Market Update & Important Indicators:
On US markets, consumer-staples stocks tumbled intraday, pulling the S&P 500 lower as investors showed signs of fatigue after three straight days of gains. Investors were jarred by the weak performance of some of the world's biggest consumer product companies that reported earnings results. That sent shares of those companies into a tailspin. Although investors have been more muted in their response to companies that are reporting stronger-than-expected results so far, those that miss expectations or offer weak guidance have faced a harsh rebuke from investors. The S&P 500 fell 0.6% in recent trading, while the Dow Jones Industrial Average slipped 83 points, or 0.3%, to 24665. The US gold price rose overnight by 0.3% to finish at 1,345.30 US$/oz.
Most European equity markets ended modestly higher, buoyed by oil stocks as crude prices extended a rally, while investors waded through a pile of corporate earnings reports. On the national indexes, France's CAC 40 index rose 0.2% to end at 5,391.64, and the U.K.'s FTSE 100 index picked up 0.2% to close at 7,328.92. Spain's IBEX 35 picked up 0.1% at 9,868.00. But Germany's DAX 30 index underperformed, losing 0.2% to close at 12,567.42, as shares of lender Deutsche Bank AG lost ground. The broader Stoxx Europe 600 index ended up by less than 1 point at 381.95, but it was enough to mark a third consecutive gain. The oil and gas, consumer services, industrial and financial sectors rose, but tech and consumer goods shares slumped.
Asia-Pacific stocks mostly rose, supported by gains in energy companies and Chinese markets. Hong Kong's China Enterprises Index, made up of Chinese-based firms with listings in Hong Kong, climbed 2.1%, while the benchmark Hang Seng Index rose 1.4%. Oil-related stocks helped fuel gains. An afternoon pullback nearly cost the Nikkei all of what was a 0.9% morning gain for the index before it finished up 0.15% at 22191.18, its fifth-straight advance. Metals supported the market; however, uncertainty lingers regarding trade and many market participants remained on the sidelines ahead of the earnings season starting next week. The JSX index rose 0.6% at the day's high of 6355.901 as gainers beat decliners by 208 to 145.
Resources firms almost single-handedly drove Australia's stock benchmark to a fifth-straight advance, its longest run since late February. Despite fading from early highs, the S&P/ASX 200 rose 0.3% to 5881 — a four-week high. Buoyed by higher metals prices, the materials sector led with a 2.3% jump. Energy rose a further 0.7% after oil's latest pop overnight. They countered weakness in the country's banks.
The London Metal Exchange’s Tin price rose 0.2% overnight to 21,695/t. The other base metals were lower overnight. The 3-month copper contract fell 0.6% to 6,942/t, while nickel prices fell by 1.3% to 15,021. The price of zinc fell by 1.2% to 3,209 US$/t. Larger losses were seen in the lead and aluminium prices, falling to 2,330/t and 2,495/t, respectively.
In this issue:
St Barbara Ltd (SBM) | Cash is King | HOLD
Market Cap $2200m| Current Price $4.25 Target Price: $3.84
St Barbara (SBM) announced March Q production of 86koz (-14% vs Dec Q) at an all-in sustaining cost (AISC) of $982/oz (+8% on Dec Q). Lower throughput at Gwalia was impacted by mine sequencing and was partly offset by high head-grades running at 15g/t (92% above reserve grades). Cash at bank increased by $50m to $262m after dividend payments of $16m and investments of $4m. Simberi FY18 guidance was updated to 125-132koz (from 115-125koz) to reflect improved operational performance, however costs have rose by 14% on lower grades and work stoppages. Full year group guidance now stands at 375-392koz (prior 365-385koz) at an AISC of $920-970/oz. We view SBM as a high-quality gold miner with significant free cash generation. We move to a HOLD recommendation (from SELL) following revisions to our model to push Gwalia mine life out to 10 years and increase our target price to $3.84 (prior $3.23ps).
Recent Contacts & Presentations:
Global Energy Ventures (GEV), Advanced braking technology (ABV), Fortescue Metals Group (FMG), Helix Resources (HLX), Pantoro Limited (PNR), Alt Resources Ltd (ARS), Coziron Resources Ltd (CZR), ABM Resources Ltd (ABU), Vital Metals Ltd (VML), Todd River Resources Ltd (TRT), Pacific Energy Ltd (PEA), Carnarvon Petroleum Ltd (CVN), Australian Mines Ltd (AUZ), Australian Finance Group (AFG), 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)