Market Update & Important Indicators
U.S. stocks finished mixed Friday, curbing earlier gains amid a renewed selloff in the biotechnology sector. The Dow rose 113 points, or 0.7%, to 16315, pulling back from a gain of 264 points earlier in the session. An 8.9% rally in Nike helped keep the Dow in positive territory. The world's biggest sportswear maker posted stronger quarterly profits. But the S&P 500 fell 0.1% and the biotech-heavy Nasdaq Composite lost 1%. A rout in biotech shares weighed down broad-market indexes. The Nasdaq Biotechnology Index lost 5.1%, capping a tumultuous week for the sector. The selloff reverses the gains logged early Friday that followed a speech by Federal Reserve Chairwoman Janet Yellen, who laid out a case for raising interest rates this year, reassuring investors that the central bank has confidence in the health of the U.S. economy. Ms. Yellen's comments, delivered late Thursday, were effectively a warning that last week's decision to keep rates near zero wasn't a shift toward an interminable delay in raising rates.
Meanwhile, European markets climbed sharply. The Stoxx Europe 600 gained 2.8%, but it notched its second consecutive weekly decline. Shares in the auto sector led Friday's rebound. A number of car makers had fallen sharply on Thursday amid the emissions scandal enveloping Volkswagen.
Shares in Japan rebounded Friday after a pledge by Japanese Prime Minister Shinzo Abe to strengthen the country's economy, while markets elsewhere mostly fell amid the prospect of higher rates in the U.S. Japan's Nikkei Stock Average finished up 1.8%, with the benchmark rallying from negative territory in the midmorning. The gains came as Japanese Prime Minister Shinzo Abe announced an ambitious goal to expand the nation's economy by around a fifth, though he didn't say exactly how or when that growth would be achieved. Elsewhere, the region's market were closing out the week with losses, after weak Chinese manufacturing data on Wednesday renewed concerns about the ripple effects of its slowing economy. Shares in Malaysia, Hong Kong, Taiwan and Indonesia are all down more than 3% this week. Earlier this month, worries about China's devaluation of the yuan in August abated and volatility in Chinese domestic shares subsided.
Copper futures closed lower in London on Friday, due to lingering market concerns about the outlook for metal consumption in China, the world's biggest buyer of the metal. Most other LME metals finished lower. Gold declined 0.8% to US$1,145oz, while Brent was at US$48.6/bbl. The AUD is buying US$0.70.
In This Issue
Metro Mining (MMI) | SPEC BUY
Metro Mining (MMI) has received confirmation from the Queensland Government that a full Environmental Impact Statement (EIS) is required for its Bauxite Hill’s project in the Cape York Peninsula. The Company had been following the less onerous Environmental Assessment (EA) process as predicated for bulk mining projects under 2Mtpa in the state. The likely impact will be at least a six month delay on the timeline to first production. Positively, as the project is no longer constrained to 2Mtpa, MMI can investigate higher output with potentially better economies of scale.
Dacian (DCN) | SPEC BUY
With the upcoming Scoping Study (due imminent), Argonaut provides an analysis of what if Goldfields (GFI:SJ) acquired Dacian (DCN)? GFI owns the adjacent underutilised Granny Smith mill and the high grade Wallaby mine. Argonaut calculates (assumptions on Page 2) an acquisition of DCN is accretive up to a price of A$1.45 per share. The stock remains one of Argonaut’s preferred gold development stocks given AUD denominated costs, exploration upside and proven management. Argonaut recognises the strategic value of DCN to a neighbouring corporate could be significantly higher than our A$0.70 valuation (under review pending Scoping Study) and maintains a SPEC BUY.
Recent Contacts & Presentations
Gold Road (GOR), Tox Free Solutions (TOX), AWE Limited (AWE), Ausdrill (ASL), GR Engineering (GNG), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), FAR Limited (FAR), Central Petroleum (CTP), Senex Energy (SXY), Ironbark Zinc (IBG)