Market Update & Important Indicators
The Dow Jones Industrial Average rose 98.92 points, or 0.6%, to 18057.65. The S&P 500 added 10.88 points, or 0.5%, to 2102.06 and the Nasdaq Composite gained 21.41 points, or 0.4%, to 4995.98. The moves were led by General Electric, whose shares surged $2.78, or 11%, to $28.51 as the company said it has resolved to part ways with the bulk of finance business GE Capital, and will sell or spin that part off over the next two years. GE's gains added about 19 points to the Dow. Volume was light, however, as just 5.6 billion shares changed hands, compared to an average of 6.7 billion shares so far this year. It was the second-lowest volume day of 2015.
European stocks climbed further into record territory on Friday as the market's big rally in 2015 showed no sign of abating. The Stoxx Europe 600 climbed 0.9%, closing at an all-time high for the second day in a row. A recent spate of corporate mergers has injected further confidence into a buoyant market, while Thursday's repayment by Greece of its latest instalment owed to the International Monetary Fund eased worries that Athens might spark a fresh confrontation with creditors. In the background, the European Central Bank continues to pump EUR60 billion a month into debt markets under its stimulus program, driving down yields and pushing investors into equities in search of better returns. Germany's DAX index was 1.7% higher, and France's CAC 40 rose 0.6%. Outside the eurozone, the U.K.'s FTSE 100 was up 1.1%, hitting a record high.
The region's markets took off this week with Hong Kong gaining the most in more than three years and Tokyo's Nikkei Stock Average breaking 20000 for the first time in 15 years. The Hang Seng Index ended a three-day week up 7.9% at 27272.39 as its rally accelerated on Wednesday following holidays. The index hadn't gained as much in a week since October 2011. Investors said cheap stocks and the prospect of greater demand from the mainland drove the gains, as well as momentum buying because the market was going up. The Shanghai Composite Index followed with an increase of 4.4% for the week. After briefly breaking above 20000, the Nikkei closed at 19907 for a gain of 2.4% for the week. The Nikkei's rally has been fuelled by Japanese Prime Minister Shinzo Abe's pro-growth policies. Most other Asian markets gained, including Korea's Kospi and Pakistan KSE 100, both up around 2% for the week
The S&P/ASX 200 ended the day 36.2 points, or 0.6%, higher at 5968.4, with mining the only industry sector in the red. That left the index up 1.2% for the holiday-shortened week and within reach of 6000, a level last breached in January 2008. A rebound in oil prices and fresh bets the Reserve Bank will trim interest rates further helped push Australia's equities market higher Friday, again putting the benchmark index within reach of an elusive seven-year high.
Metals on the LME were up with Lead and Zinc posting the largest gains, up 1.8% and 1.4% respectively. Iron Ore was down 1.7% to US$47.53 US/t. Gold rose 1.2% to US$1207.3/oz, while Brent is trading up 0.8% at US$57.95/bbl.
In This Issue
What are Biofuels
Biofuels are fuels made or processed from vegetation from which energy can be extracted, known as biomass. Sources can include corn, wood and sugar cane. Biofuels currently comprise only a small part of energy supply. USA and Brazil are the largest producers of biofuels.
US biodiesel production in 2011 brought the industry to a new milestone. Under the EPA Renewable Fuel Standard, targets have been implemented for the biodiesel production plants in order to monitor and document production levels in comparison to total demand. Biodiesel production in 2011 reached more than 1 billion gallons and continues to grow. This production number far exceeded the 800 million gallon target set by the EPA. The projected production for 2020 is nearly 12 billion gallons
What are biofuels?
Biomass energy is effectively derived from living or recently living organisms and is carbon based, composed of a mixture of organic molecules including hydrogen, nitrogen amongst others. While fossil fuels are in fact ancient biomass, they are not considered “biomass” as they contain carbon that has been ‘out’ of the carbon cycle for a very long time, thus their combustion disturbs the CO2 content in the atmosphere. Whilst biofuel technology is still relatively young, there are already 2 recognised generations of technology, with fuel from algae an emerging third generation.
• First generation biofuels. These are biofuels produced using conventional technology and by and large use food crops (such as sugar, corn) as the source of biomass. The two most notable first generation biofuels are bioethanol and biodiesel. Other first generation biofuels include butanol, alcohol and biogas.
• Second generation biofuels. Second generation biofuels make use of more advanced technology such as gasification and liquefaction processes to convert biomass into biofuel. Moreover they are use non-food crops such as stalks of wheat as feedstock. Many are only at an early stage of development and they are not yet in widespread use. Examples include biohydrogen, biomethanol and Fischer-Tropsch (FT) diesel.
Why use biofuels?
Bio-fuels are a potentially more environmentally friendly substitute for fossil fuels and this is naturally where their strengths lie. The advantages may be summarised as:
• Carbon neutrality. Carbon generated from biofuel consumption has been absorbed from atmospheric carbon dioxide by the original organism as it grows. This means that net carbon emissions should equal zero, assuming that biomass is replenished to its sustainable level. Bioethanol, for example, produces 65-70% less carbon emissions than conventional gasoline.
• Security of supply. Use of biofuels reduces reliance on oil imports. This is becoming increasingly important because of the volatility of oil prices and frequent tensions with oil producing nations. However, although increasing use of biofuels is predicted, estimates still suggest contribution to overall consumption will remain moderate (only 9% of total by 2030).
• Biodegradability. Biofuels are not harmful in the event of a spillage unlike the majority of fossil fuels.
• Political support. The use of biofuels is welcomed by the agricultural sector as biofuels provide an extra market for farming products. In countries where the farming industry has strong lobbying powers, this is a clear political benefit.
Recent Contacts & Presentations
Saracen (SAR), Beadell (BDR), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Austal (ASB), TFS Corporation (TFC), Buru Energy (BRU), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), Migme (MIG), Vmoto (VMT), Pioneer Credit (PNC), Minemakers (MAK)