Market Update & Important Indicators
The two biggest slices of the S&P 500-technology companies and financial firms-played tug-of-war with the broader index Wednesday. Banks have led stocks higher this week, with investors saying the sector is benefiting from robust economic growth around the world, gradually rising interest rates and the prospect of tax cuts. The S&P 500's financial sector hit its highest level of the year Wednesday. At the same time, investors pulled back from tech companies, which have gotten pricier as they have fuelled this year's run-up in stocks. Technology shares in the index – which accounted for nearly a quarter of the S&P 500's value as of the end of last month – were on track for their worst day in months. he S&P 500 declined 0.1%. The Dow Jones Industrial Average rose 0.4% and was on track for a fresh record, while the Nasdaq Composite-heavily weighted with tech companies-declined 1.3%. The U.S. gold price traded lower overnight, losing 0.8% to close at 1,283.20 US$/oz.
European stocks closed at a nearly three-week high on Wednesday, boosted by a rally in the region's bank shares a day after U.S. Federal Reserve Chairman-nominee Jerome Powell said he hopes to ease financial regulations. The Stoxx Europe 600 index climbed 0.3% to end at 388.04, scoring its highest close since Nov. 10, according to FactSet data. France's CAC 40 index added 0.1% to finish at 5,398.05, while Germany's DAX 30 index edged up less than 0.1% to 13,061.87. The U.K.'s FTSE 100 index slid 0.9% to finish at 7,393.56, as the pound touched a two-month high.
Banks led stock markets in Japan higher Wednesday after a jump in shares of financial companies helped the S&P 500 and Dow Jones Industrial Average notch their best day since September. Japan's Topix banks section climbed 2.2%. South Korea's Kospi index edged down less than 0.1% while Japan's Nikkei rose 0.5%, led by gains in financials. Stocks in Shanghai and Hong Kong rebounded late in the session after a morning drop, adding to a volatile week. Hong Kong's Hang Seng Index pared its loss for Wednesday to 0.2%. Investors in Asia largely shrugged off news that North Korea fired a brand-new intercontinental ballistic missile, ending a more than two-month hiatus. Markets have shown little reaction to geopolitical developments this year as many investors currently view them as unlikely to derail the solid backdrop for the world economy and corporate earnings.
After being unable to hold 6000 the past 2 days, broad gains in Australian stocks made that level no resistance today for the S&P/ASX 200. It rose 0.4% to 6011.1, the highest finish in a little over 2 weeks. The major banks, tracking overnight strength in US financial stocks, did some heavy lifting, as did a rebound in big iron-ore producers and energy companies despite a further crude-price weakness. Meanwhile, job-ads company Seek slid 3.6% despite reaffirming FY guidance.
The London Metal Exchange’s 3-month copper contract traded lower overnight, slipping 0.6% to finish at $6,760/t. The other base metals finished mixed. Aluminium prices fell 1.7% to 2,054/t, whilst Lead prices bounced 0.5% to close at 2,426/t. Zinc prices were flat, closing at 3,179/t, whilst Nickel prices rebounded 1.5% to 11,460/t. Tin prices closed 0.2% lower at 19,580/t.
In this issue
Pacific Energy (PEA) | Loss of Newmont contract | HOLD
Market Cap $197m | Current Price $0.53 | Valuation $0.67
PEA has been unsuccessful in its tender for two new gas-fired power stations at Newmont’s Tanami operations. Currently PEA has ~46MW of diesel-fired generators installed at Tanami, which will be de-commissioned and redeployed once PEA’s current contract terminates at the end of CY2018. The loss of Tanami represents a 16% reduction in PEA’s current contracted capacity. Near-term negative sentiment and uncertain long-term growth underpin our HOLD call on a revised $0.67 valuation (previously $0.70).
Recent Contacts & Presentations
St George Mining Ltd (SGQ), Overland Resources Ltd (OVR), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM), Gascoyne Resources Ltd (GCY), Southern Cross Electrical Ltd (SXE), MOD Resources Ltd (MOD), Meteoric Resources NL (MEI)