Market Update & Important Indicators:
U.S. stocks edged up Wednesday after the release of Federal Reserve minutes fell short of reaffirming investor expectations that an interest-rate rise was due this year. Income-paying stocks led Wednesday's gains, recovering slightly after falling out of favour in recent months. Yield-hungry investors had bid up these sectors for their dividend payments in the first half of the year. Real-estate stocks in the S&P 500 rose 1.3%, while utility stocks rose 1%. "The yield play is happening because people are going to question whether or not the Fed is actually going to pull the trigger in December, " said Ray Moore, a trader at Raymond James. "The market interpreted the Fed minutes and believes a rate increase this year is less likely."
Overseas, the Stoxx Europe 600 fell 0.5%. The British pound rose after four consecutive days of losses. The pound touched a historic low against a basket of currencies Tuesday, according to Bank of England data. It recovered during Asian trading hours, rising more than 1.5% against the dollar, after media reports suggested that U.K. Prime Minister Theresa May had agreed to hold a parliamentary vote on her plans for taking Britain out of the European Union. London's export-heavy FTSE 100 index, which touched its highest level in decades Tuesday, pulled back as the British currency recovered.
The stock market plunged Wednesday in Thailand amid simmering concerns about the health of Thai King Bhumibol Adulyadej. Thailand's currency and stock market dropped to multi-month lows Wednesday, three days after the Thai royal authorities said the king's health was not stable. Other Asian shares were also broadly lower Wednesday as the odds rose for a U.S. interest rate increase in December, leading to worries that foreign investors will pull money out of Asia. Japan's Nikkei Stock Average traded 1.1% lower and Hong Kong's Hang Seng Index closed down 0.6%. The CME Fed Funds futures showed the market's expectations of a rate increase in December rose to 74.5% from 69.5% a day earlier. In Japan, stocks were weighed down by losses in steel and financial companies. In other markets, Hong Kong's Hang Seng was heavily weighed down by financials China's plans to deleverage firms with high debt ratios by swapping loans for equity are expected to be a drag on Chinese banks, say analysts. The specific worry is that banks will be saddled with near worthless equity holdings after swapping for bad loans.
Australia's equities market closed largely unchanged Wednesday, shrugging off a weak lead from U.S. stocks, which fell on disappointing earnings, and overnight commodity price declines. The S&P/ASX 200 ended down five points, or 0.1%, at 5474.6. Commonwealth Bank of Australia was in the spotlight after naming Catherine Livingstone to succeed retiring Chairman David Turner. Ms. Livingstone, one of the country's highest-profile female executives, is taking the reins at a time when Australian banks are under growing scrutiny from regulators and lawmakers.
On the London Metal Exchange, copper for delivery in three months was up 0.04% at $4,814/t. Aluminium was up 0.3% at $1,681/t, zinc was flat up 0.7% at $2,250/t, lead was down 1.2% at $2,007/t, tin was down 0.1% at $19,853/t, and nickel was up 1.4% at $10,521/t.
In this Issue:
Pacific Energy (PEA) | Liquidity boost | BUY
Market Cap $222m | Current Price $0.60 | Valuation $0.72
The increase in PEA’s free float post Pacific Road’s selldown, at a time of renewed interest in the sector, should keep investors engaged and result in improved trading volumes. New investors who participated in the block trade have gained exposure to a Company that has an enviably stable track record in the typically volatile mining services space, better forward visibility than peers, and growth options. Our valuation has improved to $0.72 (prior $0.69) and we upgrade to buy (prior hold).
Northern Minerals (NTU) | Rare Potential | SPEC BUY
Market Cap: $68m | Current Price $0.13
Northern Minerals (NTU) is developing the Browns Range rare earth oxide (REO) project in north-western Australia. The project is a unique high grade dysprosium (Dy) deposit, a strategic REO used in the production of stationary magnets. This market is expected to grow at 4-6% pa out to 2020, driven by increasing demand for electric vehicles and generators (i.e. wind turbines). Browns Range is well advanced having completed a Definitive Feasibility Study (DFS), attained a Mining Lease and environmental approvals and negotiated a coexistence agreement with Traditional Owners. The project has potential to produce at a pilot scale level just 12 months from the completion of funding.
Recent Contacts & Presentations:
Antipa Minerals Ltd (AZY), Vault Intelligence Ltd (VLT), Noxopharm Ltd (NOX), Gage Roads Brewing Co. (GRB), West African Resources (WAF), Cedar Woods Properties Ltd (CWP), Sino Gas & Energy Holdings Ltd (SEH), Salt Lake Potash Ltd (SO4), Kalina Power Ltd (KPO), Austal Limited (ASB), Agrimin Ltd (AMN), Stavely Minerals Ltd (SVY), MGC Pharmaceuticals Ltd (MXC), Vital Metals Ltd (VML), Tox Free Solutions Ltd (TOX), Swick Mining Services Ltd (SWK), Davenport Resources Ltd (DAV), Orthocell Ltd (OCC), BC Iron Limited (BCI), ALT Resources Ltd (ARS), Gascoyne Resources Ltd (GCY), Dacian Gold (DCN)