Diversified digger Rio Tinto (LSE: RIO) has gained more than 4% from Tuesday’s close, to reclaim the 2,000p marker. And many resources-related shares have unsurprisingly been caught in the updraft, too — industrial belt-maker Fenner (LSE: FENR) was recently up 5% on the day.

China bites back?

Official data released overnight showed Chinese exports surge 11.5% year-on-year in US dollar terms during March, the biggest leap for more than 12 months.

But stock pickers should not be breaking out the bunting just yet, in my opinion. Whilst the increase in exports is encouraging, I believe a sustained recovery in economic data is needed before market commentators call a bottom to the downturn — Chinese exports slumped by a quarter in February, after all.

Besides, China’s imports declined yet again last month, this time by a chunky 7.6%. Sure, Rio Tinto and its industry rivals would have no doubt welcomed copper purchases hitting a record 570,000 purchases in March. Still, this is likely the result of tactical stockpiling rather than a sign of robust underlying demand.

And of course the mining and energy sectors need a sustained improvement in Chinese commodities demand to be complemented by huge cuts to total global production in order to slash chronic supply imbalances across most markets.

Battered belt-maker

Consequently, Fenner and other support providers to the diggers and the drillers are also not out of the woods just yet. The belt-maker advised last month that its “end markets continue to be challenging, most notably oil and gas where the North American rig count has reduced further.”

And the company faces further pressure as US coal mining activity is also on the back foot. Sure, Chinese coal demand may have galloped 15.6% higher in March. But news today that North America’s Peabody Energy has filed for bankruptcy underlines the massive upheaval facing the bulk commodities sector, and consequently the demand outlook for Fenner’s industrial parts.

Driller dives

Oil and gas play HydroDec Group (LSE: HYR) has failed to be swept up in the midweek buying spree washing over the commodities sector, the stock last changing hands 11% lower from Tuesday’s close.

HydroDec has suffered a delayed drop as investors digested yesterday’s news that losses had widened to $31.1m in 2015 from $8.9m the previous year. As well as battling falling revenues, the business was whacked by an $11.1m impairment on the value of its assets.

With cash heading out of the business at an alarming rate, HydroDec also announced plans “to extend its £2m secured second working capital facility with Andrew Black, a non-executive director … by a further £2.25m to £4.25m.”

Like Rio Tinto and Fenner, HydroDec is expected to endure further earnings misery in the medium term as commodity prices drag. As a result I believe the oil play — like many of its small cap peers — could find itself in extreme peril should commodity prices fail to snap resoundingly higher.

The post Why Savvy Investors Are Selling Rio Tinto plc, Hydrodec Group plc & Fenner plc appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Encouragingly, the trading update showed that EKF is on-track to deliver cost savings of £6.7m from 2016 onwards and that it is putting in place the foundations for future growth. To aid this, EKF has adopted a singular focus on point-of-care and it remains focused on returning to core profitability and positive cash flow. Although EKF is expected to record a loss in the 2015 financial year, this is partly due to the expected impact of asset write downs of up to £60m.

While this is disappointing, EKF is anticipating core revenues of over £30m in 2016 and expects to have an EBITDA (earnings before interest, tax, depreciation and amortisation) of between £3m and £4m this year. As such, and while it remains a relatively high risk play, which is in the midst of a major turnaround, EKF may be of interest to less risk averse investors.

Also rising today are shares in Hydrodec (LSE: HDY), with the cleantech industrial oil re-refining company posting gains of 15% even though there’s no significant news . Despite this rise, Hydrodec is still down by 59% in the last year, a key reason for this being the falling oil price during the period. As a result of this, Hydrodec last week confirmed the disposal of its UK collections business and UK lubricant oil re-refining, with it retaining an economic interest in the latter through a potential profit share.

The deal seems to be a sound one for Hydrodec since it reduces the downside risk to the business by its UK operations given the relatively low oil price. It also allows the company to shift its focus towards its transformer oil technology business, where it could have a competitive advantage due to its proven technology. Although the company’s shares have performed well today, there is still some way to go as it proceeds with what is an ambitious turnaround plan. However, it may be worth a closer look for less risk averse investors.

Meanwhile, Hardy Oil & Gas (LSE: HDY) has also performed well today, with its shares being up 11%. As with Hydrodec, Hardy has been hurt by a falling oil price in the last year, with its shares being down by 49% during the period.

Looking ahead, Hardy could deliver improved share price performance since it continues to have no debt on its balance sheet and a cash position of $19.3m. However, as its recent results highlighted, the company may have the potential to develop its India-based assets, but the pace of activity has been rather slower than it had hoped. And with there being a number of oil and gas plays trading on low valuations and having bright futures, it may be prudent to look elsewhere rather than buying a slice of Hardy at the present time.

The post Are These 3 Small-Caps Set To Soar? EKF Diagnostics Holding PLC, Hardy Oil & Gas plc And Hydrodec Group plc appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.