Market Update & Important Indicators:
U.S. stocks, the dollar and yields on government bonds fell after President Donald Trump said he would shake up the country's trade and tax policy. The Dow Jones Industrial Average fell 23 points, or 0.1%, to 19803. The S&P 500 dropped 0.2%, while the Nasdaq Composite was down less than 0.1%. In a meeting with business leaders Monday, Mr. Trump said he would cut taxes "massively" for the middle class and companies, and reduce regulations by at least 75%. He also said the U.S. would impose a "very major" border tax on companies that move overseas. Some market participants said Monday's moves reflected unease over a lack of specifics in Mr. Trump's plans. One factor in the selloff may have been the realization that it will take time for the new administration to formulate details of its economic policies, said Jason Pride, director of investment strategy at Glenmede Trust Co. Energy shares were the biggest losers in the S&P 500, falling 1.1% alongside a drop in the price of oil. U.S. crude oil settled down 0.9% at $52.75 a barrel amid worries over U.S. shale production.
European stocks closed in the red as equity investors got their first chance to react to President Donald Trump's inauguration speech, seen as taking a protectionist tone. The Stoxx Europe 600 fell 0.4% to finish at 361.01, dropping for a third straight session. The index on Friday closed down by 0.1% ahead of Trump's address in Washington, D.C., sending the pan-European benchmark 0.9% lower for the week.
After some initial softness, Asian stocks were broadly higher as investors continue to digest what Donald Trump means to their holdings. But Japanese equities were a noted laggard as the yen leads broad currency gains in the dollar, rising a full yen from late-Friday levels in the U.S. And the Hang Seng index gave up near-1% morning gains by the lunch break, briefly trading down on the day, amid continued widespread investor caution from getting overly aggressive on the buying side. The Nikkei was down 1%, with exporters reacting as typical when the Japan currency rises. But insurers are also getting hit as sovereign-debt yields decline, something which pressures their investment holdings. After Friday's gains, the Shanghai Composite was up 0.3% and the Shenzhen Composite climbed 0.8% as China's central bank added temporary liquidity to the system ahead of the Lunar New Year. Taiwan's Taiex benchmark gained 1%. Meanwhile, China guided the yuan higher for the first time in three sessions as investors continue to dial back their bets on dollar strength.
A spate of profit warnings weighed on Australia's equities market, sending it to an almost five-week low. Shrugging off an early push higher, the S&P/ASX 200 lost 43.8 points, or 0.8%, to finish at 5611.1 with only the property trusts subindex in positive territory. The industrials sector notched up the sharpest retreat of the day. The ASX 200 has now fallen in seven of the last 10 sessions as a strong end to 2016 following the U.S. presidential election unwinds. The four biggest banks, which are among the largest stocks in the ASX 200, were again lower Monday as an almost 20% rally following the November election is eroded.
The London Metal Exchange's three-month copper contract closed up 0.8% at $5,795/t. All other base metals predominantly finished up on Monday. Aluminium prices rose 0.1% to $1,855/t, zinc rose 0.8% to $2,776/t, nickel rose 0.1% to $9,655/t and lead rose 2.4% to $2,375/t. Tin bucked the trend, falling 0.4% at $20,104/t.
In this Issue:
Dacian Gold (DCN) | Jupiter Ascending | BUY
Market Cap $382m | Current Price $2.63 | Target Price $3.35
Dacian Gold (DCN) has delineated two new zones of shallow mineralisation proximal to the planned Jupiter open pit. These zones were identified during the extended 722-hole reconnaissance aircore/RAB drill program aimed at testing extensions to the known open pit mineralisation. These discoveries have potential to add shallow oxide resources which could significantly improve the economics of the Mt Morgans Project. Recently, DCN also announced that construction has commenced on the project following receipt of key regulatory approvals. The Company is targeting first production in Q1 CY18.
Gage Roads (GRB) | Implementing strategy | BUY
Market Cap $42m | Current Price $0.049 | Valuation $0.061
We expect tailwinds from a growing craft beer market and the implementation of the “Return to Craft” strategy to increase GRB’s EBITDA to the targeted $1/litre over the next 5 years. Key to strategy execution is increased awareness of GRB’s own-label products and penetrating all market channels. The 2Q17 update, highlighting growing sales to customers across all segments, demonstrates early success. We maintain our full year forecasts, valuation and positive view.
Recent Contacts & Presentations:
Syntonic Ltd (SYT), MZI Resources Ltd (MZI), Resolute Mining Ltd (RSG), Capricorn Metals Ltd (CMM), Eve Investments Ltd (EVE), Australian Mines Ltd (AUZ), Heron Resources Ltd (HRR), St George Mining Ltd (SGQ), Threat Protect Australia Ltd (TPS), Paringa Resources Ltd (PNL), The Gruden Group Ltd (GGL), Primary Gold Ltd (PGO), Vault Intelligence Ltd (VLT), Botanix Pharmaceuticals Ltd (BOT) Orthocell Ltd (OCC), Strandline Resources Ltd (STA) Dragontail Systems Ltd (DTS), ABM Resources Ltd (ABU), Acacia Coal Ltd (AJC), Troy Resources Ltd (TRY), Hazer Group Ltd (HZR), Berkeley Energia Ltd (BKY), Sino Gas & Energy Holdings Ltd (SEH), Sovereign Metals Ltd (SVM)
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