Market Update & Important Indicators
Energy shares led U.S. stocks lower Monday as oil prices fell, pulling major indexes away from record highs with investors awaiting new corporate earnings reports and policy decisions from two of the world's major central banks. The declines marked a pullback for the S&P 500 after the slowest trading week of 2016 left the index at a fresh record Friday. Some investors said they expected more action this week, with a busy calendar of earnings reports and possible monetary policy moves from the U.S. Federal Reserve and Bank of Japan. Energy shares dragged on the S&P 500, falling 2.3% as U.S. oil prices lost 2.4%.Oil prices have suffered from a summer glut and fading demand. The Dow Jones Industrial Average fell 0.5%, the S&P 500 declined 0.4%, while the Nasdaq Composite Index slipped 0.2%.
European stocks ended a volatile session with small gains as optimism over upbeat earnings and deal-related news outweighed a slump in oil prices. The Stoxx Europe 600 rose 0.2% to settle at 340.93, posting its first rise in three sessions.
Enthusiasm for stocks faded in Asia, with Japan shares flattening after a two-week run-up and China markets making only fractional gains. The Nikkei Stock Average finished down less than 0.1% Monday. Both the Shanghai Composite Index and South Korea's Kospi gained 0.1%. Hong Kong's Hang Seng Index finished up 0.1%. Expectations for easing from global central banks have kept most Asian markets moving higher in recent weeks, as has a rebound in flows to emerging markets. But traders and analysts increasingly say the market has been dialling back hopes, concerned that Bank of Japan will fail to live up to investors' rather large easing expectations.
Australian stocks gained Monday, led by consumer staples after Woolworths announced a plan to restructure its business. The S&P/ASX 200 closed up 35.4 points, or 0.6%, at 5533.6 points as the health care and utilities sectors also gained. Despite taking a breather Friday, the local bourse has now risen in 11 out of 13 sessions. On the domestic data front, investors are awaiting Wednesday's second-quarter consumer price index, which is seen as pivotal to the Reserve Bank of Australia's decision whether to cut interest rates further.
Copper futures closed lower in London, under pressure from a stronger dollar and profit taking ahead of a Federal Reserve meeting later this week. The London Metal Exchange's three-month copper contract was 0.41% lower at $4,900/t at the PM kerb close Monday, after trading higher earlier in the day. Other base metals were mixed. Aluminium was down 0.2% at $1,593/t, zinc was up 0.2% at $2,245/t, nickel was up 0.6% at $10,437/t, lead was up 0.2% at $1,831/t and tin was up 0.1% at $17,748/t.
In this Issue
Sino Gas & Energy (SEH) | Stepping on the gas | BUY
Market cap $228m | Current Price $0.11 | Valuation $0.25
Sino Gas and Energy (SEH) has reached an agreement with Sanjiaobei (SJM) partner PetroChina CBM (PCCBM) for the allocation of pilot production sales revenue. While the outstanding payment was minor (~US$2m), the agreement clarifies payment terms under the piloting phase and sets the tone of the relationship under the Production Sharing Contract (PSC). SEH has been substantially de-risked year-to-date by the signing of gas sales allocation agreements at both SJB and Linxing (LX), as well as the replacement of indebted Sino Gas Energy (SGE) JV partner MIE Holdings with China New Energy Mining Limited (CNEML). The restart of SJM now is planned for Q3 2016 and SEH will chase the combined SJB and LX production target of 25MMscf/d by year’s end. Net cash at June 30 was $47.5m. Argonaut maintains a BUY recommendation and a $0.25 target price.
Recent Contacts & Presentations
Department 13 (D13), Peak Resources (PEK), Fortescue Metals (FMG), Paradigm Biopharma (PAR), Peel Mining (PEX), Ausgold Limited (AUC), Gascoyne Resources (GCY), Metro Mining (MMI), Pacific Energy (PEA), Novatti Group Ltd (NOV), Hammer Metals Ltd (HMX), Helix Resources Ltd (HLX), Saracen Mineral Holdings Ltd (SAR), Merdeka Copper Gold (MDKA: IJ), Monument Mining (MMY.V: TSX), Apollo Consolidated (AOP), Botanix Pharmaceuticals (BOT), Sino Gas & Energy (SEH)
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