Market Update & Important Indicators
U.S. stocks capped off a quiet stretch of holiday trading with a weekly gain. Activity in the stock market has been muted in recent sessions, with U.S. trading closed Thursday in observance of Thanksgiving and the market shutting early Friday. Still, major indexes have generally continued to extend their 2017 rally, with advances in shares of industrial, technology and consumer-discretionary companies lifting the S&P 500, Dow Jones Industrial Average and Nasdaq Composite to fresh records this week. The S&P 500 rose 5.34 points, or 0.2%, to 2602.42, closing above the 2600 level for the first time. The day's moves brought the broad index to its 55th closing record of the year and its second-fastest 100-point milestone on record. The Dow industrials added 31.81 points, or 0.1%, to 23557.99, climbing 0.9% for the week. The Nasdaq increased 21.0 points, or 0.3%, to a fresh high of 6889.16, advancing 1.6% for the week. Shares of brick-and-mortar retailers, which have struggled to gain traction this year amid competition from e-commerce giants like Amazon.com, rallied heading into a weekend of holiday sales. The U.S. gold price traded slightly lower overnight, falling 0.2% to close at 1,287.90 US$/oz.
German stocks snapped a two-session skid, with the export-heavy – and euro-sensitive – German DAX 30 benchmark picking up 0.4% to end at 13,059.84, breaking a two-day run of losses. In Paris, the CAC 40 claimed a 0.2% rise at 5,390.46. In Madrid, the IBEX 35 picked up 0.2% to end at 10,053.50. Those indexes on a weekly basis rose 1.3% and 0.4%, respectively. But the U.K.'s FTSE 100 index slipped 0.1% to end at 7,409.64. That helped keep some pressure on the Stoxx Europe 600, which ended down less than 1 point at 386.63.
In Asian trading, the Shanghai Composite Index edged up 0.1% after falling 2.3% Thursday in its biggest one-day drop in nearly a year. The steep declines followed signs of Beijing's determination to clamp down on market speculation and the country's high debt levels. Hong Kong's Hang Seng, which slid Thursday along with its mainland counterparts, rose 0.5%, ending the week 2.3% higher. Japan's Nikkei finished the day up 0.1% and ended the week up 0.7% following a Thursday holiday.
Major banks again held Australian shares back, leaving the benchmark S&P/ASX 200 down slightly for the week despite an afternoon recovery. It was second-straight slight drop amid sliding stocks in China, Australia's largest export market. The ASX fell 3.6 points to 5982.6, but it still rose 0.4% for the week. The Big Four banks collectively lost more than 6 points, partly offset by gains in the materials sector — which helped buoy the market this week after strong rebounds for base metals and iron ore. With iron ore heading towards a bull market, resource stocks were among the best performers: Mid-cap miner Mineral Resources surged 7.8% after it surprised brokers, including Macquarie, with its bullish outlook for shipments of lithium direct shipping ore, or DSO, from its Wodgina operation in Western Australia.
The London Metal Exchange’s 3-month copper contract traded higher overnight, gaining 0.5% to finish at $7,002/t. The other base metals finished mostly higher. Aluminium prices rose 1.0% to 2,117/t, whilst Tin prices gained 0.4% to close at 19,573/t. Lead prices rebounded 1.1% to close at 2,472/t, whilst nickel prices added 0.9% at 11,979/t. Zinc prices bucked the trend, closing 0.2% lower at 3,263/t.
In this issue
Austal (ASB) | We’ll take it | BUY
Market Cap $644m | Current Price $1.84 | Valuation $2.10
Although design partner Fassmer lost the OPV bid, ASB will be involved in the programme with winning bidder Luerssen. This is not unexpected given ASB’s shipbuilding experience and existing facilities. Importantly, the work will help underpin Henderson’s operations, backfilling our Australian forecasts (rather than adding to them). We expect the maturing LCS programme and significant commercial work to boost FY19 earnings. Momentum is positive and we maintain a buy call on a $2.10 valuation (prior $1.96).
Recent Contacts & Presentations
St George Mining Ltd (SGQ), Overland Resources Ltd (OVR), Metro Mining Ltd (MMI), Botanix Pharmaceuticals Ltd (BOT), Xanadu Mines Ltd (XAM), Orthocell Ltd (OCC), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU), Minotaur Exploration Ltd (MEP), Panoramic Resources Ltd (PAN), Sino Gas & Energy Holdings Ltd (SEH), Great Boulder Resources Ltd (GBR), Metallum Ltd (MNE), Gold Road Resources Ltd (GOR), Apollo Consolidated Ltd (AOP), De Grey Mining Ltd (DEG), Triton Minerals Ltd (TON), Evolution Mining Ltd (EVN), Silver Mines Ltd (SVL), NTM Gold Ltd (NTM), Gascoyne Resources Ltd (GCY), Southern Cross Electrical Ltd (SXE), MOD Resources Ltd (MOD), Meteoric Resources NL (MEI)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF