May Day "Sale Day"

Proving to be the end of what was a cautious month the market has held its own this week. There has been a heavy focus on Wall street following its gains but regardless of that there is some positive sentiment in the bull. However, that sentiment usually has the bears calling out that we are missing something. The bull has certainly bucked the trend of the May sell-offs of the previous five years. Next week will prove to be interesting given the triangular pattern of the market indicating a breakout.

AFR 30 May 2014:  

“May was something of a watershed month for investors in the oil and gas sector,” Mr Hershan said.

Shares in Oil Search jumped 6.6 per cent to $9.43 after production began at a major liquified natural gas project in Papua New Guinea it is a partner in. Other oil and gas producers that are nearing the start of commercial production on big LNG projects also got a boost. Santos lifted 5.9 per cent to $14.52, and Origin Energy added 1.7 per cent to $15.09.

Woodside Petroleum rose 3.3 per cent to $42.17, its highest price since June 2011, as shareholders mulled the company’s decision to pull out of Israel’s Leviathan LNG project. Brent crude oil gained 1.4 per cent to $US110.03 a barrel as Russia and China announced a major gas deal.

Aquila Resources was the best-performing stock, climbing 38.8 per cent to $3.47 as China’s BaoSteel and Queensland’s Aurizon Holdings lobbed a joint takeover bid worth $1.42 billion.

Mining was the worst-performing sector for the month, down 3 per cent as the spot price for iron ore, landed in China, dropped 9.7 per cent to an 18-month low of $US95.70 a tonne. Resources giant BHP Billiton fell 1.3 per cent to $37.01, while Rio Tinto lost 2.5 per cent to $59.30.

Iron ore play Fortescue Metals Group plunged 12.7 per cent to $4.41 over the month.

“The slump in the iron ore price over May was inevitable given the strong increase in global supply coming through,” Mr Hershan said.

Copper and gold miner PanAust jumped 37.1 per cent to $2.20 after majority shareholder China’s Guangdong Rising lifted its takeover offer to $2.30 per share.

Junior goldminer Regis Resources was the worst-performing stock, dumping 36 per cent to $1.56 as analysts slashed 2015 earnings estimates after the company provided a disappointing exploration update. The spot price of gold fell 3.3 per cent over the month to $US1257.72 per ounce. Australia’s biggest goldminer Newcrest Mining, fell 5.3 per cent at $9.74.

“It was a promising to see the local capital markets really come alive,” Mr Hershan said. “A number of initial public offerings, some of good size and quality, along with an uptick in M&A  activity is creating new opportunities for investors.”

Among the biggest IPOs to hit the boards in May, Spotless Group is up 15.5 per cent at $1.85, while Genworth Mortgage Insurance has risen 19.2 per cent to $3.16. June is tipped to be an even busier month for new listings.