Market Update & Important Indicators
The Nasdaq has bolted above 5,000 following a surge in biotech company Biogen as US stocks gained more broadly on a pullback in the dollar. The tech-rich Nasdaq Composite Index jumped 34.04 (0.68 per cent) to 5,026.42, finishing above 5,000 for only the fourth time in its history. The Dow Jones Industrial Average jumped 168.62 (0.94 per cent) to 18,127.65, while the broad-based S&P 500 rose 18.79 (0.90 per cent) to 2,108.06. US stocks got a lift as the dollar retreated following a Federal Reserve statement two days ago that vowed a cautious approach to lifting interest rates.
European stocks ended the week on a high with London's FTSE surging past the 7,000 mark for the first time in history, after Greece pledged new reform plans and the EU offered two billion euros in emergency aid. London's benchmark FTSE 100 index closed 0.86 per cent higher at 7,022.51 points, boosted by the British government's upbeat budget and an outlook for stronger growth. Frankfurt's DAX 30 added 1.18 per cent to 12,039.37 points. The euro currency climbed to $US1.0845 from $US1.0660 late on Thursday in New York, pushing higher on the Greek news.
Shanghai stocks continue to rally towards a seven-year high. Tokyo swung from initial losses to end 0.43 per cent higher, adding 83.66 points to 19,560.22. Seoul was flat by the close, edging down 0.65 points to 2,037.24. Hong Kong dipped 0.26 per cent. Shanghai rallied 0.98 per cent, or 35.05 points, to 3,617.32. The market has now climbed more than nine per cent following an eight-session winning streak and is now at its highest level since mid-2008.
In Australia, the market on Friday lifted as investors piled in amid heightened expectations of an imminent Reserve Bank interest rate cut. The benchmark S&P/ASX200 index was up 24.7 points, or 0.42 per cent, at 5,975.7 points. The broader All Ordinaries index was up 23.8 points, or 0.4 per cent, at 5,936.3 points. The Australian market looks set to open higher after US stocks got a lift as greenback retreated following a Federal Reserve statement vowing a cautious approach to lifting interest rates. At 0645 AEDT on Monday, the June share price index futures contract was up 28 points at 5,998. No major local economic news is expected on Monday.
All metals on the LME rebounded strongly. Standouts were Lead, which rose 4.3% to 1,790/t, Nickel which gained 3.5% to US$14,210/t and Copper which rose 3.3% to US$6,074/t. Gold was up 1% to US$1,182/oz. Brent, the global oil benchmark, increased $0.89, or 1.6%, to $55.32 a barrel on ICE Futures Europe.
In This Issue
Troy (TRY) | BUY
Troy Resources (TRY) is expected to deliver the high grade, low cost Karouni Project on budget and on time, with first gold anticipated in the June Q. The operation is the key valuation driver for the stock given promising margins (~US$540/oz at spot). The Company, however, still faces headwinds in Argentina with regards to the prevailing silver price and a stubbornly high Argentine peso. Argonaut has factored in an updated silver price (to US$15.50/oz from US$16.00/oz) and higher costs associated with the lagging currency devaluation. Argonaut’s valuation reduces to A$1.00 (was A$1.40). The stock remains deep value and highly leveraged on the exploration success at Karouni. BUY recommendation maintained.
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Resolute (RSG) | HOLD
Argonaut downgrades Resolute Mining (RSG) to a HOLD (was BUY) with a revised valuation of $0.35 (was $0.60) following an update on Syama. The Stage 1 open pit will be completed earlier than anticipated (largely by June Q 2015, v Argonaut forecast of CY15 end), which translates to lower than expected production and cash flow in FY16. With a sizable, unhedged production profile, RSG offers significant leverage to an upswing in the gold price. The deferral of the Stage 2 open pit waste stripping should result in boosted cash flow during the March and June Qs CY15. However, given the balance sheet ($22m cash and bullion, $122m debt at 31st December), cost structures and the prevailing gold price, the Company’s capex requirements (including Syama underground) remain onerous.
Recent Contacts & Presentations
Beadell (BDR), Pacifico (PMY), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Helix Resources (HLX), Rift Valley Resources (RVY), West African Resources (WAF), Commodities Group (COZ), Pioneer Credit (PNC), Matrix (MCE), Austal (ASB), Ausdrill (ASL), TFS Corporation (TFC), Gage Roads (GRB), Austin Engineering (ANG), Buru Energy (BRU), OBJ Limited (OBJ), Strandline Resources (STA), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD)