Market Update & Important Indicators
Stocks jumped as global markets showed tentative signs of regaining their footing after an extended rout fueled by growth concerns. Despite the gains, traders said they were skeptical that the early optimism could be sustained amid persistent doubts about the growth prospects of China and the rest of the world. The Dow rose 4.0% to 16,286 and the S&P 500 gained 3.9% to 1,941.
Australian stocks emerged from another convulsive trading session with a second day of gains on Wednesday, bolstered by energy shares as oil prices edged higher following China's latest easing measures. The S&P/ASX 200 rose 0.7% to 5172.8, having trading as much as 1.7% lower early in the day.
The reach of China's stock crash, and the global rout it sparked, started to recede from Asian markets though shares on the mainland remained volatile. China's main stock index has now lost nearly a fourth of its value in the past five sessions, even after its central bank late Tuesday cut interest rates for the fifth time since last November and lowered the amount of deposits banks are required to hold to boost lending. The Shanghai Composite Index fell nearly 4% in the morning, before rising more than 4% just before the close. The benchmark then dropped again, finishing down 1.3% at 2927.29. Tokyo shares posted their biggest percentage point gain since last October, with the Nikkei Stock Average finishing up 3.2%.
The pan-European Stoxx Europe 600 index turned lower around the time U.S. stock markets opened and ended down 1.8%. The index gained 4.2% Tuesday and has fallen more than 8% over the past week.
Metals on the LME were down across the board last night with copper losing 2.7% to US$2.25/lb and nickel continuing its woeful run, dropping 0.4% to US$4.33/lb. Gold also fell overnight, down 1.3% to US$1,125/oz. Brent was up 1% and the AUD/USD is trading at 0.712.
In This Issue
Austal (ASB) | BUY
ASB delivered a record FY15 result, with the fall in the A$ boosting revenue, and a standout result in Australia helping underlying EBIT climb 12% to $73.2m. The decline in the shipbuilding margin in the US was expected and we believe ASB will put lessons learnt on initial LCS’s to good use on future builds. We like the US$ exposure, the strong balance sheet, an order book of $3.1b, a significant pipeline in the US and potentially in Australia, and the likely positive margin impact from maturing vessel programmes. Our valuation climbs to $2.15 (prior $2.00) and we maintain a buy call.
Panoramic Resources (PAN) | BUY
Panoramic Resources (PAN) has intercepted mineralisation ~250m west of the previous limit of downhole EM (DHEM) detection limits. Surface hole SMD164 intercepted 5m @ 2.6% Ni and 0.2% Cu. Significantly, DHEM on this hole has increased the potential western extent of mineralisation to a total strike extent of ~2km. Although the geophysical anomaly does not guarantee economic mineralisation, Savannah has had a good correlation of EM targets to mineable orebodies. With this strike extent, it would appear as though Savannah North is going to dwarf the Savannah orebody.
Recent Contacts & Presentations
Tox Free Solutions (TOX), Matrix (MCE), Dacian (DCN), Austal (ASB), Resolute (RSG), Troy (TRY), Sandfire (SFR), Saracen (SAR), Sino Gas & Energy (SEH), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), High Peak Royalties (HPR), Karoon Gas (KAR), Austex Oil (AOK), Central Petroleum (CTP), Senex Energy (SXY), Newmont, Coventry (CYY), Energia (EMX), Minemakers Limited (MAK)