Have The Miners Bounced From Rock Bottom, Telstra Questioned Over Charges, US Rates Lower For Longer

What a week for the miners last week, BHP and Rio up over 10% and Fortescue up over 20%. And whilst we know they have been certainly on the nose as a sector – so is there share price growth sustainable? and with the growth coming in the gold and copper sector – the miners might start re evaluating iron ore projects and look at other projects structurally to improve long term profitability.

Some traders are of the belief that the oil price and the mining sector has found its bottom and speculators have bought energy stocks with greater confidence that the worst is over. This may be true, but picking the bottom in any asset is fraught with danger.

Telstra (TLS) closed the week in the positive despite the Australian Competition and Consumer Commission (ACCC) ordered the telco to cut the price it charges other operators to access its copper wire network. The watchdog said that Telstra should cut the price by 9.4% from November 1 as the network’s gradual replacement by the national broadband network reduces the number of Australians reliant on it.

The ACCC dismissed Telstra’s claim that the migration to the NBN meant it had to charge the remaining customers more to maintain the same level of service on its fixed line network.

The ACCC said customers were not to blame for the shift away from the copper network. “The ACCC has taken this approach because it considers that users of the fixed line network have not caused the asset redundancy and under-utilisation,” Mr Sims said. The ruling is a slight modification on the ACCC’s interim ruling in June of 9.6 %.

Australia’s RBA kept rates on hold at 2%, and the US could now be on a similar cycle where rates are lower for longer. The United States does not look like it will have the ability to raise interest rates this year so that means the world’s biggest economy holds onto zero per cent rates for a while. The US dollar has fallen a bit too, lifting commodity prices and providing some reprieve for emerging markets.

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