Market Update & Important Indicators
U.S. stocks edged higher, as gains in technology and financial shares helped extend a rally that has carried major indexes to record highs. With major U.S. indexes recovered from the U.K.'s surprise vote to leave the European Union and shaking off the attempted coup in Turkey, some investors and analysts said that if companies' earnings and outlook for the future exceed expectations in the coming weeks, major indexes could climb even higher. Technology shares in the S&P 500 gained 0.8% and the tech-heavy Nasdaq gained 0.6%. Financial shares in the S&P 500 gained 0.8% after Bank of America became the latest large lender to beat earnings expectations.
The Stoxx Europe 600 gained 0.2% as investors are looking ahead to the European Central Bank policy meeting on Thursday – its first since the U.K. voted to leave the European Union. Investors pinning their hopes on central bank stimulus after the Brexit vote have helped push stocks higher in recent weeks. The Bank of England kept interest rates on hold last week, but signalled it is likely to ease policy in August. Economists expect the ECB to strike a dovish tone at its Thursday meeting, but to stop short of boosting its stimulus measures.
Stocks in Asia were mixed on Monday, in a largely muted reaction to a failed coup against the Turkish government, while data out of China showed slowing home price gains. The Hang Seng Index was up 0.2%, the Shanghai Composite Index fell 0.1% and South Korea's Kospi was flat. For the most part investors were still focused on China, where data last week showed the country maintaining its growth pace of 6.7% in the second quarter. On Monday, data showed housing prices in the country rising at a slower pace in June from a month earlier. Chinese home prices increased 0.7% from a month earlier, compared with gains of 0.8% and 1.0% recorded in May and April, respectively. Chinese stocks were slipping, on concerns the better growth data decreases the likelihood of the central bank announcing easing measures. In Hong Kong, a gauge of property stocks on the Hang Seng Index was up 0.3%, ahead of most other sectors. Markets in Japan are closed for a holiday, after the Nikkei's 9.2% jump last week.
Australian shares ended higher for the eighth straight session, led by consumer and energy stocks. The S&P/ASX 200 ended Monday up 28.9 points, or 0.5%, at 5458.5 — its highest close since Aug. 11 last year — as the country's big banks also gained. It has been the longest run higher for the local market since late December, climbing back from losses in the wake of Britain's vote to leave the European Union. Sentiment has been buoyed of late by rebounding U.S. stock indexes and investors' expectation that governments and central banks will seek to reassure markets and provide stimulus.
The London Metal Exchange's three-month copper contract was 0.43% higher at $4,939/t at the PM kerb close, after trading lower for most of the day. Other base metals were mixed. Aluminium closed 0.6% lower at $1,645/t, zinc was up 0.6% at $2,213/t, nickel was up 2.6% at $10,505/t, lead was down 1.2% at $1,844/t, and tin was down 1.2% at $17,902/t.
In this Issue
Paladin Energy (PDN) | Strategic Initiatives imminent | SPEC BUY
Market Cap $368m | Current Price $0.22 | Valuation $0.26
Paladin Energy (PDN) announced June Q results with Langer Heinrich (LHM, 75% PDN, 25% China National Nuclear Corp.) producing 1.1Mlb U3O8, down 14% Q-on-Q and below Argonaut’s forecast of 1.3Mlb. C1 costs increased 10% to US$26.60/lb. Negative movements in both production and costs were largely the result of water recycling issues which carried on from the March Q. Cash at the end of the quarter was US$59.2m, within the guided range of US$45-65m and higher than Argonaut’s forecast of US$40m. PDN expects to announce an outcome on strategic initiatives by the end of July. These initiatives, which may include partnerships, strategic investment, funding and/or corporate transactions, are required to repay the outstanding US$212m convertible bonds (CBs), due April 2017.
MZI Resources (MZI) | Sales contract increase for H2 2016 | BUY
Market cap $71m | Current price $0.34 | Valuation $0.68
MZI Resources (MZI) announced that its major leucoxene sales customer (Chemours) has requested a significant increase in off-take for the remainder of 2016. This request considerably offsets the sales reduction by the same customer, announced in February 2016. Chemours appears to be reversing sales reductions across its supplier base following a strong painting season in the US, increasing demand for pigment products. Two of the three largest mineral sand producers, namely Iluka and Tronox, have signalled price increases in both TiO2 and zircon products. Most recently, Iluka announced it is seeking a zircon reference price of US$1,010/t, an increase of ~US$60/t on recent prices. MZI benefits from selling high value mineral sands products, devoid of low payable ilmenite, with its lowest value product L70 sold into fixed price contracts estimated at US$350/t.
Recent Contacts & Presentations
OBJ Limited (OBJ), Kibaran (KNL), Department 13 (D13), Peak Resources (PEK), Fortescue Metals (FMG), Paradigm Biopharma (PAR), Botanix (BOT), Peel Mining (PEX), Ausgold Limited (AUC), Gascoyne Resources (GCY), Metro Mining (MMI), Pacific Energy (PEA), Novatti Group Ltd (NOV), Hammer Metals Ltd (HMX), Helix Resources Ltd (HLX), Saracen Mineral Holdings Ltd (SAR), Merdeka Copper Gold (MDKA: IJ), Monument Mining (MMY.V: TSX)