Market Update & Important Indicators
U.S. stocks wavered between slight gains and losses Tuesday, a day after the Dow industrials and the S&P 500 climbed to record highs. Both the Dow and the S&P 500 hit new intraday highs amid what traders described as a slow day in the market. Contributing to the positive tone Tuesday, U.S. housing starts rose 20.2% in April from a month earlier to an annual rate of 1.135 million, the Commerce Department said Tuesday. That was the highest reading since November 2007. Economists surveyed by The Wall Street Journal expected April housing starts to reach a rate of 1.01 million.The euro fell hard against the U.S. dollar Tuesday, while European stocks and bonds surged on the prospect of the European Central Bank ramping up its asset-purchase program in May and June. The euro got hit with a double whammy Tuesday and extended its losses against the dollar as the European Central Bank signaled it would step up bond buying in the coming weeks and investors got positive economic news out of the U.S.
Chinese shares rose Tuesday on signs of fresh investment from Beijing, while Japan's Nikkei Stock Average ended above the 20000 mark for the first time in three weeks, fueled by earnings. The Shanghai Composite Index finished up 3% at 4417.55, after Beijing approved a batch of railway projects and said it would speed up reform in the finance sector. China's state-planning agency approved six rail projects on Monday with a total investment of 243.8 billion yuan ($39.3 billion). Hong Kong's Hang Seng Index was up 0.4%, led by Chinese firms that rose close to 2%. In Japan, the Nikkei Stock Average ended up 0.7% at 20026.38, following Monday's 0.8% gain.
Base metals fell on Tuesday as the European Central Bank vowed to pursue its bond-buying program. Gold declined 1.5% to US$1209/oz, while Brent fell 3.4% to US$64.02/bbl.
In This Issue
Matrix (MCE) |HOLD
In a market update released today, MCE notes:
• The award of new contracts for the supply of drilling riser buoyancy, which takes the current backlog to US$97.7m
• That a number of projects have been delayed in the current oil price environment, having an adverse impact on MCE’s planned production schedule
• That $2.6m non-recurring redundancy and downsizing costs will impact FY15 reported earnings
• That underlying FY15 EBITDA is expected to be ~$22.1m and with reduced output levels FY16 revenue is expected to be $110-130m
In the light of the above we will be making downward adjustments to our forecasts. MCE has an excellent facility at Henderson, however the key to decent earnings is keeping it fully utilised. Given the oversupply of floating rigs and the anticipated sharp drop off in new build deliveries post 2016, we believe that diversification into SURF, well construction and other products and markets will be an important determinant of plant utilisation in the longer term.
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