Market Update & Important Indicators
The Nasdaq has closed at a record high for the second straight session, jumping more than 0.9 per cent following a surge in Google shares. The tech-rich Nasdaq Composite Index jumped 46.96 points (0.91 per cent) to 5,210.14 on Friday. The Dow Jones Industrial Average dropped 33.80 (0.19 per cent) to 18,086.45, while the broad-based S&P 500 added 2.35 (0.11 per cent) at 2,126.64. Google powered 16.1 per cent higher after reporting that second-quarter net income climbed two per cent to $US3.4 billion on an 11 per cent rise in revenue to $US17.7 billion, thanks in part to increases in mobile advertising. The tech giant also gave a bullish outlook on its YouTube business and hinted that moves to return cash to shareholders were in the horizon.
European stocks marked a pause despite growing optimism over Greece which was given a further boost as the EU approved a 7 billion euros ($A10.28 billion) bridge loan for Athens. London's benchmark FTSE 100 index of top companies slid 0.31 per cent to end at 6,775.08 points, while in Frankfurt the DAX 30 shed 0.37 per cent to 11,673.42 points. Milan slipped 0.07 per cent and Madrid gave up 0.26 per cent. The CAC 40 in Paris bucked the trend end the day up 0.06 per cent to 5,124.39 points. The euro slipped to $US1.0855 from $US1.0875 late on Thursday in New York.
Asian markets mostly rose after the European Central Bank boosted emergency aid to Greece and eurozone chiefs agreed a bridging loan to the country, while Hong Kong and Shanghai rallied as fears over a renewed mainland rout eased. Tokyo rose 0.25 per cent, or 50.80 points, to 20,650.92, marking a five-day winning streak. Shanghai jumped 3.51 per cent, or 134.18 points, to 3,957.35 – the index has now risen for two straight weeks, clawing back some of the huge losses suffered in just under a month after hitting a June 12 peak. However, it is still down more than 23 per cent. Hong Kong ended 1.00 per cent higher, adding 252.49 points to 25,415.27. Sydney closed flat, adding just 0.5 of a point, or 0.01 per cent, to end the week at 5,670.1, but Seoul dipped 0.53 per cent, or 11.10 points to 2,076.79.
The Australian market looks set to open flat following mixed performances on US and European markets after a revamped Greek government took over in an effort to enforce tough fiscal reforms that accompany a third bailout deal. At 0810 AEST on Monday, the September share price index futures contract was down one point at 5,612. No major local economic news is expected on Monday. In equities news, Arrium is expected to release its fourth quarter production report, while Australian Foundation Investment Company is slated to post full year results. In Australia, the market on Friday closed flat after a recovery on the back of the Greek bailout agreement ran out of puff. The benchmark S&P/ASX200 index was up 0.5 points, or 0.01 per cent, at 5670.1 points. The broader All Ordinaries index rose 2.7 points, or 0.05 per cent, at 5652.5 points.
Oil prices are little changed amid the stronger US dollar and concern that the historic Iran nuclear deal could unleash more Iranian crude on the global market. West Texas Intermediate crude for August delivery slipped two US cents to $US50.89 a barrel on the New York Mercantile Exchange on Friday. After falling for three straight days, the US benchmark WTI was at its lowest level since early April. In London, Brent North Sea crude, the international benchmark, closed at $US57.10 a barrel, an increase of 18 cents, on the September futures contract's first day of trade.
Metals on the LME were mixed with Tin up 4.6% to US$15,840/t however Copper, Aluminium and Nickel lost 1.4% and 1.1% to finish at US$5,460/t, US$US1,655/t and US$11,461/t respectively. Oil was mixed with Brent rising 0.3% to $57.10/bbl and WTI flat at $50.89/bbl. Gold dipped 1.0% to $1,133/oz and iron ore 62% fines inched up 0.2% to $50.66/t.
In This Issue
Regis (RRL) | BUY
Regis Resources (RRL) has provided an update in relations to its Duketon operation, including June Q production, FY16 guidance, Resource / Reserve update and a regional exploration update. Overall, the updated parameters are in-line or above Argonaut’s expectations, with the exception of softer production guidance for FY16, counter-balanced by better costs and FCF. The Company delivered 75koz @ AISC A$1,148/oz for the June Q, in-line with Argonaut’s forecast of 75koz @ AISC A$1,146/oz. FCF continues to exceed Argonaut’s expectation, with A$27.3m (~A$360/oz) generated this Q. RRL is targeting a 5-7c per share dividend and an on market buyback program (up to 5%). The stock offers size, liquidity, strong cash flow, dividend and arguably better visibility than many peers with its open pit operations and a sizable Reserve base. The Company’s exploration update was upbeat with numerous high grade results delivered from satellite deposits well within trucking distances to existing processing facilities. RRL recently announced several inexpensive deals which are likely to prove highly value accretive in due course. The stock remains inexpensive on an absolute and relative basis. BUY recommendation maintained.
Recent Contacts & Presentations
Resolute (RSG), Rift Valley (RVY), Pacifico (PMY), Kingsgate (KCN), Troy (TRY), Tox Free Solutions (TOX), GR Engineering (GNG), Austal (ASB), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Karoon Gas (KAR), Austex Oil (AOK), UIL Energy (UIL), Tlou Energy (TOU), FAR Limited (FAR), Cooper Energy (COE), Central Petroleum (CTP), Senex Enrgy (SXY)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
