Market Update & Important Indicators:
U.S. stocks hovered around the flat line Wednesday as a climb in oil prices boosted energy shares. Energy shares in the S&P 500 rose 1.2% as oil prices surged. U.S. crude oil rose 3.5% to $47.49 a barrel after data showed U.S. crude stockpiles fell more than analysts expected last week. Consumer discretionary shares in the S&P 500 slipped 0.5%. The U.S. gold price once again dropped, falling 0.2% to 1,218.80 US$/oz. Major stock indexes have gained in recent weeks as corporate earnings have exceeded analysts' expectations. U.S. companies have largely beat estimates, with most S&P 500 companies now having reported results, according to FactSet. With the earnings season now drawing to a close, some investors said the Trump administration needs to deliver on proposed tax cuts for equity markets to climb further. Moves were muted after the unexpected firing of James Comey, the director of the Federal Bureau of Investigation, though some investors expressed concern that Mr. Comey's departure could stoke tensions between the White House and Congress.
European stocks closed with small gains Wednesday, helping the region's benchmark to a fresh 21-month high. The Stoxx Europe 600 index edged up 0.2% to finish at 396.45, its highest closing level since August 2015. That comes after the pan-European gauge tacked on 0.5% on Tuesday. The index is up 9.7% this year, after getting a boost ahead of markets-friendly Emmanuel Macron's victory in the French presidential election on Sunday. The Euro Stoxx 50 Volatility Index dropped to its lowest level since March on Monday and fell further Tuesday, then gained slightly Wednesday.
In Asia, South Korea's Kospi index gave up early gains and fell 1% following the conclusion of presidential elections in the country. Moon Jae-in's victory in those elections on Tuesday has prompted investor caution given his support for closer ties with North Korea. In China, the Shanghai Composite Index fell 0.9% after a small gain on Tuesday snapped a five-day losing streak. Elsewhere, Japan's Nikkei Stock Average rose 0.3%.
Australian shares recovered from early weakness to finish Wednesday higher, reversing from the previous day's drop. The major banks trimmed losses earlier in the session as investors digested the federal budget and plans for a levy on the biggest lenders' liabilities, while regional banks rallied and infrastructure-related companies advanced in the wake of Canberra's spending plans. Amid broad gains, the S&P/ASX 200 rose 35.5 points, or 0.6%, to 5875.4. The budget, released after the market closed Tuesday, included plans for A$75 billion in infrastructure spending over the next decade on a new airport in Sydney and a high-speed rail corridor, among other projects. It also confirmed a levy on the liabilities of the five largest banks, aimed at raising A$6.2 billion over four years. Ahead of the confirmation, speculation about the levy weighed heavily on banking stocks as analysts estimated it would cut as much as 6% from annual earnings.
The London Metal Exchange's three-month copper contract closed down 0.21% at $5,501/t. The other base metals finished mostly lower on Wednesday. Nickel prices fell 1.0% at 9,079/t, zinc prices fell 0.9% at 2,586/t, aluminium prices fell 0.3% to 1,860/t whilst tin prices dropped 0.1% to 19,738/t. Lead prices bucked the trend rising 0.7% to 2,187/t.
In this Issue:
Pacific Energy (PEA) | Powering on | BUY
Market Cap $259m | Current Price $0.70 | Valuation $0.85
PEA has begun to deliver on a substantial 125MW pipeline (tendered or priced). The recent 11MW Altura Mining contract win, along with 11MW of additional capacity secured with existing customers, takes PEA’s Group contracted capacity to 278MW. The strength of PEA’s order book and the potential for further material contracts in the coming months has provided cause for us to upgrade our FY18 and FY19 forecasts for the Company. PEA is a standout performer in the typically volatile resource services space and we maintain a buy call on a revised blended valuation of $0.85 (prior $0.82).
Recent Contacts & Presentations:
Apollo Minerals Ltd (AON), Ironbark Zinc Ltd (IBG), Sovereign Metals Ltd (SVM), Pilbara Minerals Ltd (PLS), Laconia Resources Ltd (LCR), Hazer Group Ltd (HZR), Transerv Energy Ltd (TSV), Ausquest Ltd (AQD), Quintis Ltd (QIN), Paradigm Biopharma Ltd (PAR), Pharmaust Ltd (PAA), Strandline Resources Ltd (STA), PharmaNet Group (PNO), Emerald Resources NL (EMR), Echo Resources (EAR), Investigator Resources Ltd (IVR), Beadell Resources Ltd (BDR), Pantoro Ltd (PNR), Botanix Pharmaceuticals Ltd (BOT), Resolute Mining Ltd (RSG), Hotcopper Holdings Ltd (HOT), Prairie Mining Ltd (PDZ) Vital Metals Ltd (VML), Red River Resources Ltd (RVR)