Market Update & Important Indicators
U.S. stocks pulled back Tuesday afternoon, even as shares of technology companies rose following losses in recent sessions. Investors were cautious as Republicans were set to try to reconcile the Senate's version of the tax bill with the House's — a task lawmakers hope to complete by Christmas. The end of the third-quarter earnings season, along with few new developments on the legislative front, has left money managers with little else to act on, some analysts and investors said. The S&P 500 declined 0.3% in the last half-hour of trading, while the Dow Jones Industrial Average shed 0.4%. The teach-heavy Nasdaq Composite was down less than 0.1% after declining for two consecutive sessions. Most of the S&P 500's sectors declined Tuesday, with the exception of technology. The declines were steepest among telecommunications companies, off 1.4%, and utilities, down 1.3%. The U.S. gold price traded lower overnight, losing 0.7% to close at 1,266.10 US$/oz.
European stocks finished lower, suffering their third loss in four sessions, with drops for Provident Financial and tech shares weighing on the region's main benchmark. The Stoxx Europe 600 fell 0.2%, giving back part of Monday's rise. Germany's DAX 30 index edged down by 0.1% and France's CAC 40 lost 0.3%, while the U.K.'s FTSE 100 shed 0.2%. Investors are also keeping tabs on the Brexit process, with reports U.K. Prime Minister Theresa May will return to Brussels to continue talking with European Union officials.
Asia-Pacific markets came under pressure on Tuesday as technology stocks across the region declined. Hong Kong's Hang Seng Index fell 1%, dragged down by tech and property-related stocks. The Shanghai Composite closed 0.2% lower, while the CSI 300 Index, which tracks large cap companies in Shanghai and Shenzhen, gained 0.5%. Japan's benchmark Nikkei 225 closed 0.4% lower. Elsewhere, Taiwan's tech-heavy TAIEX closed 0.8% lower, while Korea's KOSPI index closed 0.3% higher, with Samsung Electronics declining 10.2%.
Australian stocks ended a choppy session lower while shrugging off the central bank's as-expected rate decision. The S&P/ASX 200 settled 0.2% lower after moving modestly below Monday's closing level most of the day. BHP Billiton and Rio Tinto also weakened despite continued gains by iron ore, though Fortescue rose modestly and South32 jumped 3.7% after staging an investor briefing and reaffirming full-year production guidance.
The London Metal Exchange’s 3-month copper contract traded sharply lower overnight, slipping 4.1% to finish at $6,543/t. The other base metals finished mostly lower. Aluminium prices lost 0.8% to 2,036/t, whilst Lead prices pulled back 0.3% to close at 2,500/t. Zinc prices fell 1.8%, closing at 3,130/t, whilst Nickel prices dropped 4.6% to 10,801/t. Tin prices bucked the trend, closing flat at 19,582/t.
In this issue
Decmil (DCG) | Solar PV project | BUY
Market Cap $204m | Current Price $1.175 | Valuation $1.40
DCG’s credentials are well established in resources, growing in infrastructure, and emerging in renewables. The MOU with Maoneng, if progressed successfully to a ~$275m EPC contract for the Sunraysia Solar PV project, would go a long way to establishing DCG as a contender for significant potential work in the renewables sector, and add to the opportunities in resources and infrastructure. Buy maintained on the compelling macro.
Threat Protect (TPS) | Executing | SPEC BUY
Market Cap $22m | Current Price $0.195 | Valuation $0.28
The latest two acquisitions from the existing monitoring client base means TPS has converted close on 3,000 reseller lines to direct lines so far this half. Boosting revenue, with little associated cost impact, adds to the good run-rate evident in the last two quarters. We expect TPS to continue with this strategy, leveraging the underutilised control rooms and positively impacting margin. We maintain our speculative buy recommendation on a blended valuation of $0.28 (this unchanged on prior after taking into account the 1 for 7 share consolidation ratified at the recent AGM).
Recent Contacts & Presentations
PharmAust Ltd (PAA), Alice Queen Ltd (AQX), Jervois Mining Ltd (JRV), St George Mining Ltd (SGQ), Overland Resources Ltd (OVR), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM), Gascoyne Resources Ltd (GCY), Southern Cross Electrical Ltd (SXE)