Australian miners pick up speed as gold nudges higher

Australia’s market closed Wednesday slightly up 0.3% at 6146 following a boost to local mining stocks. The rise was driven mainly by gold and metals prices. This was the highlight on the Asian markets Wednesday as China remains closed for the mid-autumn festival. Both Rio Tinto and BHP were up, +1.8% and +1.1% respectively, but other miners were also higher, notably St Barbara, which saw a gain of more than 7%. All this was being driven by a gold price that hit a one week high on the back of safe haven buying and is still north of $1200/Troy oz.

The market has been cautious about mining stocks, particularly gold miners, despite the mega merger of Barrick and Randgold last month. Many US and Canadian gold mining stocks are still trading more than 25% below where they were a year ago. Gold, on the other hand, is up 0.81% over the last 30 days.

Aston Martin opens flat as Brexit doubts remain

Many eyes are on Aston Martin Lagonda today, which begins trading in the London market after much hype in the run up to the listing. Shares opened flat at £19, but started to lose ground, coughing up more than 4% in early trading. The company had cut its initial market price estimate in the run up to the listing from £5.1 billion to £4.5 billion. Aston Martin’s brokers had originally been looking at as much as £22 per share, but extensive kicking of the tyres by analysts and fund managers in recent weeks had been drawing some big question marks over that valuation.

Aston Martin Lagonda is still trading at a higher price earnings multiple than Ferrari, which is the only other stock that bears successful comparison with Aston Martin. Yet Ferrari is still regarded as a more profitable company. Ferrari shares closed in New York at just over $137/share yesterday. The entire UK car manufacturing industry is living under a big Brexit cloud at the moment, as the sector is so reliant on parts sourced from inside the EU. A hard Brexit has the potential to cripple the industry overnight, and Aston Martin would be no exception.

Tesco posts solid profit but not good enough for investors

Tesco’s interim results saw the supermarket chain come out fighting: all eyes were on Tesco’s ability to absorb its Booker acquisition while at the same time coming up with some kind of viable response to the march of the discount grocery retailers like Lidl and Aldi. Tesco posted a 13% year on year rise in group sales while operating profit grew 24.4%. However, this missed analyst expectations – the market had obviously been looking for more from Tesco and is now disappointed. Tesco shares dropped over 5% in early trading.

Tesco is sailing into a veritable maelstrom when it comes to the highly competitive UK supermarket sector – it has to cope with a Sainsbury’s / Asda merger which is creating a giant that will control 30% of the market, against Tesco’s 27%. Tesco CEO Dave Lewis has responded to the discount challenge with the launch of a new discount brand, with up to 15 stores scheduled to open in the next six months, but will that be enough to keep Tesco on course? And that’s before you factor in the choppy waters that will be created in the event of a hard Brexit.