Keras Resources (LON:KRS) – £1.3m placing completed
Dow Jones Industrials +0.10% at 17,926
Nikkei 225 -0.37% at 16,848
HK Hang Seng -0.08% at 21,320
Shanghai Composite -0.14% at 3,078
FTSE 350 Mining -0.66% at 9,885
AIM Basic Resources +0.15% at 1,840
Economic News
US – Inflation slowed in Mar coming in below market estimates (0.9%yoy v 1.0%yoy forecast) bringing down the total for Q1/16 to 1.1%yoy (Q4/15: 0.5%yoy).
• Striping out volatile food and energy prices, prices are reported to have climbed 2.2%yoy, down from 2.3%yoy in Feb, driven by lower clothing prices and healthcare inflation.
• The Fed’s preferred measure of inflation, the PCE index will be released on 29 Apr, days after the FOMC meeting.
• While core PCE continued to trail the 2% Fed target coming in at 1.7%yoy in Feb, the pace has been accelerating through first months of the year.
• This week economic news:
Date Index Period Actual Expected (Bloomberg) Previous
Tuesday Monthly Budget Mar -$108.0bn -$104.0bn -$52.9bn
Wednesday Retail sales/Core (ex auto) Mar -0.3%mom/0.2%mom 0.1%mom/0.4%mom 0.0%mom/0.0%mom (revised from -0.1%mom/-0.1%mom)
PPI/Core Mar -0.1%mom/-0.1mom 0.2%mom/0.1%mom -0.2%mom/0.0%mom
Thursday Weekly Jobless Claims 253k 270k 266k (revised from 267k)
CPI Mar 0.1%mom/0.9%yoy 0.2%mom/1.1%yoy -0.2%mom/1.0%yoy
CPI Core Mar 0.1%mom/2.2%yoy 0.2%mom/2.3%yoy 0.3%mom/2.3%yoy
Friday Industrial Production Mar -0.1%mom -0.5%mom
Manufacturing Production Mar 0.1%mom 0.2%mom
Capacity Utilization Mar 75.3% 75.4%
New York Manufacturing Apr 2.0 0.6
UoM Consumer Sentiment Apr 92.0 91.0
Source: Bloomberg
China – Economic growth slowed to 6.7%yoy in Q1/16, in line with market estimates and government targets.
• The government approved the 6.5-7.0% growth target in Mar.
• An increase was led by gains in housing and infrastructure as authorities decided to support growth delaying the rebalancing exercise.
• Fixed asset investment climbed 10.7%yoy in the first three months of the year, beating estimates and marking the strongest reading since Aug.
• Stronger investment led an increase in industrial production that climbed at the fastest pace in nine months.
• A slowdown in the financial sector compared to a high base Q1/15 weighed on gains in the services industry.
• Debt continued to build up at fast pace in the final month of the quarter.
• New borrowings posted the second-highest monthly total since Jan/14 after record credit growth recorded in Jan this year.
• Q1/16 GDP: 6.7%yoy v 6.9%yoy in Q4/15 and 6.7%yoy forecast.
• Industrial production (YTD): 5.8%yoy v 5.4%yoy in Jan-Feb and 5.5%yoy forecast.
• FA Investments (YTD: 10.7%yoy v 10.2%yoy In Jan-Feb and 10.4%yoy forecast.
• Retail sales (YTD): 10.3%yoy v 10.2%yoy in Jan-Feb and 10.2%yoy forecast.
• Aggregate financing: CNY 2,340bn v CNY 780bn in Feb and CNY 1,400bn.
EU – Car registrations growth came in at the slowest pace in six months climbing 6.0%yoy in Mar partly driven by fewer shopping days due to Easter holidays.
• Despite the VW emissions scandal Golf was the best-selling vehicle last month.
• Italy posted the strongest growth (17.4%yoy) of the top five markets.
• Sales in Germany and Spain were down.
UK – BoE Apr meeting minutes show MPC members are increasingly concerned over economic outlook amid uncertainties over the EU membership referendum scheduled for Jun.
• Authorities highlight the uncertain result of the vote is weighing on companies’ willingness to borrow, invest and hire.
• “Business surveys had reported a softening in investment intentions, consistent with expenditure decisions being deferred pending the outcome of the referendum.”
• “Some lenders had reported that, notwithstanding still favourable credit availability, the demand for finance from some large companies had dipped somewhat, partly reflecting EU referendum uncertainty.”
• The MPC also noted a “significant role” of the referendum risks in the 40%yoy drop in commercial real estate deals in Q1/16.
• Members of the MPC voted unanimously to leave the benchmark rate at 0.5% leaving the stock of assets purchased under the QE programme at £375bn.
Greece – The IMF questioned chances of achieving target budget surpluses set under the latest Greek €86bn bailout package as creditors consider releasing the second instalment.
• Under the deal, the Greece agreed to post a fiscal surplus before interest payments of 3.5% of GDP in two years.
• “Currently, as envisaged, the debt is not sustainable and what is required is a debt operation,” IMF Lagarde said.
• Lagarde suggested new debt deal does not necessarily need to involve a haircut on outstanding nominal but may be sUBStituted with maturity extensions, interest rate cuts and a “debt holiday”.
• The IMF stance highlights differences with the Euro area finance ministers who rejected the notion that Greek debt is unsustainable.
Currencies
US$1.1259/eur vs 1.1262/eur yesterday. Yen 109.28/$ vs 109.17/$. SAr 14.490/$ vs 14.620/$. $1.416/gbp vs 1.417/gbp
0.772/aud vs 0.769/aud. CNY 6.483/$ vs 6.483/$.
Commodity News
Precious metals:
Gold US$1,230/oz vs US$1,241/oz yesterday – Deutsche Bank reached settlements in lawsuits over allegations of gold and silver prices fixes manipulations with futures traders, Bloomberg reports.
• The bank also agreed to assist plaintiffs pursue similar claims against other banks as part of the settlement.
• “in additional to valuable monetary consideration to be paid into a settlement fund, the term sheet also provides for other valuable consideration such as provisions requiring Deutsche Bank’s cooperation in pursuing claims against the remaining defendants,” plaintiffs’ attorneys said.
• Silver and gold futures traders filed claims against a group of banks in 2014.
• Silver traders sued Deutsche Bank, HSBC, Bank of Nova Scotia and UBS.
• Gold traders also filed claims against Barclays and Societe Generale.
• Gold ETFs 56.6moz vs US$56.6moz yesterday –
Platinum US$988/oz vs US$992/oz yesterday
Palladium US$562/oz vs US$543/oz yesterday
Silver US$16.21/oz vs US$16.14/oz yesterday
Base metals:
Copper US$ 4,815/t vs US$4,809/t yesterday
Aluminium US$ 1,556/t vs US$1,557/t yesterday
Nickel US$ 8,930/t vs US$8,885/t yesterday
Zinc US$ 1,879/t vs US$1,873/t yesterday
Lead US$ 1,723/t vs US$1,754/t yesterday
Tin US$ 17,150/t vs US$17,180/t yesterday
Energy:
Oil US$44.0/bbl vs US$44.1/bbl yesterday
Natural Gas US$1.947/mmbtu vs US$2.034/mmbtu yesterday
Uranium US$27.00/lb vs US$27.75/lb yesterday
Bulk comodities:
Iron ore 62% Fe spot (cfr Tianjin) US$56.2/t vs US$56.6/t – China posted record monthly steel production in Mar/16 explaining a surge in iron ore prices that saw a 55% rally though Q1/16.
• Output climbed 2.9%yoy to 70.6mt helping to reduce the quarterly decline to -3.2%yoy (192mt).
• Local steelmakers ramped up production in Mar on the back of rising steel prices led by a rebound in the housing sector and expansionary government fiscal policy.
• Domestic benchmark hot-rolled sheet prices surged 45% this year driving steel mills’ margins higher.
• On the other side of the spectrum, Rio Tinto is talking iron ore down saying the latest rally in the price is not sustainable amid forecasts for growing supply.
• Prices may come off in H2/16 as new supply is set to outpace improving demand in China, CEO Sam Walsh said.
Thermal coal (1st year forward cif ARA) US$43.6/t vs US$42.3/t yesterday
Other:
Tungsten - APT European prices stood at $175-190/mtu vs $170-185/mtu last week
Company News
Keras Resources (LON:KRS) 1.3p, Mkt Cap 15.6m – £1.3m placing completed
• The Company has raised £1,250k at a price of 1.1p to fast track development of its projects in Australia.
• The team is targeting to launch production at the high grade Prince of Wales underground mine (30km north of Kalgoorlie) and the Lindsay’s mine (65km NNE of Kalgoorlie).
• The Prince of Wales project is expected to produce 15-20kopa at AISC of
• The project hosts 154kt at 8.0g/t for 40koz in mineral resource and a 500kt at 10g/t for 160koz in exploration targets.
• The Linday’s project includes the open pit and underground resource of 4,000kt at 1.7g/t for 215koz including the high grade Parrot Feathers deposit (400kt at 4.2g/t for 54koz).