Market Update & Important Indicators
Financial markets showed signs of stabilizing Tuesday following sharp declines in the British pound and global equities after the U.K. voted to leave the European Union last week. Investors continued to weigh the ramifications of Britain's unexpected referendum result for the global economy and European politics as U.K. Prime Minister David Cameron travelled to Brussels on Tuesday to discuss the so-called Brexit with EU leaders. In the U.S., the Commerce Department said the economy expanded more than previously thought in the first three months of the year. Gross domestic product, the broadest measure of goods and services produced across the U.S., grew at a seasonally adjusted annual rate of 1.1% in the period, the weakest pace in a year, while the agency previously estimated the economy grew at a 0.8% pace.
Stocks in Europe climbed by the most in a week, getting a break after two back-to-back selloffs sparked by the U.K.'s Brexit vote. The Stoxx Europe 600 bounced up 2.6% to 316.70, the best performance since June 20, FactSet data showed, as all sectors were in the green. In the financial group, Italian bank stocks rose after reports that the Italian government is looking at adding 40 billion ($44 billion) to the country's financial system. The Stoxx 600 on Monday tumbled 4.1% to a fourth-month low, a second straight slide after Thursday's Brexit referendum. In London on Tuesday, the FTSE 100 tacked on 2.6% to end at 6,140.39, while the midcap FTSE 250 added 3.6% to close at 15,503.06.
Stock markets in Asia stabilized somewhat on Tuesday, despite continuing concerns about the political and economic aftermath of the U.K.'s decision to leave the European Union. Shares across the region opened lower, hit by weak sentiment from the overnight selloff in the U.S. and Eurozone markets. But losses generally slowed throughout the day as investors bargain-hunted for stocks that had been slammed since Friday's tumble. Japan's Nikkei Stock Average ended up 0.1% in a second-straight day of gains. The benchmark index recouped losses of as much as 1.9% in the morning. Elsewhere, Hong Kong's Hang Seng Index was last down 0.5%, and Korea's Kospi rose 0.5%. China's Shanghai Composite Index ended up 0.6%.
Shares in Australia were again under pressure Tuesday, closing at a fresh two-month low in the wake of Britain's vote to leave the European Union. Markets globally remain jittery, with investors unsure how to position following the U.K. referendum. Still, the Australian market managed to pare back its worst levels of the day as major banks crept higher. Surrendering a modest recovery Monday on the heels of Friday's steep dive, the S&P/ASX 200 shed 33.9 points, or 0.7%, to finish at 5103.3. Most industry sectors were in the red, led by energy and materials stocks.
Copper prices closed at an eight-week high on Tuesday as the dollar weakened in response to steadying markets. The London Metal Exchange's three-month copper contract was up 2.29% at $4,818 a ton at the pm kerb close, its highest point since May 4. The other base metals also closed higher. Aluminium closed up 1.7% at $1,614 a ton, zinc was up 4% at $2,072 a ton, nickel was also up 4% at $9,294 a ton, and lead was up 2.1% at $1,731 a ton.
In this Issue
Dacian Gold (DCN) | Relentless Momentum| BUY
Market Cap $375.4m | Current Price $2.83 | Valuation $3.10
Dacian Gold (DCN) released assays from the 24 hole in-fill drilling program at the Westralia Underground deposit with high grade intercepts including 3.3m at 84g/t and 13.2m at 14g/t. Resource drill-out programs have now been completed for the Morgans and Westralia underground mines and the Jupiter open pit. It is anticipated that all three deposits will extend previously defined mineralisation and increase Resource confidence, whilst remaining open in several directions. DCN’s share price has increase 260% year-to-date, however Argonaut believes momentum will continue driven by macro environment tailwinds supporting gold equities and ongoing high impact newsflow throughout H2 CY16. Argonaut increases its valuation to $3.10 (previously $2.30). Buy maintained.
Recent Contacts & Presentations
Evolution Mining (EVN), LWP Technologies (LWP), Walkabout Resources (WKT), Minotaur Exploration (MEP), Peet Limited (PPC), Parmelia Resources (PML), Venturex (VXR), Dacian Gold (DCN), Cudeco (CDU), Resolute Mining (RSG), Echo Resources (EAR), Altech Chemicals (ATC), TFS Corporation Limited (TFC), Noxopharm (NOX)