Market Update & Important Indicators
U.S. stocks bounced around, putting the Dow industrials on track for their fourth loss in five sessions. The Fed last week refrained from raising short-term interest rates, which would have marked its first increase in nearly a decade, amid concerns about weak economic growth abroad. China stoked global growth concerns when it unexpectedly devalued its currency last month. A slowdown in the global economy bodes poorly for corporate profits at big, multinational companies and future gains in those stocks.
Australian shares sank to a two-year closing low Wednesday as worries about global growth and the world's appetite for commodities were reignited by data suggesting a second-half slowdown for China, Australia's biggest trading partner. The S&P/ASX 200 finished 105.5 points, or 2.1%, lower at 4998.1. It was the sharpest decline for the index in two weeks and left it below the psychologically important 5000 level for the first time since July 2013.
On Wednesday manufacturing data from the world's No. 2 economy stoked further worries about the spillover effects of its slowdown. The Shanghai Composite Index closed down 2.2% and the Hang Seng Index fell 2.3%.
Economic news from Europe helped to offset weak Chinese data. Stocks ended mostly higher in Europe. The U.K.'s FTSE 100 rose 1.6%. The Stoxx Europe 600 added 0.1%, after falling more than 3% on Tuesday.
Metals on the LME were mixed with copper falling 0.4% to US$2.30/lb and zinc rising 1.4% to US$0.74/lb. Ahead of the Roy Hill first shipment next month, iron ore fell 1.6% to US$55.30/dmt. Gold was up 0.5% to US$1130/oz.
In This Issue
Northern Star (NST) | HOLD
Northern Star (NST) released higher than anticipated production forecasts from FY17 to FY19 in its most recent presentation (September 2015), highlighting a path to expand production organically from ~550koz to ~700koz by FY18. These figures factored in production from the Central Tanami JV (starting FY18), ongoing Resource / Reserve conversions (2.5Moz produced from FY16-FY19, v Reserve of 1.5Moz) and further exploration upside (e.g. Velvet replacing main feed from Kanowna Belle). The Company’s exploration effort (A$35m in exploration, A$39m in capital, including Jundee and Velvet drill drives) remains a key differentiator. Argonaut’s valuation increases to A$2.20 (was A$2.00), factoring in Central Tanami and higher production from Kalgoorlie, Plutonic and Jundee. Following recent strong share price performance, Argonaut downgrades the stock to a HOLD.
Recent Contacts & Presentations
TFS Corporation (TFC), HRL Holdings (HRL), Tox Free Solutions (TOX), Sino Gas & Energy (SEH), Dacian (DCN), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), FAR Limited (FAR), Central Petroleum (CTP)