The S&P 500 was up by 14.85 points or0.75%on Tuesday to 1998.98.  U.S. stocks rose on Tuesday and the S&P notched its best performance in a month after a report shifted investor expectations for the Federal Reserve's policy statement due on Wednesday. The Fed began its two-day policy meeting on Tuesday, and while it has said it doesn't expect to raise rates until 2015, recent strong economic data has led Fed officials to acknowledge they may need to move sooner than they previously anticipated.

Energy stocks jumped 1.2 percent as a group, with Exxon Mobil Corp. adding 1.2 percent to pace gains in 28 of 30 stocks in the Dow Jones Industrial Average. Utilities in the S&P 500 added 1.2 percent. Technology stocks climbed 0.7 percent after a sell-off yesterday. A media report in China claimed that the country’s central bank had stepped up its effort to stimulate the economy by providing some $81bn of liquidity to the country’s five biggest banks. Concerns about the Eurozone’s fragile economy were helped by news of aninth successive monthly drop for the Zew index of German investor confidence in September to its lowest level since December 2012.


Exxon Mobil Daily Chart (Source – Thomson Reuters)
 
S&P ASX 200was down by 28.1points or 0.51%on Tuesday and closed at 5445.40 points.  Minutes from the Reserve Bank of Australia issued on Tuesday once again included a warning on house prices and reiterated the central bank’s concern about the relative strength of the Australian dollar. Resources giant BHP Billiton was up 0.3 per cent to $35.74, Rio Tinto added 0.2 per cent to $61.81 amid reports Swiss mining giant Glencore has it in its sights as a takeover target. Iron ore miner Fortescue Metals Group lifted 1 per cent to $4. Iron ore juniors BC Iron and Atlas Iron were the best-performing stocks in the ASX 200, climbing 4.9 per cent and 2.6 per cent to $2.15 and 59¢ respectively.

Bionic-ear maker Cochlear gained 0.3 per cent to $67.43 after receiving critical US regulatory approvals for its Nucleus 6 product. Standards publisher SAI Global lost 1.3 per cent to $4.43 as final bids for its proposed takeover closed with no announcement. Rare earths miner Lynas Corporation was the worst-performing stock in the ASX 200 for a second day, dropping another 7.7 per cent to 12¢. The following stocks will trade ex-dividend today:

Dicker Data, interim, Chapmans, stock split.


ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




2 Energy Stocks to BUY
 


Stock of the Day – Boart Longyear (Expensive)

BLY reported 1H14 NPAT loss of $68m. With management’s cost out efforts over the last 12-18 months insufficient to offset declining revenues brought about by lower demand and ongoing pricing pressures (management indicated they were seeing low-mid teens pricing pressure in drilling services). Rig utilization n improved to 40% by mid-August 14 vs 36% during 1H14 and is expected to remain flat for the remainder of the CY14.


BLY Revenue (Source – Company Reports)

Debt reduction has proved to be challenging for BLY given its depressed earnings and cashflow. Management’s comments about strategic review and the ability of the company tor continue as a going concern was the key focus in our view, with notes to the accounts stating that BLY’s ability to continue as a going concern is likely dependent on the successful conclusion of the review and a recapitalization transaction by 30^th June 2015.


Products Order Backlog (Source – Company Reports)

We believe the outlook for early stage exploration capex is challenged given commodity price movements and cutback from miners, with exploration being one of the more discretionary forms of mining capex in our view. We believe that ongoing uncertainty about the capex plans of major miners and the challenging capital raising activity by juniors still point to a deterioration in the outlook with ongoing pricing pressure on the back of excess capacity likely to persist over the next 12 to 18 months.


BLY Daily Chart (Source – Thomson Reuters)
 
Drilling services revenue down 43% year on year, margins down 370 basis points year on year. Products revenue was down 37.5% year on year. Average rig utilization was 36% during 1H14 vs 41% in the previous corresponding period. However management indicated that rig utilization was 40% as at mid-August 2014 with management expecting utilization to remain flat at this level for the remainder of the year. We believe the stock is expensive at the current price and would review the stock at a later date.
  

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