Market Update & Important Indicators
U.S. stocks rallied Wednesday, rising in tandem with markets in Europe and Asia, as fears receded that the U.K.'s referendum vote last week to leave the European Union would disrupt the global economy. Global shares and sterling initially plunged after Thursday's so-called Brexit vote, as investors feared the U.K.'s departure from the EU would slow global economic growth and extend the period of low interest rates. But now, markets are showing signs of recovering from those losses. Investors are now gauging the risks from Brexit to be lower than during the Lehman Brothers bankruptcy that unleashed the financial crisis in 2008. Financial stocks in the S&P 500, which fell almost 10% in the two sessions after the U.K. referendum results were released, rose 1.9% Wednesday.
In Europe, shares rose across the board, with the Stoxx Europe 600 advancing 3.1%, London's FTSE 100 gaining 3.6%, and France's CAC 40 rising 2.6%. Many investors now expect major central banks to act to counter a potential drag on the global economy after the Brexit vote, with some predicting rate cuts from the Bank of England and further stimulus from the European Central Bank. Standard & Poor's cut the U.K. two notches to AA from AAA Monday, and Fitch followed with a one-notch move to AA.
Shares across Asia rallied Wednesday as worries about the U.K.'s decision to leave the European Union abated and investors began buying up badly beaten sectors, including financials. Banks on Japan's Topix index jumped 1.8% although they remain down 4.8% for the week. Also rising in Japan were the insurance, steel and export sectors. More broadly, the Nikkei Stock Average rose 1.6%. Hong Kong's Hang Seng Index was up 1.3% and South Korea's Kospi was up 1%. The Shanghai Composite Index finished up 0.7%. The gains in Asia come after global stocks held steady overnight and the pound rose against the U.S. dollar.
Australian shares recovered Wednesday as calm returned to markets unsettled by last week's U.K. vote to exit the European Union. Energy and mining stocks helped drive the day's gains, alongside a second day of advances for the country's major banks. Local shares jumped from the open, bolstered by strong overnight moves in European and the U.S. stocks as well as rebounding prices for most major commodities, as markets globally steadied following sharp sell-offs in the wake of the British referendum. Erasing Tuesday's decline, the S&P/ASX 200 ended 39.1 points, or 0.8%, higher at 5142.4. The energy sector climbed 1.6% as crude prices continue to rise in Asian trading, while the four biggest banks together added 9 points to the ASX 200.
Copper prices closed higher in London on Wednesday, in tandem with other currencies, boosted by a weaker U.S. dollar. The London Metal Exchange's three-month copper contract was up 0.4% at $4,835 a ton at the PM kerb close. Among the other base metals, aluminium closed up 0.8% at $1,627 a ton, zinc was up 0.7% at $2,086 a ton, nickel was up 1.1% at $9.395 a ton, and lead was up 2.2% at $1,768 a ton.
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TFS Corporation (TFC) | New Institutional Plantation Investor | BUY
Market Cap $532m | Current Price $1.37 | Valuation $3.05
TFC has attracted a new institutional investor to its Beyond Carbon plantation investment product. The large, US-based, global investment management firm will spend A$27m acquiring new Indian Sandalwood plantations and freehold land in the NT. TFC will manage the plantations through to harvest. Due diligence by a new institution builds further comfort around the economics of Indian Sandalwood plantations and suggests to us that TFC will be able to continue planting ~1,500ha new plantations each year (as it has done over the last couple). Further, the contract is expected to settle this financial year, boosting cash as at end June 2016.
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)
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