Auckland Airport: Playing Devil's Advocate

This report takes an in-depth look at the valuation of AIA, a quality stock which has been perennially expensive and faces a number of risks

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Global Stocks Mixed

US and European stocks climbed fuelled by a rally in semiconductor stocks and healthcare companies. Stocks in the UK, Asia and Japan declined amid lower oil prices.

US stocks climb as  semiconductor stocks rally

US stocks advanced as semiconductor stocks surged, spurred by takeover speculation. Both the S&P 500 and the Dow Jones Industrial Average climbed +0.2%. Equities maintained their gains amid comments from the Federal Reserve, which came 15 minutes before the market closed. Fed Chair Janet Yellen said she expects the Fed to raise interest rates this year, and that subsequent increases will be gradual without following a predictable path.

Altera surged +28% on speculation Intel was in talks to acquire it. The Philadelphia Stock Exchange Semiconductor Index gained +2.8%. Alexion Pharmaceuticals jumped +2.6% to lead biotech companies higher. Energy shares led declines in the benchmark gauge as oil lost more than -5.0%. Transocean and Valero Energy dropped at least -2.4%.

European stocks gain, UK stocks continue decline

The Stoxx Europe 600 climbed +0.3%. Healthcare companies contributed the most to the Stoxx 600’s advance. Novo Nordisk jumped +10.0% after saying it will resubmit a new insulin product to US regulators. Swatch Group climbed +2.5% after predicting full-year revenue growth at the upper end of the forecast range. Adidas climbed +2.8% following a recommendation upgrade.

UK stocks declined for a fourth day, as falling mining and energy shares outweighed gains in airlines. The UK’s FTSE 100 lost -0.6%. Royal Dutch Shell contributed the most to the FTSE 100 decline, with a -1.7% drop amid lower oil prices. Tullow Oil lost -3.9%.

Asian and Japanese stocks fall

The MSCI Asia Pacific Index fell -0.5% as industrial shares led declines. Bharti Airtel and Idea Cellular slumped -4.9% and -5.1%, respectively, after agreeing to pay the most for wireless airwaves in India’s record US$17.6bn sale of radio frequency spectrum to mobile-phone operators. 

Japan’s Topix declined -1.0%. Toshiba sank -3.4% after rival SanDisk cut its sales forecast. Panasonic jumped +3.9% after forecasting profit of US$3.6bn next fiscal year, exceeding analyst estimates.

ASX 200 Up

The ASX 200 rallied +0.7%.

Crude and gold  fall

WTI crude fell -5.0% to US$48.87 while gold slid -0.5% to US$1,198.75


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