Market Update & Important Indicators
U.S. stocks pared gains Tuesday as weak earnings reports dragged down technology shares. The Dow industrials have climbed for four of the past five trading days and risen more than 15% from their lows on Feb. 11. The rally has been spurred by confidence in continued growth in the U.S. economy, a recovery in oil prices and the likelihood that U.S. interest rates will remain low. Some traders said now that the rebound from February's lows have carried major U.S. indexes to near record highs, further gains will require signs of growth in corporate earnings. Better-than-feared results from banks have helped boost indexes in recent sessions and the KBW Nasdaq Bank Index of large U.S. commercial lenders was on pace to finish Tuesday up more than 20% from mid-February lows.
European stock markets finished firmly higher as a round of upbeat earnings reports and a solid rebound in oil prices helped lift the region's benchmarks. The Stoxx Europe 600 index jumped 1.5% to end at 349.24, leaving the pan-European benchmark at its highest closing level since early January. Oil prices continued to recover on Tuesday. The moves helped spur a rise for European energy stocks.
Japan stock traders did a turnabout Tuesday, in a two-day whipsaw that despite the drama left Tokyo's main benchmark pretty much back where it started. Japan's Nikkei Stock Average rose 3.7%–its highest daily percentage gain since Feb. 2. The surge stamped out Monday's loss, when the benchmark tumbled 3.4%. The same three factors–oil, earthquakes and the yen–that were blamed for Monday's big losses were cited as reasons for Tuesday's gains. On Tuesday, the yen eased off Monday's highs. Damage by a series of earthquakes to the supply chain of auto makers and others were viewed as less disruptive. And oil prices that fell Monday during Japan's trading hours rebounded later. In China, the Shanghai Composite Index finished up 0.3% after a day of choppy trading and the Hang Seng Index gained 1.3%.
Australian shares Tuesday rose to a more than three-month high, buoyed by energy and mining stocks on the back of gains in commodity prices. After easing the day before amid renewed worries over crude-oil prices, the S&P/ASX 200 climbed 51.7 points, or 1, to finish at 5188.8–the highest level since Jan. 4. Energy stocks jumped 3.8% and the materials subindex gained 3.3%. Among miners, Rio Tinto was 3.9% stronger after turning in quarterly production numbers, while BHP Billiton and fellow iron-ore producer Fortescue Metals Group rose 5.2% and 6.8%, respectively. The major banks were all stronger, led by a 2.5% rise in National Australia Bank.
Copper futures closed higher in London, as the weaker dollar and optimism around top consumer China lent support to the industrial metal. The London Metal Exchange's three-month copper contract was up 2.3% at $4,936 a metric ton at the PM kerb close, having hit a three-week high earlier in the session at $4,947 a ton. Among the other base metals, aluminum closed up 1.1% at $1,587 a ton, zinc was up 2.3% at $1,937 a ton, nickel was up 1.3% at $9,270 a ton, lead was up 2.7% at $1,761 a ton, and tin was up 0.03% at $17,150 a ton.
In This Issue
CTI Logistics (CLX) | Review | BUY
Market Cap $60m | Current Price $0.86 | Valuation $1.55
CLX’s WA-based logistics operations in particular have been hard hit by the deteriorating local economy. The downturn may be prolonged (see our WA dashboard) and our revised west-coast FY16 EBITDA forecast is now ~14% lower than FY15 (which was ~23% lower than FY14). However, expansion onto the east coast via the acquisition of GMK has proved timely and is, in our view, underappreciated. CLX looks cheap based on our valuation of $1.55 (prior $1.75) an attractive dividend yield of 9.4%, and compared to peers. Buy call 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), Kidman Resources (KDR), Dakota Minerals (DKO), West Africa Resources (WAF), Finders (FND), Credo Resources (CRQ) , Orthocell (OCC), Capricorn Metals (CMM), Gold Road Resources (GOR), SRG (STS), Reward (RWD), Agrimin (AMN), Decimal (DSX), SRG Limited (STS), Peet (PPC)