Market Update & Important Indicators
Shares of banks and energy firms surged intraday, putting major indexes on track to snap a two-day losing streak. Recent pledges from several companies-including banks and telecommunications firms-to share the benefits of Republicans' tax cuts with their employees helped investors overcome concerns around how much of the tax bill had already been priced into the market this year, money managers said. The S&P 500 is up 20% this year, with gains partly driven by the expectations of lower taxes. Besides that, energy stocks rose as oil prices flipped from losses to gains. The Dow Jones Industrial Average climbed 87 points, or 0.4%, to 23813 in recent trading, while the S&P 500 rose 0.4%. The Nasdaq Composite added 0.2%. The U.S. gold price traded higher overnight, adding 0.1% to close at 1,266.10 US$/oz.
European stocks dropped again, with the passage of a historic tax reform in the U.S. failing to keep the December rally alive. Traders in Europe were also watching the regional election in Catalonia, Spain, where the polls point to a dead race between the pro- and anti-independence parties. The Stoxx Europe 600 index lost 0.3% to 387.24, on track for a third straight day of losses. Germany's DAX 30 index fell 0.3% to 13,034.19, while France's CAC 40 dropped 0.4% to 5,328.56. The U.K.'s FTSE 100 index was marginally lower at 7,522.38. Spain's IBEX 35 index was down 0.3% at 10,176.50.
Several Asia-Pacific stock markets rebounded from early declines in thin volumes ahead of the holidays as investors mulled the passage of tax code changes in the U.S. But Korea's stock benchmark closed down 1.7% on fresh weakness in Samsung Electronics. Chinese stocks improved after opening lower, as buyers returned after recent weakness in the market. The large-cap CSI 300 was up 1%. The reversal helped Hong Kong's Hang Seng Index, which was up 0.6% — led by gains for materials and energy stocks. U.S. tax reforms should boost growth and indirectly contribute to greater demand for goods and services produced in Asia. Other markets in the region were more muted, with stock benchmarks in Japan and Taiwan ending slightly lower, and India's benchmark essentially flat.
Australian stocks fell, ending a three-day winning streak which saw the index return to 10-year highs. The S&P/ASX 200 eased 0.3% to 6060.4 even as miners shined again, with BHP Billiton climbing 1.4% to new multiyear highs and Rio Tinto up nearly 1%. That as the country's big banks fell upwards of 1% and the utilities sector shed 0.7%.
The London Metal Exchange’s 3-month copper contract traded higher overnight, gaining 0.6% to finish at $7,086/t. The other base metals also finished mixed. Aluminium prices added 1.4% to close at 2,134/t, whilst Lead prices pulled back 0.9% to close at 2,496/t. Tin prices fell 0.6% to close at 19,395/t, whilst Nickel prices gained 0.3% to 12,011/t. Zinc prices added 0.8% to close at 3,235/t.
In this issue
Metro Mining (MMI) | Further offtake and production ready | BUY
Market Cap $303m | Current Price $0.24 | Target Price $0.42
Metro Mining (MMI) announced the signing of a non-binding Memorandum of Understanding (MOU) with Chinese State-Owned Enterprise (SOE) SPIC Aluminium and Electric Power Investment Co. The MOU outlines 6.5Mt of bauxite supply over a 4-year period from 2018 and increases the assigned 2018-2019 offtake to 100% of planned production. The Bauxite Hills Project is nearing completion with the barge loadout facility having completed wet commissioning in November. Mining equipment is due to arrive on-site after the Northern Australian wet season (January-March) and first shipments should occur in mid-April. At current bauxite prices of ~US$50/t, MMI would generate a ~A$20-25/t CIF margin on its initial 2Mtpa production rate (ramping up to 6Mtpa). BUY maintained with a $0.42 target price.
Recent Contacts & Presentations
Greenland 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), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM)