price weakness in our Asia Morning Note on 4 September. However, the recent stainless-steel inventory drawdown should support an increase in the nickel price in the short-term. Meanwhile, the nickel sulphate premium to the nickel price has started to increase, reflecting growing demand from the battery sector.
Recent Contacts & Presentations:
Explaurum (EXU), FAR (FAR), Ramelius Resources (RMS), Strandline (STA), Dimerix (DXB), Aspire Mining (AKM), Austal Limited (ASB), Macmahon Holdings Limited (MAH), Nickle Mines Limited (NIC), Carnarvon Petroleum Limited (CVN), Prodigy Gold (PRX), Ausdrill Ltd (ASL), Bionomics Ltd (BNO), Gold Road Resources (GOR), Encounter Resources Ltd. (ENR), OZ Minerals Limited (OZL), Melbana Energy (MAY), Botanix Pharmaceuticals Ltd (BOT), Novo Litio (NLI), Classic Minerals (CLZ), OZ Minerals (OZL), Saturn Metals (STN), Antipa Minerals (AZY), SRG Ltd (SRG) Bowen Coking Coal (BCB), Birimian (BGS), Breaker Resources (BRB), Galena Mining (G1A), Valmec (VMX),Bryah Resources (BYH), Calima Energy (CE1) Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1)