Market Update & Important Indicators:
Major U.S. stock indexes rose intraday as trade tensions calmed, sending the Nasdaq Composite past the 8000 mark for the first time. Stocks extended early gains after President Trump announced Monday that his administration reached a trade deal with Mexico, moving closer to a new pact on the North American Free Trade Agreement and clearing the way for Canada to re-join negotiations. The development was an encouraging sign for investors after weeks of trade jitters, some analysts said. Stocks rallied as investors flocked to riskier assets and sold government bonds. The Nasdaq Composite jumped 0.9%, zipping past the 8000 threshold, its fastest 1000-point milestone in almost two decades. The tech-heavy index has soared 16.1% this year, outpacing the S&P 500's gain, as investors have raced into shares of tech giants like Facebook Inc. and Apple Inc. The S&P 500 gained 0.8%, also on track for a new high. The Dow Jones Industrial Average climbed 259 points, or 1%, to 26050. The US Gold price gained 0.5% to record 1210.80 US$/oz.
The Stoxx Europe 600 index closed up 0.5% at 385.56, buoyed by the prospect of improving global-trade relations on news of the U.S. and Mexico reaching a deal on renegotiating the North American Free Trade Agreement. German stocks outperformed, with the DAX ending up 1.2% as easing trade concerns lifted auto stocks, while German retailer Metro AG jumped more than 12% after Ceconomy said it was in talks to sell most of its 10% stake in the firm. France's CAC 40 rises 0.9%, while Spain's Ibex 35 ends up 0.7%. Italy's FTSE MIB underperforms, however, closing up 0.3%, as Italian banking stocks fall. Trade is quieter than usual, with U.K. markets closed for a public holiday.
Asian stocks overall moved higher. The Nikkei index closed up 1.1%. Asian markets were buoyed by the People's Bank of China's decision to reintroduce a mechanism called the countercyclical factor, which works to prevent sharp moves either way in the currency. The yuan's weakness was on the U.S. agenda for trade talks between the two countries, according to people briefed on the discussions. If China is moving to voluntarily assuage those worries, this could help ease global trade tensions.
Australian equities continued to lag, though the local benchmark ended Monday slightly higher. The ASX All Ords rose 0.4% to 6381, erasing much of the month's decline. Financials, which were pressuring the market last week with steady drops, edged up 0.15% today. But materials climbed 0.75%, though energy stocks were muted at 0.3%. Consumer-discretionary stocks rose 0.8%.
The London Metals Exchange was closed overnight in observance of the Summer Bank Public Holiday.
In this issue:
Pacific Energy (PEA) | FY18 Results | BUY
Market Cap $232m | Current Price $0.54 | Valuation $0.75
Following the recent business update, there were no surprises in PEA’s $45.8m underlying FY18 EBITDA result. Guidance in the range of $54-55m has been provided for FY19. This is below our prior forecast, which we have adjusted, but in our view is largely underpinned by existing contracts and does not capture organic growth opportunities. Reasons to like PEA are intact; in a mining services sector typified by volatile earnings, PEA offers rare visibility and consistency. Our valuation of $0.75 (prior $0.76) continues to support a BUY recommendation.
Recent Contacts & Presentations:
Prodigy Gold (PRX), 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)