Date: Apr 04, 2019

SP Angel – Morning View –Wednesday 03 04 19

Trade deal optimism sees commodities higher

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African Battery Metals* (ABM LN) – Cameroon Cobalt Nickel Project

Aura Energy (AURA LN) – Mauritania gold exploration licences

Bushveld Minerals (BMN LN) Target Price 87p – Eskom signs US$180m loan for renewable energy expansion

Griffin Mining (GFM LN) – Resource uplift at Caijiaying zinc mine’s Zone III in China

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Strategic Minerals* (SML LN) – Fluffing up heaps at Leigh Creek copper project

Trans-Siberian Gold (TSG LN) – Rodnikova deposit, Kamchatka

WTO cuts global trade growth projection for 2019 to the weakest in three years on the back of increasing commercial tensions and tariffs.

  • World merchandise trade growth will slow to 2.6% this year and 3% next year, after notching 3% in 2018, the WTO said in a report released on Tuesday.
  • The report follows on the heels of similar revisions from the World Bank and the IMF.
Dow Jones Industrials-0.30%at  26,179
Nikkei 225+0.97%at  21,713
HK Hang Seng+1.16%at  29,968
Shanghai Composite+1.24%at   3,216
FTSE 350 Mining+0.82%at  20,798
AIM Basic Resources-0.01%at   2,113

Economics

US – Trade talks optimism has been given a boost by new comments from White House economic adviser Larry Kudlow yesterday that the office expects “to make more headway” in talks this week.

  • US Trade Representative Robert Lightizer and treasury Secretary Steven Mnuchin are due to resume talks with Chinese VP Liu He today, days after two sides reported progress int talks last week in Beijing.
  • Chinese trade talks team is coming to the US today.
  • Commodities climb (copper +1.1%, brent +0.7%) driven by a risk on sentiment.
  • Fitch reaffirmed the US sovereign debt rating at AAA with a stable outlook citing the nation’s debt tolerance being higher than that of other countries.
  • The agency highlighted that rising deficits and debt could eventually test the credit strength in the absence of reform.
  • Core durable goods orders, a proxy for business investment plans, slipped 0.1%mom in February, a little worse than expected (+0.1%mom).
  • The economy is losing momentum as stimulus from a $1.5tn tax cut fades and US/China trade negotiations failed to yield a deal yet.

China – Private business sentiment indices climbed in March which combined with positive manufacturing PMI released earlier this week point to a stabilisation in the growth slowdown amid government led stimulus.

  • Caixin Services PMI: 54.4 v 51.1 in February and 52.3 forecast.
  • Caixin Composite PMI: 52.9 v 50.7 in February.

Eurozone – Revised PMI data points to modest growth in March helped by the services sector that more than compensated for a continuing slump in the manufacturing segment.

  • Services reading climbed to the highest since last November led by gains in Germany and Spain with solid growth recorded in Italy; France returned to marginal contraction.
  • Manufacturing PMIs painted a more worrying picture with indices hitting multiyear lows last months including Italy (47.5), France (49.7) and Germany (44.1).
  • New work was only marginally higher last month as manufacturing firms saw the sharpest fall in new orders since late-2012 reflecting deteriorating demand conditions both at home and abroad.
  • Outlook wise, manufacturing sector recorded the worst reading in over six years while services firms were the most optimistic in the last six months.
  • The worry is sluggish manufacturing may drag services industry growth lower.
  • “At current level, the PMI remains consistent with GDP rising by 0.2%qoq in Q1, but unless manufacturing pulls out of its downturn the overall pace of economic growth will likely weaken in the Q2 as the malaise spreads to the service sector… in this respect, with forward-looking indicators from the manufacturing sector suggesting goods production will fall further in the coming months, downside risk to the outlook have intensified.

UK – PM May is considering working with the opposition Labour leader on softer Brexit options including a customs union with the EU.

  • Prime Minister is hoping to negotiate a new Brexit plan before next Wednesday’s emergency meeting of EU leaders when she is planning to seek an extension to Britain’s current April 12 deadline.

British soldiers caught using pictures of Jeremy Corbyn for target practice in Kabul

  • While the MoD sees the practice as unacceptable, we see this as a green alternative to shooting more solid objects.

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