Market Update & Important Indicators
U.S. stocks declined Tuesday after a mixed bag of earnings reports. This week earnings are at the forefront for investors, as it is one of the busiest weeks for companies reporting first-quarter results. Including results from 77 companies, first-quarter earnings for S&P 500 companies are on track to fall 4.2% from a year ago, according to FactSet.
European stocks rose cautiously Tuesday, with some robust corporate earnings offsetting jitters surrounding the future of Greece's economy. French advertising company Publicis Groupe SA was one of the strongest performing stocks across Europe with its share price gaining more than 5% at one point during the session, buoyed by the company reporting stronger than expected first-quarter revenue and guiding for more satisfactory growth in 2015. Other upbeat earnings came from U.K.-listed broadcaster Sky PLC, Swedish telecom operator Tele2 AB, Dutch paint and chemicals maker Akzo Nobel NV and Europe's biggest biotech company, Switzerland's Actelion Ltd.
Stocks in Hong Kong rebounded Tuesday from their largest tumble of the year, pulled higher by a surge in China Resources Enterprise, while Australian shares inched higher amid signals that the country's central bank could soon cut interest rates. The Hang Seng Index closed up 2.8% at 27,850.49, bouncing back from Monday's 2% loss. The strongest gainer on the benchmark was China Resources Enterprise, whose shares jumped 55.9% to HK$23.70 on news that it was selling all of its non-beer assets to its parent company. China Mobile surged 7.5% to HK$115.90 after reporting better-than-expected earnings.
Base metal prices on the LME were mixed overnight, with copper dropping 0.7%. Gold is trading at $1,202.5/oz. Brent crude was lower at $62.08/bbl.
Thought for the day
Gold M&A expected to continue
EVN announced a binding agreement to acquire 100% of La Mancha’s Australian operation (Frog’s Leg, White Foil) this week. The Company is paying an EV of ~A$414m (~A$300m scrip, A$114m net debt) for the asset. The operation features:
• Reserve 781koz @ 2.6g/t (at 31st December)
• Open pit (White Foil) and underground (Frog’s Leg) mines
• A new 1.5Mtpa Carbon-in-leach (CIL) plant
At an estimated ~A$529 / Reserve oz, the acquisition is one of the more expensive deals in Western Australia in recent times. However, the acquisition will allow EVN to step up its production profile to 530-600koz, achieve a higher market capitalisation and potentially be included into the prestigious GDX gold index.
Australian domiciled producers, who are benefitting from a softening AUD cost base and increasingly competitive contractor /wage rate, are well positioned for further M&A.
Recent Contacts & Presentations
Dacian (DCN), Saracen (SAR), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), Migme (MIG), Vmoto (VMT), Pioneer Credit (PNC), Minemakers (MAK), MZI Resources (MZI), High Peak Royalties (HPR), Leaf Resources (LER), Austin Engineering (ANG), Ausdrill (ASL), Matrix (MCE), Austal (ASB), MMA Offshore (MRM), CTI Logistics (CLX), 99 Wuxian (NNW)
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