Global markets continued their positive run overnight, as stocks on Wall Street were boosted by technology shares ahead of Alphabet’s results release after the bell.
Last night saw the release of the final report by Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (also referred to as the Hayne Report). The investigation uncovered all manner of misdeeds in the sector and has been a major weight on performance of the sector.
Initial thoughts by market commentators are that the final report leaves the core businesses of the big four bruised, but not broken from a humiliating public inquiry. The report stops well short of fears of forcibly separating banks from financial advice divisions or making narrow recommendations for how bankers are paid. Still, the report refers 24 cases to regulators for civil and potentially criminal breaches of the law. The federal government says the referrals can apply to individuals as well as companies putting executives at AMP, ANZ, CBA, NAB, IOOF, Suncorp, TAL and Allianz on notice.
Stock in Focus: TPG Telecom (TPM:ASX)
As we touched on last week, the competitive environment for the Aussie Telco companies may be getting a bit easier, after TPG Telecom announced it would no longer be rolling out its own mobile network in Australia.
This news has been more favourable for Telstra shareholders (Telstra shares jumped as shown above), as this eliminates the possibility of a fourth mobile provider – providing relief for the struggling incumbent major provider. Further, regarding the Huawei ban, Telstra are unaffected as their equipment is predominantly provided by Ericsson (While Optus and Vodafone have split providers including Huawei).
The market has also viewed TPG’s move as potentially swaying the ACCC decision towards approving TPG’s merger with Vodafone, as the merger would have less effect on reducing the competitive landscape of the Australian mobile industry as there is no longer a fourth player entering the market. TPG have said the decision was made simply due to external factors outside of TPM’s control, due to the ban of Huawei’s equipment – although there is scepticism the decision was made to pressure the ACCC.
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Australia & New Zealand Market Movers
The Australian share market rallied on Monday (ASX 200 index +0.48%) ahead of the after-market release of the banking royal commission's final report. The major Banks had a strong session, likely as some covered short positions ahead of the report.
In stock news, Medibank Private shares rose on rumours an offshore strategic name had quietly taken an interest in the Australian health insurer, indicating it "may be the beginning of something larger". Boral shares fell sharply after the company downgraded its profit expectations for its first-half result. The building materials company cited delays in big infrastructure projects in major Australian cities as the trigger for the downgrade. The company also flagged slowing volumes in its United States operations, impacted by above average rainfalls in its most important states.
The New Zealand market started the week lower (NZX 50 index -0.22%) in relatively quiet trading, with investors keeping one eye across the Tasman for the findings of a royal commission into the banking sector and waiting for the domestic earnings season to start next week. In stock news, Vista Group International said it has renewed a deal with Viacom for the multinational to use Vista's Movio software platform.
3 Things Markets Will be Watching this Week
- US corporate earnings season continues this week.
- Local earnings season also kicks off in Australia this week, with CBA among the heavyweights to release profit figures.
- The Reserve Bank of Australia makes an interest rate decision on Tuesday.
Have a Great Day,
