Market Update & Important Indicators
U.S. stocks advanced, rebounding from last week's downdraft, as investors snapped up health-care companies following a spate of deal announcements. The Dow Jones Industrial Average rose 286 points, or 1.6%, to 17999 in afternoon trade. The S&P 500 rose 27 points, or 1.3%, to 2088. The Nasdaq Composite climbed 55 points, or 1.1%, to 4947. Despite Monday's gains, trading volumes were relatively subdued. Shares of biotechnology stocks were among the sharpest decliners last week, amid fresh worries about their lofty valuations. On Monday, the Nasdaq Biotechnology Index gained 1.1%, and is up nearly 3% over the last two sessions. Deal-making elsewhere in the health-care sector helped buoy shares Monday.
European equities shrugged off uncertainty over Greece's financial future on Monday, still spurred by accommodative central bank monetary policy, coupled with a revival in corporate appetite for mergers and acquisitions. The Stoxx Europe 600, having ended Friday 0.3% higher, added 1.1% on the day, taking gains so far this year to close to 17%. Germany's DAX 30, which has particularly benefited from a weak euro in recent weeks, rose 1.8%, while France's CAC and London's FTSE added 1% and 0.5% respectively. Strategists said that the persistent appetite for equities was chiefly being triggered by central banks in both Europe and China reiterating their commitment to stimulus measures. Last week, European Central Bank President underscored the central bank's commitment to purchase large amounts of public and private debt for at least 18 months and until it is convinced that inflation will stabilize near annual rates of 2%.
Chinese stocks surged Monday after Beijing signalled it can ease monetary policy to lift sluggish growth, with indexes in Hong Kong and Shanghai chalking up their biggest one-day gains in months. Capital flows into Hong Kong from China using the Stock Connect trading link were also heavy, reaching a record high after mainland mutual funds were approved to use the four-month-old program. The optimism flared after China's central bank governor Zhou Xiaochuan signalled over the weekend that China has "more room" to ease policy if inflation continues to slip. Lower interest rates would be a boon to the stock market, as many investors are using borrowed cash to pump funds into the rallying market, one of the world's top performers this year despite the slowing economy. The Shanghai Composite ended 2.6% higher, its biggest advance in more than two months, extending gains that have taken the index to a seven-year high. Hong Kong's benchmark Hang Seng Index advanced 1.5%, while the Hang Seng China Enterprises Index, a measure of Chinese companies with stocks trading in Hong Kong, surged 3.4% to the highest closing price in almost four years.
Falling commodity prices weighed heavily on Australian stocks Monday, causing the S&P/ASX 200 to plunge 1.3% to 5846.1 points. The selloff came even as other Asian bourses traded higher on remarks by Chinese officials at the weekend, which had sparked speculation of more monetary stimulus in the world's second-largest economy
Base metals were mixed on the LME, with Aluminium, Copper and Zinc up 0.9%, 0.5% and 1.3% respectively. Lead, Nickel and Tin were all down with Nickel the hardest hit at 3.1. Brent crude oil fell, off 0.8% to $56.29/bbl. Gold also dropped, falling 1.1% to $1,185/oz.
In This Issue
Orbital (OEC) | Initiation | SPEC BUY
We initiate coverage of OEC with a speculative buy recommendation and a target price of $1.05. We expect a rejuvenated board to help realise OEC’s potential, the firming relationship with Boeing subsidiary Insitu will help drive the traditional business, and the recent investment in REMSAFE will deliver diversification and a further growth option. Synerject, meanwhile, provides a comfortably stable contribution that in our view largely underpins OEC’s current market capitalisation.
Recent Contacts & Presentations
Saracen (SAR), Beadell (BDR), Pacifico (PMY), Fertoz (FTZ), Atrum (ATU), Doray (DRM), Helix Resources (HLX), Rift Valley Resources (RVY), West African Resources (WAF), Matrix (MCE), Austal (ASB), Ausdrill (ASL), TFS Corporation (TFC), Gage Roads (GRB), Austin Engineering (ANG), Buru Energy (BRU), OBJ Limited (OBJ), Strandline Resources (STA), Carnarvon Energy (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), Pura Vida Energy NL (PVD), MMA Offshore (MRM), Migme (MIG), Vmoto (VMT)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
