Market Update & Important Indicators
U.S. stock indexes retreated from record highs Monday, weighed down by falling utilities and real-estate shares. The Dow Jones Industrial Average fell 0.3%, backing away from Friday's all-time high. The S&P 500 lost 0.3%, while the Nasdaq Composite ticked down 0.2%. Investors are looking ahead to the Federal Reserve's two-day monetary policy meeting later this week, as well as President Donald Trump's first State of the Union address and data on manufacturing and unemployment. While analysts are largely expecting the Fed to hold short-term interest rates steady, the Fed's policy statement could give investors clues on future rate increases. Stocks pulled back broadly Monday, with nine of the 11 sectors of the S&P 500 trading lower. Shares of utilities and real-estate companies, considered by many investors to be bond-like because of their relatively hefty dividends, were among the biggest decliners in the S&P 500, falling alongside U.S. Treasury prices. The U.S. gold price traded lower overnight, pulling back 0.7% to finish at 1,339.90 US$/oz.
Swedish medical technology group Getinge led the Stoxx Europe 600 down, eclipsing gains for semiconductor makers and tech stocks. The pan-European index backtracked 0.2%, or 0.8 points, to 399.8 after Getinge reported worse-than-expected fourth-quarter profit, hitting its shares by 11%. Still, Apple-supplier AMS reported a major jump in revenue and lifted its sales forecasts, boosting its shares by 17% and lifting peers, with STMicroelectronics up 2.4% and Dialog Semiconductor gaining 1.4%. All major European indices fell apart from the FTSE 100, which maintained modest gains due to mining stocks.
Asian stock markets were mixed Monday, while the U.S. dollar picked up strength after reaching three-year lows last week. Stocks in China and Hong Kong dropped, with a 1% fall in the Shanghai Composite Index, which had risen in 19 of the past 21 trading days, hitting two-year highs. The Shenzhen A-Share Index fell by 1.6%. Hong Kong's Hang Seng – which had risen in 24 of the last 27 trading days, hitting multiple record highs on the way – was down 0.4%. Korea's Kospi hit another record high, climbing 0.9%. Japan's Nikkei 225 closed roughly flat.
Australian shares rose, tracking fresh highs for major Wall Street indexes. Despite fading in the final hour, the S&P/ASX 200 still manages to advance 0.4% to 6075.4, a 2-week closing high. The major banks, energy stocks and a 1.7% jump in Telstra lead broad gains. Commonwealth Bank gains 0.7%, matching a rise in NAB, after naming the head of its retail division as its next CEO, while AWE rallies 16% after Mitsui trumps rival suitors with a US$488 million bid. Iluka climbs 4.9% in the wake of better-than-forecast mineral sands production.
The London Metal Exchange’s 3-month copper contract traded flat overnight, finishing at $7,085/t. The other base metals finished mixed. Aluminium prices fell 1.5% to 2,220/t, while lead prices added 0.3% to close at 2,602/t. Zinc prices were 2.3% higher to a fresh 10-year high at 3,601/t, whilst Tin prices gained 1.3% to 22,104/t. Nickel prices were jumped 1.3% to close at 13,776/t.
In this issue
Northern Star Resources (NST) | December Quarter production | HOLD
Market Cap $3,700m| Current Price $6.26 | Target Price $5.70
Northern Star (NST) delivered a lower December Q, producing 129koz at an all-in sustaining cost (AISC) of A1,067/oz (-7% on production, +5% on costs vs the Sep Q). Group production was impacted by lower grades and recoveries at Jundee and the temporary suspension of production at Paulsens. Underlying free cashflow from operations was $34.9m (+33% from $26.2m in Sept Q). Net cash and investments fell to $433m (-2% Q-o-Q). Whilst production was lower, we anticipate the 2H will see the fruits of investment in drive development with production driven by higher grade Millennium and Velvet ores at Kalgoorlie Ops and higher consistent crushing rates at Jundee. We continue to believe that NST will reach the mid-point of its stated 525-575koz FY18 guidance. Exploration continues to focus on organic growth, in particular the delineation of the Zodiac discovery at Jundee with 4 drill rigs testing the depth and strike extent of the system, currently being tested over 2km along strike and ~1300m below surface. Maintain HOLD and TP $5.70.
Recent Contacts & Presentations
Ramelius Resources Ltd (RMS), MOD Resources Ltd (MOD), Greenland Minerals & Energy Ltd (GGG), Walkabout Resources Ltd (WKT), Marindi Metals Ltd (MZN), Volt Power Group Ltd (VPR), PharmAust Ltd (PAA), Alice Queen Ltd (AQX), Jervois Mining Ltd (JRV), St George Mining Ltd (SGQ), Overland Resources Ltd (OVR), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE)
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