Market Update & Important Indicators:
U.S. stocks retreated intraday, weighed down by declines in the shares of technology companies. Stocks' losses accelerated in afternoon trading, pulling nine of the 11 sectors in the S&P 500 lower. Financial stocks jumped with government bond yields, while technology stocks-one of the leaders in the stock market this year-were among the worst-performing sectors in the broad index. The day's moves marked another retreat for the technology sector, which has rallied in 2017 as investors bet on companies viewed as having high growth potential. Recent losses have pulled the sector down 1.7% in the S&P 500 for the month. The Nasdaq Composite fell 1.1%, on course for its biggest one-day drop since June 9 – the start of the recent weakness in tech shares. The Dow Jones Industrial Average slipped 99 points, or 0.5%, to 21311, and the S&P 500 dropped 0.8%. The U.S. gold price rose slightly, jumping 0.2% to finish at 1,246.70 US$/oz.
European stocks closed with losses, feeling the weight of a rising Euro, as profit warnings and merger concerns also hit the region's equities. The Stoxx Europe 600 fell 0.8% to end at 385.98, suffering its lowest close since April 21. The pan-European index finished in the red as the euro traded around $1.1294, up from $1.1182 late Monday in New York. The shared currency gained after European Central Bank President Mario Draghi said in a speech in Portugal that "a considerable degree" of stimulus is needed in the Eurozone. The euro briefly traded as high as $1.1304, touching its highest intraday level since September. In Frankfurt, the export-heavy DAX 30 was down 0.8% to end at 12,671.02. In London, the FTSE 100 declined 0.2% to close at 7,434.36.
Stocks extended gains in Asia-Pacific trading, though advances were modest. Causing some concern was the 1% drop in gold prices that came immediately after the release Monday of a German business-sentiment index showing a gain to record highs. After hitting a six-week low Monday, the metal was little changed in Asian trading. While Taiwan's Taiex was struggling to stay ahead after eight straight sessions of gains, stocks in most other markets, lacking broad trading catalysts, were modestly higher. Korea's Kospi gained 0.3%, putting it on pace for another record high, while the Nikkei added 0.3% to hit its best level in a week. Chinese stocks were broadly higher, amid rotational buying in various sectors. The benchmark Shanghai Composite notched a third-straight session of gains, finishing 0.2% higher at 3,191.
Australian stocks ended another choppy session modestly lower, as gains among the major banks and miners failed to counter weakness across much of the rest of the market. After swinging between positive and negative territory, the S&P/ASX 200 finished down just 6 points, or 0.1%, at 5714. It was the third straight session the index moved by less than 10 points, as investors near the end of the Australian financial year. Outside of the financial and materials sectors, other subindexes were in the red, led by losses in utilities and consumer shares.
The London Metal Exchange's three-month copper contract rose 1.1% Tuesday to close at $5,858/t. All other base metals finished higher. Aluminium prices rose 1.2% to 1,877/t, lead prices rose 1.5% to 2,273/t, nickel prices rose 2.7% to 9,213/t, tin prices rose 0.2% to 19,390/t, whilst zinc prices jumped 1.1% to 2,747/t.
In this Issue:
GR Engineering (GNG) | Revenue Deferred | BUY
Market Cap $223m | Current Price $1.46 | Valuation $1.70
GNG downgraded FY17 revenue guidance due to slippage in anticipated progress claim timing on recently awarded projects, causing ~$30m revenue to be deferred from FY17 into FY18. As a result, we have decreased our FY17 revenue and EBITDA forecasts to $215m and $16m respectively (previously $250m and $25m). More positively, this deferment of revenue has boosted FY18, where GNG has given guidance for $300-$330m. The anticipated record revenue for FY18 underpins our BUY recommendation on a revised valuation of $1.70 per share (previously $1.75).
Recent Contacts & Presentations:
Antipa Minerals Ltd (AZY), Echo Resources Ltd (EAR), Sovereign Metals Ltd (SVM), Calidus Resources Ltd (CAI), Great Boulder Resources Ltd (GBR), Finders Resources Ltd (FND), Bionomics Ltd (BNO), Threat Protect Australia Ltd (TPS), Ramelius Resources Ltd (RMS), Zenith Energy Ltd (ZEN), Blackham Resources Ltd (BLK), Top End Minerals Ltd (TND), Northern Star Resources Ltd (NST), Xanadu Mines Ltd (XAM), Dacian Gold (DCN), Egan Street Resources Ltd (EGA), Alice Queen Ltd (AQX), Paringa Resources Ltd (PNL), AWE Limited (AWE), Saracen Mineral Holdings Ltd (SAR), Red River Resources Ltd (RVR), Vital Metals Ltd (VML), Prairie Mining Ltd (PDZ)