Market Update & Important Indicators:
The S&P 500 drifted lower intraday as a new round of tariffs rattled trade-sensitive stocks. Shares of manufacturers and materials companies fell after the U.S. and China enacted tariffs on $16 billion in each other’s' goods, including Chinese-made chemicals, machinery, tractor parts and U.S.-produced fishmeal, industrial lubricants, engines and trucks. The additional duties came as officials from both governments engage in a second day of trade talks in Washington, D.C., and signalled to investors that tensions between the U.S. and China are likely to stir further market volatility in the months ahead. The S&P 500 has risen more than 5% since the end of June, and is on pace for its best three-month stretch of the year. But with more than 95% of the broad index having reported earnings, the tit-for-tat trade sparring could have a bigger impact on stock prices. The S&P 500 fell 0.3%, while the Dow Jones Industrial Average slid 77 points, or 0.3%, to 25,657. The Nasdaq Composite declined 0.1%. The U.S. gold price was weaker overnight, shedding 0.9% to 1184.60 US$/oz.
European stocks booked a modest loss, as new details covering a "no-deal" Brexit overshadowed some positive economic data on the eurozone. The Stoxx Europe 600 Index dipped 0.2% to 383.38. Thus far this week, the pan-European index is up about 0.6%, putting it on track to snap a three-week string of declines. The U.K.'s FTSE 100 fell 0.2% to 7,563.22. Among the country's biggest drags were Barclays, which lost 1.7%. Germany's DAX ended lower by 0.2%, closing at 12,365.58. France's CAC 40 Index ended virtually unchanged at 5,419.33. Thus far in 2018, the pan-European index is down 1.5%, while German shares are off 4.3% and U.K. equities have shed 1.6%. Bucking the trend, France's index is up 2% in 2018.
It was touch-and-go around midday, but afternoon strength allowed Asian stocks to once again finish broadly higher. Markets, including Taiwan and South Korea, logged their fifth-straight gain and near two week closing highs. Chinese stocks saw the biggest turnaround, bouncing at the start of afternoon trading, led by smaller stocks after Wednesday's underperformance. Weak throughout the action, however, was Hong Kong, where its four-day uptrend ended with a roughly 0.5% decline. Meanwhile, Singapore's benchmark ended a nine-day losing streak, jumping 1.5% following Wednesday's holiday. Outpacing it was the Philippines, with a 2.25% rise, the most in eight weeks.
Fresh strong gains in Aussie telecom stocks and a bounce in materials names weren't enough to prevent a third-straight drop in the country's equities benchmark. The S&P/ASX 200 fell 0.3% to 6244.4 as the financial sector fell at least 1% for a third-straight day, the first streak of its kind since January 2016's global stock slump. But materials rose 0.6% and the lightly weighted telecom sector climbed a further 1.9% on merger and acquisition hopes.
Base metal prices were mixed overnight on the London Metal Exchange. Lead was the biggest gainer overnight, rising 2.5% to 2,042/t, whilst aluminium increased again, jumping 0.6% to 2,053/t. Zinc was slightly higher, rising 0.2% to 2,475/t. Falling overnight, tin prices shed 1.4% to 19,155/t whilst nickel prices fell 1.8% to 13,198/t. The 3-month copper price was also lower, shedding 0.3% to 5,987/t.
In this issue:
Peet (PPC) | Well positioned | BUY
Market Cap $598m | Current Price $1.22 | Valuation $1.50
PPC’s FY18 NPAT of $49.1m was 10% up on FY17, while solid operating cash flow meant strong balance sheet metrics at year end. This financial strength provides flexibility, as does the large, diversified land bank. PPC is targeting earnings growth in FY19, which we believe is achievable given contracts on hand and the number of projects in development. Property market sentiment and pricing pressure are key risks, however given PPC is in a strongly cash generative phase, has a typically low-cost base, and is under no immediate pressure to replenish the land bank, we maintain a BUY call on a $1.50 valuation.
Recent Contacts & Presentations:
Ausdrill Ltd (ASL), Bionomics Ltd (BNO), Gold Road Resources (GOR), Encounter Resources Ltd. (ENR), OZ Minerals Limited (OZL), Melbana Energy (MAY), Botanix Pharmaceuticals Ltd (BOT), Novo Litio (NLI), Classic Minerals (CLZ), OZ Minerals (OZL), Saturn Metals (STN), Antipa Minerals (AZY), SRG Ltd (SRG) Bowen Coking Coal (BCB), Birimian (BGS), Breaker Resources (BRB), Galena Mining (G1A), Valmec (VMX),Bryah Resources (BYH), Calima Energy (CE1) Genesis Minerals (GMD), Agrimin (AMN), Magnetic Resources (MAU), Core Exploration (CXO), Marindi Metals (MZN), MOD Resources (MOD), Santos (STO), Adriatic Metals (ADT) Bio–Gene Technology (BGT), Walkabout Resources (WKT), Triton Minerals (TON), Calima Energy (CE1)