Market Update & Important Indicators:
Stocks fell intraday ahead of a planned vote on a health-care bill that many investors say could test the viability of the Trump administration's agenda. Major indexes rose through most of the session, then erased their gains in the afternoon as prospects of a Republican plan to dismantle the Affordable Care Act appeared to dim. Many investors and analysts have said the vote will be a key test of whether President Donald Trump will be able to push through potential policy changes like tax cuts, fiscal stimulus and deregulation-hopes for which have helped stocks rally since the election. As of the afternoon, Republican lawmakers remained short of the votes needed to pass their health plan in the House of Representatives. Both major U.S. indexes finished lower for the day with the Dow Jones Industrial Average shedding 5 basis points to 20,657 whilst the S&P 500 dropped 0.1% at 2,346. The U.S. gold price also dropped, falling 0.3% to 1,244.5 US$/oz.
European stocks shook off early weakness to close firmly higher, getting a boost from an upbeat session in the U.S. ahead of a key vote on a health-care bill. After a wobbly start to the day, the Stoxx Europe 600 index ended 0.9% higher at 377.20, marking its first gain in four sessions. "The day's main event is still to come: the House of Representatives' vote on 'Trumpcare.' While things like the Muslim travel ban have shown the kind of resistance the president can expect, the health care bill marks the first real test of Trump's ability to deliver the reforms he promised during the election,".
Asia-Pacific markets remained wary after U.S. stocks rebounded Wednesday. Japan's Nikkei 225 closed 0.23% higher and Korea's Kospi closed up 0.2%. The pullback earlier this week added to concerns about stock valuations in the wake of various indexes hitting multiyear and record highs. The Thailand SET Index ended 0.1% higher at 1568.72 points, tracking broad-based gains in most of its regional peers. The FTSE Bursa Malaysia Index ended lower, the only underperformer in Southeast Asia, mainly due to profit taking after recent gains. The 30-stocks benchmark index closed the day 0.07% lower at 1,747.00 points. Meanwhile, Indonesian shares rebounded, as the global sell-off eased. Singapore's Straits Times Index also ended higher amid bargain hunting after the benchmark index hit a month's low in the previous session. The 30-stock index ended 0.3% higher at 3,126.93 also supported by broad gains in the region.
Australian shares rose, as investors showed signs of regaining confidence after a major selloff of stocks earlier in the week, driven by jitters over U.S. President Donald Trump's legislative agenda. The S&P/ASX 200 index closed up 0.4%, or 23.5 points, at 5708 ahead of a scheduled vote in the U.S. House of Representatives to dismantle the Affordable Care Act, which is seen as a litmus test of Mr. Trump's ability to enact corporate-friendly policies such as tax reform and fiscal stimulus. Australia's resources stocks signalled the shift in sentiment, with diversified miners mostly on the rise while many gold producers lost ground.
The London Metal Exchange's three-month copper contract closed up 0.29% at $5,825/t. The other base metals finished mixed on Thursday. Aluminium prices rose 0.6% at 1,923/t, whilst nickel prices also jumped 0.1% at 9,968/t. Falling for the day, lead prices dropped 0.2% at 2,363/t, tin prices fell 1.0% at 20,292/t, whilst zinc prices finished down 1.5% at 2,795/t.
In this Issue:
Western Areas (WSA) | Poised to bounce | BUY
Market Cap $653m | Current Price $2.40 | Target price $2.70
Western Areas (WSA) generated normalised positive cashflow of $12.3m in the December Q, increasing the Company’s cash balance to $104m (no debt). Argonaut is anticipating positive cash flow once in the March Q despite an expected 10-12% drop in realised nickel prices. Geopolitical issues impacting Philippine and Indonesia nickel laterite exports to China has driven high nickel price volatility. This, coupled with WSA’s status as the only pure play nickel producer remaining on the ASX, has led to high share price volatility. WSA currently has 18% short interest versus an average of 4.5% for other mid to large cap ASX base metal producers. We believe there is high potential for WSA to rebound to the top of its 12-month trading range of $2.00/sh to $3.20/sh driven by a nickel price recovery, the near-term release of the Odysseus Pre-Feasibility Study (PFS), ongoing exploration results from the Neptune prospect and continued positive quarterly cashflow.
Recent Contacts & Presentations:
Vital Metals Ltd (VML), Mincor Resources (MCR), Dacian Gold (DCN), Leaf Resources Ltd (LER), Alchemy Resources Ltd (ALY), MZI Resources Ltd (MZI), Seafarms Group Ltd (SFG), Marindi Metals Ltd (MZN), Rift Valley Resources Ltd (RVY), Botanix Pharmaceuticals Ltd (BOT), Thundelarra Ltd (THX), DTI Group Ltd (DTI) OpenDNA Limited (OPN), Metro Mining Ltd (MMI), Tox Free Solutions Ltd (TOX), St George Mining Ltd (SGQ), Venturex Resources Ltd (VXR), Creso Pharma Limited (CPH), Sino Gas & Energy Holdings Ltd (SEH), Orecorp Limited (ORR) Doray Minerals Limited (DRM), Capricorn Metals Ltd (CMM) Independence Group (IGO), Cardinal Resources Limited (CDV)
Please read Argonaut's Important Disclaimers & disclosures