Market Update & Important Indicators
Shares of Facebook plummeted Monday as a broader shakeout among technology stocks put major U.S. indexes on pace for their worst day since early February. Stocks opened lower and continued to fall as shares of Facebook suffered their biggest decline in roughly four years after it said a firm with ties to the 2016 Trump campaign improperly kept data on tens of millions of users. Shares of other major tech companies followed Facebook lower, including Google parent Alphabet and Apple, and the selloff spilled into nearly every other corner of the market on Monday. All 11 major S&P 500 sectors fell in afternoon trading. The S&P 500, Dow Jones Industrial Average and the Nasdaq Composite were on pace for their worst day since stocks entered correction territory on Feb. 8, underscoring the tech sector's outsize ability to dictate broader market moves through the sheer size of its biggest constituents. The Dow declined 1.3%, pushing the index back into the red for the year as all 30 components traded lower. The S&P 500 dropped 1.4%, falling for the fifth time in six sessions, while the Nasdaq Composite dropped 2.6%. The tech-heavy index had recovered its February losses in recent weeks and set a new all-time high a week ago. The U.S. gold price traded slightly higher overnight, finishing 0.2% stronger at 1316.60 US$/oz.
European shares closed lower as a higher euro against the dollar weighed on sentiment. The Stoxx Europe 600 ends the session off 1.1% at 373.68 as the euro gained 0.4% to $1.2341. Germany's DAX closed 1.4% down and France's CAC-40 declined 1.1%. The UK’s FTSE Index closed 1.7% lower at 7,043.
In Asia, the Nikkei Stock Average closed down 0.9%, on the back of political headwinds for Japanese Prime Minister Shinzo Abe. His approval rating has taken a hit, new polls show, after revelations that the names of senior political figures–including Mr. Abe and his wife–had been removed from documents about the cut-price sale of land to a school operator.
Australia's stock benchmark for a 2nd day avoided declines seen in much of the rest of Asia Pacific, helped today by a strong bounce in energy stocks. That sector climbed 1.65% amid Friday's near-2% jump in oil prices, helping cut the month's drop for the industry to 2.4%. As such, the S&P/ASX 200 rose 0.2% to 5959.4, trimming March's decline to 0.9%. Also helping today was property stocks while financials fell further as the Royal Commission continues to grill bank executives.
The London Metal Exchange’s 3-month copper contract traded lower overnight, falling 0.5% to close at $6,854/t. The other base metals again finished mixed. Tin prices closed 1.1% lower at 20,845/t, whilst Zinc prices closed flat at 3,265/t. Aluminium prices closed 0.1% higher at 2,066/t. Lead prices pulled back again, retreating 0.9% further to 2,362/t, whilst Nickel prices fell by another 1.0% to finish at 13,429/t.
In this issue
Kidman Resource | World Class Deposit | SPEC BUY
Market Cap $746m | Current Price $2.24 | Target Price $2.50
Kidman Resources (KDR) released an updated Mineral Resource for the Earl Grey lithium deposit in Western Australia with 189Mt @ 1.5% Li2O for 2,843kt contained Li2O or 7Mt lithium carbonate equivalent (LCE). This represents a 54% increase in LCE and positions Earl Grey to the second largest hard rock lithium deposit globally. The greater Mt Holland project is World Class based on its large scale, wide mineralisation, low strip ratio, further exploration potential and low risk jurisdiction. KDR will have strong newsflow through 2018 with feasibility studies on the spodumene concentrator and lithium carbonate/hydroxide refinery in Q3 and Q4 respectively, as well as potential offtake agreements. The Company is focussing on ex-China markets which we see a valuable differentiator to its peer group of ASX listed hard rock lithium plays. SPEC BUY maintained with a revised target price of $2.50 (from $1.90).
Sovereign Metals |New graphite discovery at Msinja | SPEC BUY
Market Cap $33m | Current Price $0.13 | Target Price $0.32
Sovereign Metals (SVM) announced the discovery of a new zone of mineralisation at the Msinja Project, just 1.5km south of the defined Malingunde deposit in Central Malawi. Results from an Aircore (AC) drilling program in 2017 uncovered thick high-grade mineralisation at Msinja with up to 100m cumulative surface width.
Threat Protect (TPS) | Well connected | SPEC BUY
Market Cap $22m | Current Price $0.195 | Valuation $0.220
The $8m acquisition of SA-based Security Alarm Monitoring Service (SAMS) adds 55% more connections, diversifies and boosts revenue, increases capacity across the group, and provides organic growth opportunities to leverage infrastructure. Our forecasts are upgraded on an assumption SAMS adds to group margin and, given debt funding, delivers earning accretion. Upgrade to Spec Buy (prior Hold) on a $0.225 valuation (prior $0.170).
Recent Contacts & Presentations
Paladin Energy Ltd (PDN), Cooper Energy Ltd (COE), Medibio Ltd (MEB), Botanix Pharmaceuticals Ltd (BOT), Salt Lake Potash Ltd (SO4), Golden Mile Resources Ltd (G88), NTM Gold Ltd (NTM), Ausmex Mining Group Ltd (AMG), Matrix C&E Ltd (MCE), Austal Ltd (ASB), Decmil Group Ltd (DCG), Ventnor Resources Ltd, Ausdrill Ltd (ASL), Alice Queen Ltd (AQX), PNX Metals Ltd (PNX), Alliance Resources Ltd (AGS), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), Sino Gas & Energy Holdings Ltd (SEH), Australis Oil & Gas Ltd (ATS), Explaurum Ltd (EXU), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF