Market Update & Important Indicators
U.S. stocks slipped Thursday afternoon as sharp rallies in the oil market and energy shares faded. Investors have been cautious about risky assets for most of the week, questioning the strength of a recent rally amid a gloomy earnings season and tepid economic data. While stocks have recovered from their mid-February lows, gold and bond prices continue to suggest investors' concerns about weakness in the global economy. Investors are awaiting a key reading on reading of the U.S. economy — the monthly employment report — which is due out Friday. Eight of the 10 S&P 500 sectors fell Thursday.
Consumer discretionary stocks fell more than the broader market. L Brands fell after the Victoria's Secret parent reported lower sales growth than expected, making it the company the biggest laggard in the S&P 500. Tesla Motors dropped after the electric-car maker said late Wednesday its first-quarter loss doubled from a year ago.
European stock markets rose for the first time in five sessions, with optimism over a rally in oil prices outweighing concerns over a slowdown in growth in China's services sector. The Stoxx Europe 600 index rose 0.3% to end at 332.86, climbing back from the lowest closing level since April 7 reached on Wednesday. Trading volumes were lower than usual because of Ascension Day, which kept several markets closed, including Switzerland, Austria and the Scandinavian bourses.
Trading in Asia was lackluster on Thursday, amid growing skepticism that a multiweek rally can extend further. Hong Kong's Hang Seng Index finished down 0.4%, but the Shanghai Composite Index was up 0.2%. Investors were mostly focused on data showing that Chinese services activity expanded in April, albeit at a slower pace than in March. The Caixin China services purchasing managers index slipped to 51.8 in April from 52.2 in March. A reading above 50 indicates an expansion. Stocks in Hong Kong pared losses after the release of the PMI data and the Australian dollar edged up against the U.S. dollar.
In what has been a roller coaster week for bank stocks, the sector was given a lift by a well-received first-half report from National Australia Bank that was broadly in line with expectations after one-off costs and showed a slight rise in margins. Oil-and-gas shares were buoyed by gains in crude-oil prices as investors focused on a raging wildfire near Canada's oil-sands region and fighting in Libya, events that could threaten production in those countries. The S&P/ASX 200 finished up 8 points, or 0.2%, at 5279.1. National Australia Bank closed the day up 2%. Australia & New Zealand Banking gained 1.8%, Westpac rose 0.6% and Commonwealth Bank of Australia was 0.3% higher. Macquarie advanced 2.9% ahead of its full-year earnings report, due before the market opens Friday. Among energy stocks, Woodside Petroleum was flat but Santos and Origin Energy gained 2.6% and 3.5%, respectively. Mining shares were again lower for the day after a fall in iron ore and other commodity prices. Fortescue Metals Group lost 3.2%, while BHP Billiton added to Wednesday's sharp fall with a drop of 1.9%.
The London Metal Exchange's three-month copper contract was down 1.66% at $4,786 a metric ton at the PM kerb close. Among the other base metals, aluminum was down 1.4% at $1,592, zinc was down 1.3% at $1,856 a ton, nickel was down 4.50% at $8979 a ton, lead was down 1.3% at $1,737 a ton and tin was down 1.3% at $17,401 a ton
In this Issue
Threat Protect (TPS) | Cleaner quarter coming | SPEC BUY
Underlying earnings and cash flow were considerably weaker than expected in Q3 and, based on Company guidance, we now expect an underlying net loss of $0.5m in FY16. More positively TPS expects an improved performance from Q4 as acquired businesses contribute, efficiencies are realised and costs contained. Our reduced blended valuation of $0.032 (prior $0.038) reflects anticipated extension of tougher WA trading conditions, however Q4 should provide a better indication of the earnings and cash flow run rates as we move toward FY17. Speculative buy maintained.
Recent Contacts & Presentations
Red 5 (RED), Medusa Mining (MML), Saracen Mineral Holdings (SAR), Paradigm BioPharmaceuticals (PAR), Pilbara Minerals (PLS), Energia Minerals (EMX), Deep Yellow (DYL), Paladin Energy (PDN),), West Africa Resources (WAF), Finders (FND), Credo Resources (CRQ) , Orthocell (OCC), Capricorn Metals (CMM), Gold Road Resources (GOR), Otto Energy (OEL), Dakota Minerals (DKO), Cradle Resources (CXX), Kidman Resources (KDR)
