Market Update & Important Indicators:
Rallying technology shares helped put the Nasdaq Composite on course for its second straight session of gains. The Dow Jones Industrial Average was up less than 0.1% in the last 15 minutes of trading, while the S&P 500 rose 0.2% and the Nasdaq added 0.5%. Tech shares in the S&P 500 climbed 0.9%. Tech is down more than 3% from a peak on June 8, but it is still the best-performing sector in the S&P 500 so far this year with a gain of 18%. Shares of materials companies in the S&P 500 also rallied, rising 0.8%. Dow Chemical was up 1.1%. Retailers were among the biggest decliners Monday. Central banks are likely to remain in focus this week, with the Bank of Canada widely expected to raise rates for the first time in seven years and Federal Reserve Chairwoman Janet Yellen set to offer semi-annual testimony before congressional committees on Wednesday and Thursday. The U.S. second-quarter earnings season will also begin in earnest, with analysts estimating a growth rate of 6.6% across the S&P 500, according to FactSet. The U.S. gold price rose slightly overnight by 0.2% to finish at 1,214.10 US$/oz.
European stocks advanced, with German equities climbing following data that exports from Europe's largest economy have soared. The Stoxx Europe 600 rose 0.4%, led by gains for tech, utility and basic materials shares. Investors pushed German stocks higher, leading the DAX 30 to rise 0.5%. The gain, the index's biggest in a week, came after Germany's statistics office Destatis said German exports leapt 14.1% in May compared with a year ago in non-adjusted terms, on strong demand from outside the European Union.
Asian equity markets ended mostly higher Monday, with stocks buoyant as strong U.S. jobs data and minimal geopolitical discord post-G20 supported risk appetite. Japan led the regional gains, ending up 0.8% as the yen softened against the dollar. Still, "markets that were in perfect harmony just two weeks ago are certainly a little on edge at the moment," says Deutsche Bank. The German lender believes market participants will now be focusing on the Federal Reserve and whether Chairwoman Janet Yellen will reinforce a more hawkish economic stance when she speaks this week. Bucking the trend, Chinese stocks ended lower as a surge in IPO approvals sent nearly 100 recently-listed stocks there down more than 5%.
Australian shares snapped a three-day losing streak on Monday, helped by further evidence that the U.S. economy is gaining strength and signs that Chinese inflation is stabilizing. The S&P/ASX 200 index increased by 0.4%, although early gains that flowed from a positive session on Wall Street on Friday and upbeat jobs data were pared as the session wore on. The key data point Monday was China's consumer price index, which rose by 1.5% compared with a year ago in June to stabilize after several months of falls. Financial stocks were mostly higher on a thin day for corporate news. Energy stocks were mixed, despite oil prices rebounding from declines on Friday amid a stronger U.S. dollar and persistent oversupply worries.
The London Metal Exchange's three-month copper contract shed 0.07% overnight to close at $5,824/t. The other base metals finished mixed. Lead prices rose 1.0% to 2,303/t, nickel prices rose 0.9% to 8,962/t, whilst tin prices rose 1.6% to 19,993/t. Aluminium prices fell for the day dropping 1.8% to 1,883/t whilst zinc prices shed 0.5% to 2,778/t.
In this Issue:
Ausdrill (ASL) | Momentum into FY18 | HOLD
Market Cap $589m | Current Price $1.885 | Valuation $1.95
We remain attracted to ASL’s business quality and earnings momentum, but feel share price gains of nearly 50% over the last 8 weeks largely captures these attributes. Current trading multiples point to the longer term potential, where we expect earnings >20cps given historic performance. In our view delivery against these expectations is required to drive further share price gains and we downgrade to hold (prior buy).
Recent Contacts & Presentations:
Metro Mining Ltd (MMI), Paringa Resources Ltd (PNL), Independence Group NL (IGO), MZI Resources Ltd (MZI), Transerv Energy Ltd (TSV), Emmerson Resources Ltd (ERM), Antipa Minerals Ltd (AZY), Echo Resources Ltd (EAR), Sovereign Metals Ltd (SVM), Calidus Resources Ltd (CAI), Great Boulder Resources Ltd (GBR), Finders Resources Ltd (FND), Bionomics Ltd (BNO), Threat Protect Australia Ltd (TPS), Ramelius Resources Ltd (RMS), Zenith Energy Ltd (ZEN), Blackham Resources Ltd (BLK), Top End Minerals Ltd (TND), Northern Star Resources Ltd (NST), Xanadu Mines Ltd (XAM)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF