Market Update & Important Indicators:
U.S. stocks rose intraday Monday, driven by shares of financial companies as investors dumped government bonds, pushing Treasury yields higher. Major indexes erased earlier losses, with the Dow Jones falling 0.1% to 25044. The S&P 500 added 0.2%, led higher by shares of financial companies. The Nasdaq Composite climbed 0.2%. Treasury prices remained under pressure Monday amid concerns that international appetite for U.S. debt could wane, after White House comments on monetary policy sent the dollar and government bond prices sliding last week. That gave ammunition to the financial sector in the S&P 500, which was the biggest gainer, advancing 1.4%. Shares of banks like Wells Fargo, JPMorgan Chase and Bank of America led the way. Bank stocks tend to benefit when Treasury yields rise because higher interest rates lift banks' net interest margins, a key measure of their lending profitability. Stock investors have been cautiously optimistic in recent days amid strong earnings results and economic data. Though the U.S. continues to spar with other countries on trade, the back-and-forth hasn't weighed broadly on domestic stock indexes. The S&P 500 is up about 5% this year. Corporate earnings so far have come in above expectations, with 87% of companies posting stronger-than-expected profits and 77% beating revenue expectations, according to FactSet. The US gold price fell 0.6% to 1224.0 US$/Oz
European shares fell 0.1% amid renewed geopolitical tensions, though takeover talk concerning RPC Group helped to limit losses. The Stoxx Europe 600 falls 0.2 points to 385.32 after U.S. President Donald Trump issued a social-media broadside against Iran. Still, shares in plastic packaging group RPC Group rise 2.9% after a weekend report in Britain saying the plastic-packaging supplier is vulnerable to a takeover bid. Shares in U.K. online grocer Ocado Group rise more than 5% on continued market optimism about its prospects.
The Shanghai Composite Index rose 1.1% and Hong Kong's Hang Seng edged up 0.1%. Japan's Nikkei fell 1.3%, as a jump in the yen helped push currency-sensitive shares lower. The Japanese yen was up 0.2% against the dollar with the WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, edged slightly higher
Australia's stock benchmark had its worst day in four months while struggling throughout the day's trading and snapping a three-day winning streak. The S&P/ASX 200 fell 0.9% to 6227.6 with BHP Billiton down 1.4% and the Big Four banks losing 0.5-0.9%. Meanwhile, Wesfarmers declined 1.3% amid drops across consumer stocks and with news that it will keep a small stake in Coles when spinning it off. Also, Nufarm sank 11% after warning about weak demand for its products in Australia. But energy stocks rose slightly after Friday's gains for oil.
Base metal prices were down overnight on the London Metal Exchange. Aluminium declined 1% to 2,058/t, the 3-month copper contract fell 0.4% to 6,097/t. Zinc was 1.5% lower to record 2,580/t. Lead lost 0.2% to 2,111/t and nickel decreased 1.0% to 13,301/t.
In this issue:
Western Areas (WSA) | Funded for growth | BUY
Market Cap $911m | Current Price $3.26 | Target $3.40
Western Areas (WSA) released June Q results with 6.4kt Ni in concentrate at C1 costs of A$2.80/lb (before payability), beating Argonaut’s forecast of 4.9kt Ni at A$2.55/lb. The strong finish to the year resulted in WSA meeting revised guidance of ~21kt, with FY18 actual of 21.1kt at A$2.63/lb. The Company generated strong cash flow during the Q adding $16m cash to finish the year at $152m. We believe WSA is in a strong position from cash and future cash flow to self-fund growth projects, including the Odysseus underground mine with pre-development capex of $190-200m (PFS estimate). Upgrade to BUY with a $3.40 target price
Recent Contacts & Presentations:
SRG Ltd (SRG) Bowen Coking Coal (BCB), Birimian (BGS), Breaker Resources (BRB), Galena Mining (G1A), Valmec (VMX),Bryah Resources (BYH), Calima Energy (CE1) Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1), Peel Mining (PEX), Catalyst Metals (CYL), Vault Intelligence (VLT), Doray Minerals (DRM), Nzuri Coppoer (NZC), Bowen Coking Coal (BCB), Phosphagenics Limited (POH) Great Boulder Resources (GBR), Orthocell (OCC), Northern Minerals (NTU), ABM Resources Ltd (ABU), Vital Metals Ltd (VML), Todd River Resources Ltd (TRT), Pacific Energy Ltd (PEA), Carnarvon Petroleum Ltd (CVN), Australian Mines Ltd (AUZ), Australian Finance Group (AFG), Paladin Energy Ltd (PDN), Cooper Energy Ltd (COE), Medibio Ltd (MEB), Botanix Pharmaceuticals Ltd (BOT), Salt Lake Potash Ltd (SO4), Golden Mile Resources Ltd (G88), NTM Gold Ltd (NTM), Ausmex Mining Group Ltd (AMG), Matrix C&E Ltd (MCE), Austal Ltd (ASB), Decmil Group Ltd (DCG), Ventnor Resources Ltd, Ausdrill Ltd (ASL), Alice Queen Ltd (AQX), PNX Metals Ltd (PNX), Alliance Resources Ltd (AGS), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), Sino Gas & Energy Holdings Ltd (SHE)
Please read Argonaut's Important Disclaimers & disclosures
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