Market Update & Important Indicators:
Tumbling shares of Facebook pulled the S&P 500 lower intraday after disappointing earnings results rocked investor confidence in one of Wall Street's most popular trades. The social-media giant fell 19% in recent trading, putting it on pace for its steepest decline since its shares started trading six years earlier. The selloff started after Facebook said late Wednesday that revenue grew slower than expected in the second quarter and warned that it expected growth to decline over the rest of the year. Investors say the lackluster results have renewed concerns that the massive growth in revenue and profits among some of tech's stalwarts may not be sustainable-and that could put another hurdle in front of a stock market already grappling with trade tensions and concerns of a possible policy misstep by the Federal Reserve. The US gold price lost 0.7% to record 1224.40 US$/oz.
German stocks finished at a five-week high, leading European equity markets upward, with shares in auto makers finding relief after the European Union's top official struck a truce on trade issues with U.S. President Donald Trump. Stocks held to higher ground after the European Central Bank left interest rates unchanged and affirmed its plan to end its monthly bond-buying program in December. Germany's DAX 30 index leapt 1.8% to finish at 12,809.23, notching its highest close since June 18, according to FactSet data. The surge in German stocks helped push the Stoxx Europe 600 index up by 0.9% to end at 390.53. The pan-European index on Wednesday dropped 0.3%. France's CAC 40 index rose 1% to close at 5,480.55, while the U.K.'s FTSE 100 index edged up by less than 0.1% to end at 7,663.
It was a pretty quiet day on the whole for Asian stocks absent the pullbacks in China and Hong Kong, where equities got off the mat in the past week after some indexes had fallen into bear-market territory. Declines topped 1% for some mainland benchmarks while they're above 0.5% in Hong Kong. While the index in Japan barely fell, a number — especially Southeast Asia – have seen slight gains. But the Philippines' PSEi jumped another 2%, Korea's Kospi rose 0.7%, and India's Sensex is on pace for another record high. In Asia, the Shanghai Composite Index was down 0.7%, Hong Kong's Hang Seng fell 0.6% and Japan's Nikkei was down 0.1%.
Australia's stock benchmark quickly reversed initial weakness to spend the afternoon right around Wednesday's closing level. As stock-specific news dominated the session, the S&P/ASX 200 finished down 0.05% at 6244.5. Macquarie pulled back 2.6% as its long-serving chief executive officer is stepping down; the firm also reiterated fiscal year profit guidance. Meanwhile, Nine Entertainment slumped 10% and Fairfax jumped 8.4% after the former agreed to buy the publisher in a A$2.16 billion deal. Fortescue lost 3.7% and Newcrest gained 4.6% after their quarterly production reports. Supporting the market was energy, with that sector up 0.8% on fresh oil-price gains.
Base metal prices were mainly up overnight on the London Metal Exchange. Aluminium gained 0.4% to 2,049/t, the 3-month copper contract increased 0.1% to 6,267/t. Zinc was 0.1% lower to record 2,628/t. Lead gained 0.6% to 2,146/t and nickel increased 0.7% to 13,677/t.
In this issue:
Fortescue Metals (FMG) – Market Cap $14,000m HOLD TP $4.75ps
Fortescue Metals (FMG) reported June Q results with a record 46.5Mt shipped at US$12.17/wmt C1 vs March Q 44.7Mt @ US$13.14/wmt (-4% shipped Q-o-Q). Operations ran at an annualised rate of ~200Mtpa during the Q. Gross debt decreased to US$4.0bn (from US$4.2bn in March Q), and cash was higher at US$863m (from US$0.6bn in March Q). Price realisation gap to the Platts 62 CFR index narrowed to 37% (down from 38% in Q3FY18 and 34% in Q2FY18). Strip ratios were unchanged at 1.5:1. HOLD recommendation maintained and we revise our target price to $4.75ps (prior $4.88ps).
Recent Contacts & Presentations:
Antipa Minerals (AZY), 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)