Market Update & Important Indicators
Falling shares of Walmart pulled the Dow Jones Industrial Average lower intraday, putting the blue-chip index on track for its first loss in seven trading sessions. Shares of Walmart tumbled more than 9% after the retailer reported slowing online sales growth, indicating its difficulty in fending off competition from Amazon.com. That drop, Walmart's biggest slide in more than two years, took roughly 67 points off Dow industrials and contributed to a 1.9% decline among shares of consumer-staple stocks in the S&P 500. The Dow fell 255 points, or 1.0%, to 24965 in recent trading, while the S&P 500 was down 0.6% after paring a bigger decline suffered earlier in the session. The Nasdaq Composite edged 0.5% higher, buoyed by rising shares of technology companies. The U.S. gold price traded lower overnight, falling 1.3% to close at 1328.70 US$/oz.
European stocks closed higher, aided by a pullback in the euro on news of a potentially favourable development for the U.K. in its Brexit negotiations with the European Union. But stocks did struggle during the session, with heavyweights HSBC and BHP Billiton issuing downbeat financial results as investors returned to the markets after holidays in the U.S. and Asia. The Stoxx Europe 600 index closed up 0.6% to 380.51. On Monday, the benchmark lost 0.6%. Germany's DAX 30 index jumped 0.8% to 12,487.90, and France's CAC 40 advanced 0.6% to end at 5,289.86. Spain's IBEX 35 gained 0.9% to finish at 9,895.30, but the U.K.'s FTSE 100 ended down less than 1 point at 7,246.77.
Asian stocks fell after broad gains the day before, following overnight weakness in Europe. But Hong Kong equities were volatile in their first full day of trading in nearly a week following the Lunar New Year holiday. The Hang Seng Index fell as much as 1.3% early on when big financial stocks, particularly China-based companies, experienced weakness. By late morning the benchmark was up 0.7%, but it didn't last. After solid gains Monday, Japan's Nikkei and Korea's Kospi each fell just over 1%. The Kospi was hit by Samsung Electronics, which ended down 2% after Monday's 1.3% decline. Shares jumped 9.6% last week, the most in 2 1/2 years. Other major regional stock benchmarks were down no more than 0.3%.
An afternoon recovery left Australia's stock benchmark little changed for the day as a 0.9% gain in energy names on overnight oil gains countered declines for the major banks. Down as much as 0.5% early in the session to track weakness on European markets overnight, the S&P/ASX 200 settled down 0.7 point at 5940.9. Following a pattern of late of pulling back on any strength, Australia's big lenders gave up much of Monday's gains, led by a 0.8% fall by Westpac. Meanwhile, as earnings reports continue to roll in, Super Retail sank 14%, Vocus dropped 10% and Oil Search slipped 0.5%. BHP Billiton eased 0.4% ahead of its fiscal first-half report.
The London Metal Exchange’s 3-month copper contract traded lower overnight, sliding 0.4% to close at $7,090/t. The other base metals finished mixed. Tin prices fell 0.9% again to 21,500/t, whilst zinc prices dropped 0.2% to finish at 3,569/t. Aluminium prices pulled back 2.1% to close at 2,216/t. Lead prices added 0.4% to 2,594/t, whilst Nickel rose 0.4% to finish at 13,559/t.
In this issue
Contracting | The drought is over
We have captured considerable detail on all contracts awarded to ASX-listed contractors since July 2010. Data on client, project, location, service, sector, stage and commodity can be sliced and diced to provide a visual indication of themes and trends. We discuss some of the general and company specific observations in this note.
Explaurum Ltd (EXU) | Initiating Coverage | Speculative Buy
Market Cap $50m| Current Price $0.125 | Target Price $0.21
Explaurum (EXU) is an ASX listed, gold exploration business with a large and highly prospective 330km2 ground position. EXU’s flagship Tampia Gold Project is located 240km east of Perth near the town of Narambeen in Western Australia’s Wheatbelt and 100km south of Ramelius Resources (RMS) Edna May mine. The Company owns a 90% interest in two mining leases and a surrounding exploration licence through a joint venture, and 100% interest in a further seven exploration licences that complement the original tenure. In November 2017, EXU released a Scoping Study demonstrating gold production of 94kozpa over the first five years, capex of A$95m and all-in sustaining costs of A$888/oz. Next steps involve the completion of a Feasibility Study in the March Q and drill testing of the high priority gravity anomalies to the south, west and north of Tampia. We initiate coverage with a SPECULATIVE BUY recommendation and target price of $0.21ps.
Genesis Minerals | Snapshot | Speculative Buy
Market Cap $35m| Current Price $0.05 | Target Price $0.10
Genesis Minerals (GMD) is a gold explorer and producer with three projects located in Western Australia. The Ulysses project, located 30km from SBM’s Gwalia Mine in Leonora has a 206koz resource and recently completed a short mining campaign in mid-2017. An underground Feasibility Study is underway and due for completion in Q1CY18 and if favourable will look to commence underground development in Q2CY18. At conservative extraction rates of ~100ktpa using an average grade of 10g/t Au we see the potential to extract up to >50kozpa from an underground operation at Ulysses. The Barimaia Project located near Mt Magnet is located 10km from Ramelius Resources (RMS) Mt Magnet assets and has potential for large, low cost porphyry mineralisation at the McNab’s prospect. The Viking Project located in the Albany Fraser Belt has significant near surface mineralisation over a 1.5km long aircore anomaly.
Recent Contacts & Presentations
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), Melbana Energy Ltd (MAY), Genesis Minerals Ltd (GMD), Proteomics International Laboratories Ltd (PIQ), Ramelius Resources Ltd (RMS), MOD Resources Ltd (MOD), Greenland Minerals & Energy Ltd (GGG), Walkabout Resources Ltd (WKT), Marindi Metals Ltd (MZN), Volt Power Group Ltd (VPR), PharmAust Ltd (PAA), Alice Queen Ltd (AQX), Jervois Mining Ltd (JRV), St George Mining Ltd (SGQ), Overland Resources Ltd (OVR)
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