Market Update & Important Indicators
A broad rally bolstered by rebounding oil prices Tuesday put major U.S. indexes on track for their biggest one-day gain in about a month. Assets investors often consider havens such as gold and U.S. government debt were relatively steady, a sign many weren't convinced that the rally will last, traders and analysts said. "It shows us investors want to be in this market, but they're not fully committed," said Jonathan Corpina, senior managing partner at Meridan Equity Partners. Trading volume was relatively light compared with other days when stocks have gained sharply, traders said. While all 10 sectors of the S&P rose, gains in energy and financial stocks outpaced the broader market. Stocks in the U.S. have traded within a narrow range in recent weeks, as investors struggle to reconcile a recent rebound in equity prices with a lackluster earnings season and concerns about the health of the global economy.
European stocks moved up as gains for Credit Suisse and Volkswagen shares and an important breakthrough on the Greek debt crisis allowed investors to set aside disappointing economic data. The Stoxx Europe 600 climbed 0.9% to close at 336.24, a second consecutive advance following Monday's 0.5% rise. In the financial sector, Credit Suisse shares popped up 5% after the bank posted a smaller-than-expected loss of 302 million Swiss francs ($311 million). The lender has been struggling to restructure its investment banking business. Meanwhile, Volkswagen shares bulked up 4%. The auto maker is close to a remedy to fix thousands of 3-liter diesel-powered vehicles in the U.S., according to a Bloomberg report. Volkswagen has been engulfed in an emissions-cheating scandal that kicked off in the U.S.
Shares in Asia reversed earlier losses to end mostly higher on Tuesday, led by a surge in Japanese stocks after officials warned that the government could intervene against a sharp rise in the yen. Japan's Nikkei Stock Average ended up 2.2% and Korea's Kospi rose 0.8%. In China, the Shanghai Composite Index ended little changed. Hong Kong's Hang Seng Index was up 0.4%.
Gains by Australian banks in the wake of earnings season offset weakness in resources stocks Tuesday, as the equities market rose for a fourth straight session. Despite opening lower, the S&P/ASX 200 rose steadily through the day to finish up 22.1 points, or 0.4%, at 5342.8 — just 11 points shy of the closing high for the year hit a week ago. Gains by the four biggest banks together added almost 22 points to the ASX 200, countering falls in the energy and materials sectors after crude oil, iron ore, copper and other commodities fell amid worries about China's appetite following recent economic data. Among mining stocks, BHP Billiton and Rio Tinto sank 3.2% and 2.9%, respectively, while fellow iron-ore producer Fortescue Metals Group slid 6.3%.
The London Metal Exchange's three-month copper contract was down 0.02% at $4,685 a metric ton at the end of open-outcry trading, having hit a one-month low earlier in the session at $4,672 a ton. Among the other base metals, aluminum closed down 0.4% at $1,536 a ton, zinc was up 0.7% at $1,842 a ton, nickel was up 1.2% at $8,668 a ton, lead was up 1% at $1,747 a ton and tin was down 0.3% at $17,195 a ton.
In this Issue
GR Engineering | Up on UPS | BUY
Market Cap $146m | Current Price $0.955 | Valuation $1.25
GNG’s minerals engineering business is coming to the end of a very busy year. There is a solid study pipeline into FY17, however the formal award and timing of project work is uncertain. Therefore the addition of two longer term revenue streams worth close on $50m p.a. via contract wins by Upstream Production Solutions (UPS) is excellent news. It ratifies GNG’s late-2013 decision to diversify into oil & gas and significantly enhances revenue visibility. Our numbers climb on the back of this win, as does our blended valuation which, at $1.25 (prior $1.15), continues to underpin a buy call.
Recent Contacts & Presentations
Red 5 (RED), Medusa Mining (MML), Saracen Mineral Holdings (SAR), Paradigm BioPharmaceuticals (PAR), Pilbara Minerals (PLS), Energia Minerals (EMX), Deep Yellow (DYL), Paladin Energy (PDN),), West Africa Resources (WAF), Finders (FND), Credo Resources (CRQ) , Orthocell (OCC), Capricorn Metals (CMM), Gold Road Resources (GOR), Otto Energy (OEL), Dakota Minerals (DKO), Cradle Resources (CXX), Kidman Resources (KDR)
