Market Update & Important Indicators
Technology companies led a broad upswing in U.S. stocks Tuesday, as investors scooped up shares following recent declines. The Dow Jones Industrial Average rose for a second straight day after the index suffered its biggest two-week decline of the year. Threats between the U.S. and North Korea, as well as turbulence in Washington that amplified investors' doubts about the Trump administration's ability to enact agenda items like a tax overhaul, have weighed on stocks this month. Some of Tuesday's biggest gainers were stocks that were hit hard in recent sessions, including shares of brick-and-mortar retailers and tech giants. While the political climate continued to be a concern, the strong earnings quarter, steady economic growth and slightly more attractive valuations following recent selloffs have been driving markets. The Dow Jones Industrial Average was up 0.8% in the last half-hour of trading, while the S&P 500 added about 1%, and the Nasdaq Composite rose 1.3%. Technology companies in the S&P 500 rose 1.4%. The U.S. gold price finished lower overnight, shedding 0.5% to close at 1,284.40 US$/oz.
European stocks pushed higher Tuesday, with investor optimism returning ahead of the closely watched gathering of central bankers in Jackson Hole, Wyoming later this week. The Stoxx Europe 600 index jumped 0.8%, halting a three-session losing skid. After losses yesterday buyers have re-emerged, with fresh hope of moves on U.S. tax reform providing a potential catalyst for gains. Federal Reserve Chairwoman Janet Yellen and European Central Bank President Mario Draghi are among top speakers in Jackson Hole, with investors hoping to get hints on the future monetary policy path from both institutions.
Stock markets in the Asia-Pacific region mostly pushed higher Tuesday, but the Nikkei Stock Average slipped less than 0.1%, notching its 11th decline in 13 trading sessions. Hong Kong's Hang Seng Index gained 0.9% and Korea's Kospi added 0.4%. Thailand's shares rose for the 2nd straight session, helped by banking and telecom stocks. The benchmark SET index ended up 0.2%, amid a broad buying bias in Asia. Indian markets stabilized on bargain hunting by investors following the recent selloff. The S&P BSE Sensex closed 0.1% higher after falling 1.7% in the past two sessions.
Some well-received earnings reports, regional stock strength and a recovery in Australia's big banks helped lift shares there. After falling the prior three sessions, the S&P/ASX 200 rose 0.4% to 5750.1, finishing just off session highs. BHP Billiton gained 1.1% as plans to exit the U.S. shale business overshadowed a weaker-than-expected full-year profit. Its stock also benefited from continued gains in iron ore, which lifted Rio Tinto 1% and Fortescue 1.4%. Most of the major banks were higher, with Commonwealth Bank gaining 0.3% after sliding five-straight sessions. Energy stocks were also higher, although Oil Search led with a 3.3% jump following a strong first-half report and increased dividend.
The London Metal Exchange's three-month copper contract traded flat overnight, losing just 0.09% to $6,580/t. The other base metals finished mixed. Aluminium prices fell 0.1% to 2,087/t, whilst lead prices gained 3.0% to 2,390/t. Tin prices lost 0.7% to 20,490/t, and zinc prices lower, down 0.3% to 3,110/t. Nickel prices were higher again overnight, adding a further 0.9% to finish at 11,364/t.
In this issue
Northern Star Resources (NST) | A strong FY17
Market Cap $3000m | Current Price $4.98
Northern Star Resources (NST) reported double digit growth for their FY17 results with NPAT of $215.3m (+42% y-o-y), EPS up 42% and a final dividend of 6cps (+50% y-o-y). FY17 gold sales came in at 527koz @ $1,675/oz (vs production of 515koz @ AISC $1,013/oz) generating EBITDA margins of 52%. FY18 production is guided at 525-575koz at an AISC of $1000-1050/oz moving to >600kozpa in FY19 as infrastructure reaches maturity at Jundee and Kalgoorlie Operations to support additional throughput. NST announced a shift in its dividend policy which will see it pay out 6% of its revenue and maintain a minimum cash balance of $300m which is earmarked for working capital, opportunistic M&A and organic growth. This is a solid result and we expect to see continued organic growth through exploration success in FY18. NST remains our preferred pick in the gold space. BUY, TP $5.25ps.
Western Areas (WSA) | FY17 Financial Results | BUY
Market Cap $676m Current Price $2.48 | Target Price $2.70
Western Areas (WSA) released FY17 full year results and FY18 guidance. The Company generated $214m revenue, $85m EBITDA and $19m NPAT (+2%, +111% and +165% YoY respectively), which was largely in-line with Argonaut’s forecast’s. The profit increase was largely driven by the sale of equity in Bluejay Mining Plc ($26m) and higher realised nickel prices (up 5% generating +$19m revenue). The Company is in a strong financial position with $140m cash and no debt. A 2c/sh dividend was declared with a record date of 15 September and a payment date of 6 October.
Recent Contacts & Presentations
Northern Minerals Ltd (NTU), New Century Zinc Ltd (NCZ), Metal Bank Ltd (MBK), Rift Valley Resources Ltd (RVY), Panoramic Resources Ltd (PAN), Doray Minerals Ltd (DRM), Wellard Limited (WLD), Bryah Resources Ltd (BYH), Auris Minerals Ltd (AUR), Gage Roads Brewing Co Ltd (GRB), Stavely Minerals Ltd (SVY), Orbital Corporation Ltd (OEC), 4DS Memory Ltd (4DS), Kin Mining NL (KIN), Pharmaust Limited (PAA), Botanix Pharmaceuticals Ltd (BOT), Dimerix Ltd (DXB), Metro Mining Ltd (MMI), Paringa Resources Ltd (PNL), Independence Group NL (IGO), MZI Resources Ltd (MZI), Transerv Energy Ltd (TSV), Emmerson Resources Ltd (ERM), Antipa Minerals Ltd (AZY), Echo Resources Ltd (EAR)