Overseas Mark Cubanets US Market U.S. stocks rallied, after the Standard & Poors 500 Index sank to an eight-week low, with investors speculating the Federal Reserve wont be in a hurry to raise interest rates as a global slowdown poses risks to the economy. Costco Wholesale Corp. gained 2.6 percent after saying profit topped forecasts. Merck & Co. and UnitedHealth Group Inc. added at least 2.3 percent to pace gains in the Dow Jones Industrial Average. Apple Inc. rallied 1.9 percent to send the Nasdaq 100 Index higher by 1.6 percent. Sears Holding Corp. dropped 5.8 percent after people with knowledge of the matter said a vendor was halting shipments. Alcoa Inc. unofficially starts the earnings season after the close of markets today. Profit at companies in the S&P 500 rose 4.9 percent in the July-September period, according to the average estimate of analysts in a Bloomberg survey. In a statement following the Feds September gathering, policy makers renewed their pledge to keep interest rates near zero for a considerable time after ending bond purchases this month. They also projected a steeper increase in borrowing costs next year. Some participants saw the current forward guidance as appropriate in light of risk-management considerations, which suggested that it would be prudent to err on the side of patience while awaiting further evidence of sustained progress toward the committees goals, minutes of the gathering show. European Markets U.K. stocks dropped a second day as a decline in Carnival Plc weighed on the FTSE 100 Index. Carnival slipped 1.3 percent, extending yesterdays losses after the cruise line cancelled stops in West Africa over concerns about the spread of Ebola. FirstGroup Plc tumbled the most since May 2013 after losing its contract to operate a railway network in Scotland. GKN Plc fell 3.5 percent as Bank of America Corp. recommended selling the shares. Ashtead Group Plc slipped 3.3 percent after U.S. peer United Rentals Inc. fell the most since February on a broker downgrade. Tesco Plc gained 1.4 percent after HSBC Holdings Plc raised the biggest British grocer to neutral, the equivalent of a hold, from underweight. European stocks fell to a two-month low amid concern that equity valuations have overshot the potential for economic growth and earnings. SAP fell 3.9 percent to 53.75 euros, the lowest price in almost one year. The company will freeze hiring until 2015 in order to reduce costs, Boerse Online reported, citing an e-mail from Chief Financial Officer Luka Mucic to managers. Asian Markets Asian stocks fell, with the regional benchmark index headed for its biggest decline in two months, after the International Monetary Fund cut its forecast for global growth. Toyota Motor Corp., the worlds biggest carmaker, sank 1.8 percent in Tokyo. Sands China Ltd. dropped 2.5 percent in Hong Kong after Wells Fargo & Co. lowered its outlook for Macau gaming revenue. HKT Trust & HKT Ltd. dropped 5.1 percent after FWD Life Insurance Co. sold a stake in the telecommunications firm at a discount. A sustained period of policy interest rates near zero in advanced economies has raised the risk that some financial markets may be overheating, according to the report. The IMF said it expects the Fed to start raising rates in the middle of next year, a projection thats in line with the median estimate of economists surveyed by Bloomberg. The U.S. central bank has held the federal funds target rate near zero since December 2008. Chinas benchmark stock index rose to a 19-month high, led by property developers, after policy makers eased real-estate curbs for the first time since the global financial crisis. China Vanke Co. and Poly Real Estate Group Co., the biggest developers, advanced at least 2.8 percent after the nations central bank said last week it was allowing a broader range of home buyers access to lower down payments and mortgage rates. Ideas Last week, the Federal Government released the final report of the Vertigan panel of experts with 19 recommendations to encourage a return to infrastructure level competition and private investment in infrastructure. The government said it will adopt some of the recommendations and put others off until later so as not to undermine completion of the NBN or add further to the burden on taxpayers. CIMB think the change in emphasis has a marginally positive impact on TLS but is negative for resellers including TPM, IIN and MTU. CIMB make no change to forecasts at this point. CIMB reported that the government released the final Vertigan report, which recommends breaking NBN Co into competing business units and returning regulatory focus to infrastructure competition and private investment in infrastructure. It recommends economic regulation of the sector be transferred from the ACCC to a specialist infrastructure regulator. The government considers the report provides a road map for change over time. Its initial response is not to change NBN Cos structure nor reintroduce network competition at this point ahead of its election commitments to complete the NBN as quickly and inexpensively as possible. It will reinforce current constraints on infrastructure competition from TPG and others. It stated it will make a full response by year-end including its recommendations for an infrastructure regulator. CIMB believe that these recommendations are part of a set of developments that return value back towards infrastructure investment after a long period of transfers to access seekers. However, many key developments will be deferred until 2016 or later. CIMB think the governments initial response reaffirms the NBN and helps remove a potential barrier to renegotiation of Telstra-NBN DAs. The ACCC also recommended in November 2010 to limit backhaul competition to 121 Points of Interconnection (PoIs) compared with over 600 PoIs in the copper network. It did this to allow NBN Co to sustain a cross subsidy from backhaul pricing to cover a shortfall on access prices. The arrangement potentially strands much existing investment but also limits network competition from those carriers with significant backhaul capacity including Telstra, Optus, TPG and iiNet. Several other private backhaul carriers were also constrained. Backhaul is also likely to be a key component of the emerging Internet of Things (IoT), which will see billions of electronic devices connected over the Internet. Much of the development is for wireless-based Internet connectivity, which will aggregate traffic before transmission over backhaul networks to a carriers point of presence. However, if the bulk of fixed broadband backhaul is reserved to NBN Co, as in current arrangements, this is likely to limit the overall opportunity for the development of rival backhaul networks. CIMB consider legislation for competitive neutrality as a positive for Telstra,Optus, TPG and to a lesser extent iiNet, but it may not occur soon given the governments timetable of support for NBN Co. CIMB reaffirm its positive recommendation on Telstra, which is largely mobile-driven but supported by NBN payments. CIMB reaffirm its negative recommendations on TPM and IIN. CIMB think these are over-priced given the developments in favour of network infrastructure and competition.
Posted on: Thu, 09 Oct 2014 01:29:41 +0000
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