Market Update & Important Indicators:
The Dow Jones Industrial Average surged above 21000 for the first time Wednesday, as investors embraced optimism from President Donald Trump and Federal Reserve officials. Stocks have soared since November, with the blue-chip index surpassing 19000, 20000, and now 21000, since Election Day. Enthusiasm for Mr. Trump's plans to cut taxes, loosen regulations and ramp up fiscal spending have bolstered shares alongside signs of improvement in the U.S. economy. The Dow rose 334 points, or 1.6%, to 21,147 on Wednesday. The last time it posted a gain of more than 300 points was the day before Mr. Trump's surprise win. If the gains hold through the closing bell, the Dow will tie its fastest thousand-point jump in history: It took 24 sessions from the first close above 10000 for the index to climb to 11000 in 1999. Investors scooped up shares broadly on Wednesday, sending nearly all 30 Dow components higher. Apple rose 2.2% and has been one of the biggest contributors to the Dow's point gain since the index first closed above 20000 on Jan. 25. The S&P 500 rose 1.5% Wednesday, and the Nasdaq Composite added 1.3%. The rally came after Mr. Trump struck an optimistic tone in a speech to Congress on Tuesday evening, although he offered few new details for his agenda. Investors were also focused on the likelihood of the Fed raising interest rates in March, following comments from a number of officials suggesting another quarter-point interest-rate increase could come at the central bank's next meeting.
European stocks charged to their highest close this year, fortified by expectations that an increase in U.S. government spending will benefit European companies. As well, investors anticipated that the Federal Reserve will consider the world's largest economy strong enough to withstand another interest-rate increase. The Stoxx Europe 600 ended up by 1.5% at 375.69, marking the best finish since Dec. 2, Dow Jones data showed. The win also marked the largest daily percentage rise since Nov. 7. All sectors advanced, led by the financials and basic materials group. The pan-European index was bolstered as German, French, Spanish and Italian shares strengthened, taking part in the global rally in equities that also pushed the Dow Jones Industrial Average above 21,000 for the first time ever. In London, the FTSE 100 leapt to a record closing high.
In Asia, the yen weakening against the dollar helped Japan's Nikkei Stock Average close up 1.4%. The dollar was up 0.8% recently at Yen113.6150, helping to lift Japanese companies that sells goods abroad. Moves were largely muted elsewhere in Asia, with the Shanghai Composite Index rising 0.2% and Hong Kong's Hang Seng Index up 0.2%.
Australian shares weakened on Wednesday, despite a surprisingly strong recovery by the country's resource-rich economy that flirted with recession in the third quarter. The S&P/ASX 200 fell 0.1%, or 7.4 points, to 5704.8, mirroring subdued trading on Wall Street, where the Dow Jones Industrial Average fell for the first time in 13 sessions. Stocks gained little momentum from data showing Australia's economy grew 1.1% in the fourth quarter, reversing from a 0.5% contraction in the previous three months and ahead of the 0.8% growth forecast of analysts polled by the Wall Street Journal.
The London Metal Exchange's three-month copper contract closed up 1.33% to $6,003/t. The other base metals were mostly higher Wednesday. Aluminium rose 2.3% to $1,943/t, zinc rose 1.9% to $2,853/t, tin rose 2.9% to $19,500/t and lead rose 2.1% to $2,299/t. Nickel prices bucked the trend falling 0.2% at 10,975/t.
In this Issue:
Orbital (OEC) | REMSAFE needs a spark | HOLD
Market Cap $58m | Current Price $0.75 | Valuation $0.90
Reasonable performances from most segments were offset by a surprisingly weak result from Safety & Productivity (REMSAFE) and, although there is little change to our group FY17 forecast, we have pared back growth assumptions for this segment. Our positive view on the long term potential for OEC’s technologies is unlikely to be reflected in share price gains while near term earnings are so weak. Hold maintained.
Doray Minerals (DRM) | Impairments and Impediments | HOLD
Market Cap $123m | Current Price $0.35 | Target Price $0.38
Doray Minerals (DRM) reported its full year result with a net loss of $35m after a non-cash impairment charge of A$46.8m on the Andy Well and Deflector assets. Revenues of $70.2m were 4% less than the previous period and were 23% less than Argonauts forecasts due to the awaited sale of the copper-gold middlings (worth up to $15m at current spot prices). Our recent site visit to Deflector confirmed the operation is running well and above nameplate throughput capacity. We believe the stock trades at a discount to its peers due to the near term re-financing of its debt facility and the ongoing high cost production issues at Andy Well. We maintain our HOLD recommendation and revise our target price to $0.38ps ($0.59 prior) pending the resolution of short term impediments including the re-negotiation of debt and the sale of the copper-gold middlings.
Recent Contacts & Presentations:
Vault Intelligence Ltd (VLT), Orthocell Ltd (OCC), Strandline Resources Ltd (STA) Dragontail Systems Ltd (DTS), ABM Resources Ltd (ABU), Acacia Coal Ltd (AJC), Troy Resources Ltd (TRY), Hazer Group Ltd (HZR), Berkeley Energia Ltd (BKY), Sino Gas & Energy Holdings Ltd (SEH), Sovereign Metals Ltd (SVM), Kin Mining (KIN), Vital Metals Ltd (VML), Mincor Resources (MCR), Dacian Gold (DCN), Leaf Resources Ltd (LER), Alchemy Resources Ltd (ALY), OpenDNA Limited (OPN), MZI Resources Ltd (MZI), Seafarms Group Ltd (SFG), Marindi Metals Ltd (MZN), Rift Valley Resources Ltd (RVY), Botanix Pharmaceuticals Ltd (BOT), Thundelarra Ltd (THX), DTI Group Ltd (DTI)