Market Update & Important Indicators
Energy shares fell with oil prices, dragging on U.S. stocks. Stocks have fallen about 2% since their 2016 highs on April 20, amid swings in oil prices, soft economic data and weak corporate earnings. Some investors said gains were likely to be limited without new signs of earnings strength or improvement in the global economy. Early gains in global stocks faded along with oil prices. While stocks have rebounded from February lows, the S&P 500 is up only 0.8% in 2016.
Investors will now turn their focus to readings on the health of the U.S. consumer, with retail sales and consumer sentiment due later in the week. Shares of LendingClub fell 26% on Monday, their largest one-day percentage decline on record, after chief executive Renaud Laplanche resigned amid a board investigation into what it called improper practices in the lending process. Health-care and consumer-staples companies were among the biggest gainers in the S&P 500. Pharmaceutical company Allergan gained 6.5%, while Mallinckrodt rose 5.2%.
Stock markets in China fell, after the Communist Party's mouthpiece reported that the nation's economy is headed for an "L-shaped" recovery, stoking worries among investors that growth in the world's second-largest economy will moderate further. The Shanghai Composite Index tumbled 2.8% to finish at 2832.11, near its intraday low, while the Shenzhen Composite Index was off 3.6% at 1804.34. Traders were taking stock of a report in the People's Daily, which cited an "authoritative" person as saying that China's economic growth trend would be "L-shaped" rather than "U-shaped" or "V-shaped." The Nikkei Stock Average broke a six-day losing streak on a lull in the yen's rise against the dollar. The Nikkei rose 0.7%, albeit on thin trading volume. The Hang Seng Index closed up 0.2% and Singapore's Straits Times Index was up 0.6%.
Australian shares began the week on firm footing, as banking and oil-and-gas stocks led broad gains. After a roller-coaster session, the S&P/ASX 200 ended up 0.5% at 5320.70, near its day's high. Commonwealth Bank of Australia rose 1.9% after posting a rise in net profit in its fiscal third quarter. Westpac added 1% and National Australia Bank picked up 0.9%. Macquarie was 2.9% stronger, rebounding from a drop Friday in the wake of its full-year results. The materials sector fell, as a slump in iron-ore prices weighed on mining stocks. BHP Billiton was down 0.3% and Rio Tinto and Fortescue Metals Group lost 2.1% and 2.3%, respectively. Iron-ore and steel-rebar futures dropped in China after weak Chinese trade data and as investors anticipated fresh curbs on speculative trading. Explosives producer Orica sank 12% after it reported a 33% drop in its first-half profit and said it would scrap a progressive dividend policy.
The London Metal Exchange's three-month copper contract was down 2.6% at $4,686 a metric ton at the PM kerb close, having hit a three-week low earlier in the session at $4,685.50 a ton. All the other base metals also took hits. Aluminum was down 2.3% at $1,561 a ton, zinc was down 2.8% at $1,835 a ton, nickel was down 5.1% at $8,605 a ton, lead was down 1.2% at $1,730.50 a ton and tin was down 1.2% at $17,225 a ton.
In this Issue
Peet Limited (PPC) | Rinse, rePeet – Initiation | BUY
Market Cap $453m | Current Price $0.925 | Valuation $1.40
We initiate coverage of Peet Limited (PPC) with a buy recommendation and a valuation of $1.40. PPC has a large, national portfolio of residential property development assets that are increasingly being funded off balance sheet. This capital-light structure has positively impacted returns and debt metrics. In our view PPC can rely on extensive residential property market experience to actively manage the portfolio, identify attractive opportunities, and ride out a period of weaker economic conditions.
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