Market Update & Important Indicators
U.S. stocks fell Friday, capping off a rocky week when traders focused on the consequences of the coming U.K. vote on whether to stay in the European Union. Traders described an uneasy calm in the stock market Friday following a string of losses. As of June 8, the S&P 500 had been up 3.7% for 2016. The index pared those gains as of Friday's close and is up 1.3% this year. Also since June 8, oil prices have fallen back below $50 a barrel, and yields on the benchmark 10-year U.S. Treasury note sank to their lowest close since August 2012 on Thursday. On Friday, the Dow Jones Industrial Average fell 57.94 points, or 0.3%, to 17675.16. The S&P 500 dipped 6.77 points, or 0.3%, to 2071.22, leaving it down 1.2% for the week. The Nasdaq Composite declined 44.58 points, or 0.9%, to 4800.34.
European stocks finished higher Friday, with investors reassessing the prospect of the U.K. leaving the European Union in the wake of a British lawmaker's killing. The Stoxx Europe 600 rose 1.4% to 325.76, with all sectors pushing higher. Bank shares were leading the financial sector higher after being hit in recent sessions on concerns the banking industry will suffer in the event of a "Brexit." Stocks moved higher after campaigning was suspended for a second day by both the "leave" and "remain" sides of the Brexit debate following the killing of lawmaker Jo Cox on Thursday. Cox, a 41-year-old Labour Party member, was a vocal supporter of the U.K. remaining in the EU.
Stocks in Japan rose from a four-month low and led most Asian markets higher on Friday, although worries about the upcoming U.K. vote on European Union membership left the region's markets badly bruised for the week. The Nikkei Stock Average closed up 1.1%, while both the Hang Seng Index was up 0.7% and Shanghai Composite Index rose 0.4%. The Nikkei finished the week off 6%, marking its worst weekly performance since the week ended Feb. 12. Hong Kong was headed to lose over 4%, while the Shanghai finished down 1.1% for the week. Some investors appear willing to buy shares after several days of declines, which made for a resilient market Friday.
The S&P/ASX 200 index closed higher Friday, but it wasn't enough to prevent a third straight week of losses, as next week's referendum on the U.K.'s European Union membership continued to cast a shadow over global markets. Gains by mining companies and building-materials suppliers helped Australia's benchmark index to settle up 0.3%, or 16.7 points, at 5162.7. Friday's advance was helped by soothing noises from central banks including the Federal Reserve and Bank of Japan that there will be enough liquidity for markets on Thursday when U.K. voters head to the polls to cast their ballots on continued membership of the EU.
Copper prices closed higher in London Friday, as a weaker dollar supported demand for the industrial metal. The London Metal Exchange's three-month copper contract was up 0.3% at $4,552 a ton at the PM kerb close, moving within a narrow $60 range. Among the other base metals, aluminium closed up 1% at $1,608 a ton, zinc was down 0.5% at $1,972 a ton, nickel was up 2.2% at $9,018 a ton, and lead was down 0.6% at $1,686 a ton.
In this Issue
Pacific Energy (PEA) | Sunny Outlook | BUY
Market Cap $174m | Current Price $0.47 | Valuation $0.60
PEA has established a formal alliance with juwi Renewable Energy (juwi), a global renewable energy company. PEA and juwi worked together on Sandfire’s (SFR) DeGrussa hybrid power station, where PEA’s existing 20MW power station was integrated with a 20ha 10.6MW solar and 6MW battery system designed and installed by juwi. This is the largest integrated, off-grid solar and battery storage facility in Australia. The successful commissioning of the DeGrussa power station (announced 8th June) required development of sophisticated control systems and we believe this IP has considerable value in a market where hybrid power is gaining traction. The ability to offer a renewable energy combination with diesel/gas in partnership with an experienced global player will prove to be a strong selling point in our view. PEA’s key markets, Australia and more recently Africa, are conducive to solar power. PEA’s business model, with earnings visibility under long term contracts, stands out in the resource services sector. Buy maintained.
Recent Contacts & Presentations
Navitas (NVT), Gage Roads (GRB), Bionomics (BNO), Invigor Group (IVO), Marindi (MZN), Cardinal Resources (CDV), Galaxy Resources (GXY), Cooper Energy Limited (COE), Evolution Mining (EVN), LWP Technologies (LWP), Walkabout Resources (WKT), Minotaur Exploration (MEP)