Sector News for the Week Ended 1/17/2025
Prices of several commodities are on the rise to begin the year.
Natural gas prices broke and closed the week above $4/mBTU for the first time since late-2022. Lower inventories, higher
demand on expectations for a cold January in the U.S., are adding to the data center demand and LNG export growth
stories.
Crude oil prices broke and closed above the 40-WMA and above $78/barrel for the first time since July 2024. New
sanctions on Russia may disrupt supply to China/India and are pressuring prices to the upside.
Copper prices broke back above the 40-WMA for the first time in two months after finding support at the key $4/lb level
over several weeks. Prices are still in a range and without an immediate significant upside catalyst.
Gold prices broke to the highest level in two months and are back within 2% of all-time highs. Softer inflation figures
increased odds for further U.S. interest rate cuts in coming months.
Author: Kenley Scott
Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.
Global Sector Strategy
As is well established, the third year of the presidential cycle tends to be the standout in terms of stock market performance. The fourth year also has a mostly positive history, but two sizeable down years (2000, 2008) reflect on the averages
O’Neil Energy/Material Weekly
Hyundai Glovis (GLV.KR) – $6.8B market cap – Third-largest car shipping company, which engages in ocean transportation logistics advice, cargo space, loading/unloading, and packaging services. It is also expanding into AI-driven smart logistics, LNG shipping while also engaging in used car trading. 80% of sales are from affiliate companies like Hyundai and Kia.
- Affiliate vehicle sales (Hyundai + Kia) forecast strong growth, with expected sales rising to 10.2M vehicles in FY30 from 7.3M in FY23, creating higher demand for the company’s logistics services. EVs are expected to outpace growth, rising 16% annually over that timeframe.
- The company plans to invest $6.5B through FY30 to expand its business scope beyond automotive logistics, focusing on logistics (36%), shipping (30%), retail (11%), and new ventures like battery recycling and smart logistics (23%) while exploring growth through M&A. This could lead to non-affiliate sale growing to ~40% of sales by 2030.
- The Company just announced that it has signed a five-year maritime transport contract worth ~ KRW6.7T with HMC and KMC. The deal accounts for 26.1% of Hyundai Glovis’ FY24 sales and involves shipping 50% of Hyundai and Kia’s finished car exports to global markets. This is expected to increase revenue visibility for the company in the near-term and support fleet expansion plans for the company.
- Q3 results outpaced estimates across all key metrics.
O’Neil Energy/Material Weekly
FL idea-TechnipFMC (FTI) announced that it has received a contract from Shell (SHEL) Nigeria Exploration and Production Company for the
supply of subsea production systems for the deepwater oil and gas project located off the coast of Nigeria. The contract is worth around $250M–
500M and will be recorded in TechnipFMC’s Q4 FY24 inbound orders. The stock pulled back 12% off highs and breached support along its 10- and
21-DMA after a failed breakout. Support is at its 50-DMA (-1%), followed by its 100-DMA (-5%). RS line has started to trend lower, with an RS Rating
of 85. Acc/Dist Rating declined to D+. However, Up/Down Volume ratio is constructive at 1.
Global Sector Strategy
In this note we will compare the U.S. market performance in the Q4 period of past presidential election years, as well as how the performance led in Q1 of the following year. First, here is a comparison chart of Q4-election year through Q1-next year going back to 1972 on the S&P500. Each period is baselined at 100 beginning 10/1 of the election year. Through mid-December, the median gain has been just over 2% over 13 prior periods. This year, the S&P 500 is outpacing the median as well as all but four prior examples (1972, 1996, 2004, 2020).
O’Neil Energy/Material Weekly
FL-stock GE Vernova’s (GEV) management in its investor call on Tuesday emphasized a surge in demand for its gas turbines, with the company securing 5–6 GW of new orders in Q4, bringing the 2024 total to 20 GW, nearly doubling from 11 GW in 2023. The comments underscore the growing role of natural gas-fired power plants in meeting the 24/7 power reliability needs of data centers, particularly as they remain a preferred option compared with intermittent renewable sources like wind. Management also highlighted growing interest in pairing gas turbines with carbon capture systems to support decarbonization. Additionally, global utility capital expenditures are projected to surpass oil and gas spending in 2024, signaling a major shift in energy priorities.
Global Sector Strategy
Weekly charts of the S&P 500, Nasdaq Composite, and Russell 2000 show that indices have become fairly extended from 10-/40-WMA. When comparing with the past 2+
years and since the beginning of the bull market, we find indices have been more stretched on a couple of occasions, but not often. Of the three, the S&P 500 and the
Russell 2000 appear near to the highs of upward-trending channels that have played out over the past year or so. The Nasdaq is still a few percentage points away from
what could be the top of a channel.
O’Neil Energy/Material Weekly
Key Sector Updates for the Week Ending 12/05/2024
- OPEC+ has delayed the easing of its 2.2M bpd production cuts until April 2025 and extended the cuts through to the end of 2026. Originally, the group planned to start easing the cuts in January 2025 with a 180,000-bpd increase. The three-month delay was expected, but the additional year of restrictions signals OPEC+’s acknowledgment of weaker-than-expected demand growth. This news led to a decline in oil prices.
O’Neil Energy/Material Weekly
Focus List Updates for the two weeks ending 11/21/2024:
Archrock (AROC) reported better-than-expected Q3 FY24 results. Revenue and adjusted EPS beat estimates by 3% and 9%, respectively. Revenue from its core business, contract operations, grew 18% y/y, driven by strong compression demand. The utilization rate was 95%, indicating sustained tightness in the compressor market. The company raised its FY24 adjusted EBITDA guidance by 10% at the midpoint, which came in 5% ahead of estimates. The stock is extended after breaking out of a stage-one cup-with-handle base and is 2% off its 52-week high. Support is near its July highs of $23.4 (-4%).
Global Sector Strategy
Last week saw all of the major U.S. indices surging into fresh highs. The S&P 500, equal-weight S&P 500, and Nasdaq Composite made new all-time highs as a group for the first time since July. The Russell 2000 broke above its July peak and to its highest level since November 2021. It remains about 2% off all-time highs.
