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Basic Materials Roundup: Market Talk

14 Feb 2018 9:20 am

The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0820 GMT [Dow Jones] Although gold posted a pullback, it is still trading with the bullish channel, which confirmed a positive outlook, on the 30-minute chart. A new challenge to its next resistance level at $1,339 seems more likely to occur. The rising 50-period moving average is playing a support role. The MACD is above its 0-level. The RSI is supported by an ascending trend line, which emerged on February 8. As long as $1,326 is not broken, look for a further advance with targets at $1,339 and $1,346 in extension. Alternatively, only a break below $1,326 would turn the outlook to negative and bring a return with $1,321 as a target. Gold is trading at $1,332.6 an ounce. (analysts-europe@tradingcentral.com)

0757 GMT - Clariant beat sales and Ebitda consensus in its fourth-quarter results, says Bernstein, which nevertheless points out that operating cash flow for the full-year was weak. Even though the company said that the cash flow decline can be explained by a working capital increase due to strong demand into the first quarter, Bernstein says it retains "a healthy degree of skepticism regarding the amount of cash outflow." The broker also says it is in line with management's qualitative guidance of local currency sales growth, higher Ebitda and increased profitability. (alberto.delclaux@dowjones.com)

0526 GMT - After a solid rebound yesterday, Australia stocks fell anew today amid a pullback in miner stocks and weakness in many consumer companies. But the biggest factor was the stock-price adjustment from Commonwealth Bank trading ex-dividend. That helped result in the No. 1 lender falling 3%, good for 13 points in the S&P/ASX 200. It fell 14.7 points, or 0.25%, to 5841.2. But it wasn't all back for Aussie stocks, with Myer ticking up 1.9% after the embattled retailer said its CEO was stepping down. And amid a flurry of earnings reports, Insurance Australia gained 3.2% and CSL jumped 5.1%. (robb.stewart@wsj.com; @RobbMStewart)

0049 GMT - If Rio Tinto PLC can fetch more than $3.3 billion for its Grasberg stake, says Deutsche Bank, that would be a reasonable outcome. That's already a roughly 14% discount to its valuation, says the broker, and a further discount would be "a disappointing conclusion to Rio's involvement in Grasberg given the longer-term value potential and broader challenges in developing new copper mines." However, there would be positive environmental, social and governance aspects of a sale, it says. The tailings waste facility has long been an issue with investors and, should Rio jettison the rest of its coal assets, it would make the company "one of the most ESG-friendly diversified miners in our coverage." (rhiannon.hoyle@wsj.com; Twitter: @RhiannonHoyle)

0020 GMT - Investors should expect a pretty straightforward 1H18 result from Newcrest Mining Ltd., says Credit Suisse. "Transparent quarterly reporting projects weak reported earnings, with Credit Suisse's 1H forecast of US$126 million before minor adjustments not discernable from quarterly reporting," it says. The broker says the key update is likely to be any restatement of resources and consequent adjustments to medium-term guidance. The gold miner is due to report its results Thursday. (rhiannon.hoyle@wsj.com; Twitter: @RhiannonHoyle)

2352 GMT - Perhaps because of its 2017 underperformance, Australia's stock benchmark hasn't fallen back as much as others during this month's slide. The 5% drop has put the S&P/ASX 200's P/E at 15.25, about 5% below Deutsche Bank's fair-value estimate and the biggest such discount in 2 years. Most sectors have fallen 3-6% in this pullback, with energy and utilities the biggest underperformers but mining holding up well. With Deutsche Bank strategists expecting a further rise in bond yields, typically not good for higher-yielding stocks, the firm advises investors stay away from Aussie infrastructure and utilities stocks. (robb.stewart@wsj.com; @RobbMStewart)

2046 GMT [Dow Jones] Investors still aren't willing to bet heavily on Mount Gibson Iron roaring back. UBS says the Koolan Island restart project will be "a game changer, if it can be delivered on time and budget." The project is one-third finished and expected to be completed for first sales in early 2019. "While the project is tracking well to time and budget, and the intrinsic quality of the asset is excellent, the market appears to be discounting KI in the share price," with the startup of new projects always risky, says UBS. Mount Gibson trades at A$0.42, down 7% this year. (rhiannon.hoyle@wsj.com; Twitter: @RhiannonHoyle)

1948 GMT - Shares of steel and aluminum companies are trading higher after President Trump told a meeting of lawmakers he's considering additional tariffs and or quotas on imported metal. Trump says he's mindful that duties or volume restrictions could drive prices higher for US-made steel and aluminum, pushing up costs for domestic manufacturers. Companies and some lawmakers have warned that other countries could retaliate against the US by creating barriers for US exports. The administration is expected to release a decision in April. Among the companies trading higher are United States Steel, Nucor, Commercial Metals, Alcoa and AK Steel Holdings. (robert.tita@wsj.com ; @bob_tita)

1713 GMT - Belgian stocks closed down 0.9% on Tuesday at 3884.71, as local earnings reports and volatile international equity markets continued to weigh on the Bel-20. Tuesday's close was however slightly above Friday's five and a half month low. Bekaert and Umicore each close up 0.9%. The session's biggest loser was Telenet which closed down 5.5%. Galapagos closed down 1.9% while Aperam ended off 1.8%. (laurence.norman@wsj.com)

1535 GMT - Shares in Amur Minerals Corp. fall 16% to 5 pence after it announced a loan of up to $10 million to speed up its Kun-Manie nickel-copper sulphide project in eastern Russia. The loan consists of three advances, each of them repayable in 12 monthly instalments, Amur said. If the company decides against making any of the repayments on the dates due, the investors can convert the instalment into shares in Amur. "The funds secured will help the company to advance Kun-Manie as the management is studying long-term financing alternatives with Medea Financial Partners," says house broker S.P. Angel.(philip.waller@wsj.com)

1507 GMT - Vedanta Resources PLC is on course to more than double output at its Zambian copper operations thanks to ongoing expansions and improved global metal prices, says Steven Din, the unit's head. Vedanta has invested $3 billion in expansions and upgrades, setting it's Konkola Copper Mines in a "strong position to step-up production", which may reach 500,000 tons in the next 4 to 5 years, from 200,000 tons. The unit has emerged "strong from the downturn", during which time the price of copper dropped to its lowest in 11 years in 2016. "All the hard dollars have been spent, so now it's a matter of turning the handle to get the production," he says. (Nicholas.Bariyo@wsj.com;@Nicholasbariyo)

1411 GMT - South Africa's Kumba Iron Ore, a subsidiary of global mining giant Anglo American PLC, will pay out a full-year dividend for the first time since 2014, the company announced Tuesday. "It's all the hard work that's gone in the last two years," Kumba CEO Themba Mkhwanazi told The Wall Street Journal. He said lessons learned from the last commodities cycle include "the concept of value over volume," and "a sharper focus on returns." Kumba shares on the Johannesburg Stock Exchange were recently up 3.4% at ZAR353.19. (alexandra.wexler@wsj.com; @alexandrawexler)

(END) Dow Jones Newswires

February 14, 2018 04:20 ET (09:20 GMT)

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