Market Update & Important Indicators
The S&P 500 finished September much like it spent the past three months – quietly grinding higher. Solid earnings and economic data helped support major indexes this summer, with trading largely remaining calm despite disruptive hurricanes and threats between the U.S. and North Korea. The S&P 500 rose 4% to fresh records in the quarter, but the index's average daily move during the period was 0.3%, the lowest since 1968. The S&P 500 rose 9.30 points, or 0.4%, to 2519.36 Friday, a record, while the Nasdaq Composite added 42.51 points, or 0.7%, to 6495.96 as technology stocks extended this year's gains. The Dow Jones Industrial Average gained 23.89 points, or 0.1%, to 22405.09. Friday's moves leave the Dow industrials up 4.9% since the end of June, its eighth consecutive quarterly advance. Some of the biggest gainers in the past three months were energy companies, boosted by the rising price of oil. U.S.-traded crude oil has risen 12% since the end of June, lifted by unexpectedly strong demand and signs of slowing production. Energy companies in the S&P 500 finished the quarter up 6%. All but one of the 11 sectors in the S&P 500 ended the quarter higher. Consumer-staples stocks finished in the red. The U.S. gold price traded lower overnight, shedding 0.6% to close at 1,279.40 US$/oz.
European stocks advanced on Friday, booking the best month of the year after a string of upbeat data and a rally for the banking sector. The Stoxx Europe 600 index rose 0.5% to 388.16, and registering its highest monthly advance, up 3.8%, since December 2016. The index has risen for three straight weeks, and ended the quarter with a return of 2.3%, rebounding from a 0.5% loss in the second quarter. Germany's DAX index closed 1% higher at 12,828.86 on Friday, posting a 6.4% monthly gain-its best monthly gain of the year. France's CAC 40 index rose 0.7% to 5,329.81 and marked a 4.8% gain in September, representing its best monthly gain since March. The U.K.'s FTSE 100 index picked up 0.7% at 7,372.76, marking its best daily gain since Sept. 1. For the week, the London index finished up 0.9%. For the month, the benchmark ended off 0.8%, but notched a 0.8% quarterly gain.
Asia-Pacific stocks mostly edged up Friday. Key indexes in the region finished the quarter higher, with solid earnings and broadly positive risk sentiment continuing to outweigh the region's geopolitical concerns, in particular the escalation of tensions between North Korea and the U.S. The Shanghai Composite Index edged up 0.3% ahead of holidays that will keep markets closed through next week. It has gained 4.9% this quarter – its best since 2015, while Hong Kong's Hang Seng added 6.9% over that period. Japan led the way regionally in September, with the Nikkei notching its best month of 2017, up 3.6%.
A modest gain Friday wasn’t enough for Australia’s stock benchmark to get into positive territory for either this month or the third quarter. The S&P/ASX 200 rose 0.2% to 5681.6, but it dropped 0.7% for the quarter and 0.6% for September.
The London Metal Exchange’s 3-month copper contract was lower overnight, losing 0.6% to finish at $6,481/t. The other base metals finished mixed. Nickel prices added 0.6% to 10,416/t, while aluminium prices lost 1.3% to 2,080/t. Lead prices gained 1.0% to close at 2,492/t, with Zinc prices rising 0.5% to 3,205/t. Tin prices rebounded 0.5% to finish at 20,845/t.
In this issue
Ausdrill (ASL) | Banging the African drum | BUY
Market Cap $712m | Current Price $1.98 | Valuation $2.20
New equity of $100m, a largely undrawn debt facility of $200m, year-end cash of $167m and forthcoming operating cash inflow places ASL in an exceptional position to win work in Africa, where opportunities are at “unprecedented” levels. ASL enters this new growth period having rationalised the business, and we believe net earnings can double over the next two years. We expect FY18 newsflow to reflect the upbeat outlook commentary. Our unchanged blended valuation of $2.20 reflects current sector interest and multiples, and suggests upside from the current price. Upgrade to buy (prior hold).
Recent Contacts & Presentations
Gage Roads Brewing Ltd (GRB), Otto Energy Ltd (OEL), Whitebark Energy Ltd (WBE), MZI Resources Ltd (MZI), Gascoyne Resources ltd (GCY), NTM Gold Ltd (NTM), Novo Resources Ltd (NVO:TSX), Alice Queen Ltd (AQX), Melbana Energy Ltd (MAY), TOX Free Solutions Ltd (TOX), Artemis Resources Ltd (ARV), Apollo Consolidated Ltd (AOP), Vault Intelligence Ltd (VLT), Fleetwood Corp Ltd (FWD), DTI Group Ltd (DTI), Calima Energy Ltd (CE1), Austal Ltd (ASB), Indoor Skydive Australia (IDZ), OZ Minerals Ltd (OZL), NorWest Energy Ltd (NEW), Berkut Minerals Ltd (BMT), Draig Resources Ltd (DRG), Minotaur Exploration Ltd (MEP), Ausdrill Ltd (ASL), Neometals Ltd (NMT), PNX Metals Ltd (PNX), Northern Minerals Ltd (NTU), New Century Zinc Ltd (NCZ), Metal Bank Ltd (MBK), Rift Valley Resources Ltd (RVY)