Market Update & Important Indicators
U.S. stocks fell Tuesday after disappointing results at blue-chip companies like Microsoft Corp. and Caterpillar Inc. sparked concerns about the strong dollar's drag on earnings growth. Microsoft shares fell after the company set its financial forecast for the fiscal year, which ends in June, below Wall Street estimates, citing the strong U.S. dollar. The surge in the U.S. dollar has helped drive current earnings season's tepid outlook. The drop in oil prices and weak economic activity overseas are also contributing to low expectations. Concerns about a strong U.S. currency are driving some investors to small-cap stocks. The sector lagged behind the broader market in 2014, with the Russell 2000 index ending the year up 3.5% compared with the S&P 500's 11.4% rise. But with the strengthening U.S. dollar hurting multinational companies' profits, some money managers say now may be the time to move money into small-cap names.Nervousness about a potential showdown between Greece's new government and its international creditors continued to grip the country's financial markets Tuesday, with stocks and bonds extending their postelection losses. Broader European equity markets slipped back from seven-year highs, while in Athens the main stock index ended the session 3.7% lower, adding to Monday's 3.2% decline. The coming negotiations between the Syriza government and the so-called Troika of lenders have left many investors nervous. But last week's announcement of a bond-buying stimulus program from the European Central Bank, which drove stocks sharply higher, has underpinned an overall bullish mood. The Stoxx Europe 600 benchmark index was 1% lower. Germany's DAX 30 ended down 1.6%, France's CAC 40 1.1% and London's FTSE 0.6%.
Asia stocks were mostly up Tuesday with Tokyo at a one-month high, as investors brushed aside worries that a victory for the antiausterity Syriza party in Greece could set up a clash between the country and its creditors. Rebounds in both the dollar and the euro from post-Greek election lows helped Japanese exporters, with a weaker yen allowing them to price goods more competitively overseas and earn them more yen when they bring overseas profits home. Trading volumes in Japan remained subdued, coming to under 2.2 billion shares, with the U.S. central bank due to deliver its latest statement on monetary policy this week. The Nikkei Stock Average finished up 1.7% at 17768.30, its highest close since December 26. Hong Kong's Hang Seng Index fell 0.4% to 24807.28, after industrial profits fell 8% year-over-year in December, in another sign of weakness in the Chinese economy. On the mainland, the Shanghai Composite was down by 0.9%.
Base metals were mostly lower on the LME, with copper down 3.1%. Gold added 0.9% to $1,292/oz, while Brent crude dipped 2.2% to $49.23/bb.
In This Issue
Gold Road (GOR)
Gold Road (GOR) released a Scoping Study (SS) on the recently discovered 3.8Moz Gruyere deposit. The study appears conservative on several fronts and confirms the project as one of the most promising undeveloped assets in Australia. Its potential scale, geometry, long life, and favourable metallurgical properties combined with a low sovereign risk jurisdiction, will ensure the asset attracts market and corporate attention. The Company is cashed up (A$21.3m at 31st December) and catalyst rich, with a plethora of regional targets being tested in CY15.
Sirius Resource (SIR)
Sirius Resources (SIR) announced that it has broken ground on the Nova nickel/copper project following receipt of final statutory approvals. The Company also announced that based on tenders received to date, the DFS capex estimate has been reduced by $30m to $443m. SIR is a key pick amongst base metals under coverage with a strong balance sheet, exploration appeal, lower exposure to near term base metal price volatility and the prospect of being Australia’s lowest cost nickel producer.
Recent Contacts & Presentations
Northern Star (NST), Doray Minerals (DRM), Troy Resources (TRY), Gold Road Resources (GOR), Saracen Mineral Holdings Limited (SAR), Beadell Resources Limited (BDR), Resolute Mining Limited (RSG), RTG Mining (RTG), Alexium International Group Limited (AJX), Pacific Energy Limited (PEA), Otto Energy Limited (OEL), Peninsula Energy Limited (PEN), Sandfire Resources NL (SFR), Atrum Coal (ATU), Empired (EPD), DTI Group (DTI), Austal (ASB), TFS Corporation (TFC), Pioneer Credit (PNC)