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ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high

ASX 200 weekly wrap represented by wooden block letters spelling out 'recap
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The S&P/ASX 200 Index (ASX: XJO) has just capped off another stunning week of gains that have helped it achieve a new post-crash high. Last week, the ASX 200 added another 1.2% on top of the previous week’s stupendous 5.37% gain, which pushed the index to new post-March highs. The ASX 200 closed at 6,176.8 points but reached as high as 6,230 points during the week.

Whilst we are still a long way from touching the 7,000-points-plus levels the ASX 200 was trading at back in pre-COVID February, it certainly was a good week to have an ASX share portfolio.

As seems usual these days, it was ASX tech shares leading the gains last week. The S&P/ASX All Technology Index (ASX: XTX) was up 3.7% for the week, helped by major constituent Afterpay Ltd (ASX: APT) printing yet another new all-time high of $98.68 on Wednesday. It looks like the countdown to a triple-digit Afterpay share price is nearing midnight. The Xero Limited (ASX: XRO) share price was also on fire last week and printed a new all-time high of its own at $119.88.

In a rare departure, ASX tech shares’ gains weren’t accompanied by their American counterparts. Most significantly, Apple Inc (NASDAQ: AAPL) was on the nose with investors after releasing details of its new iPhone 12 range. The ‘fresh design’ and the new handset’s 5G capability evidently didn’t impress investors, who sent Apple shares down more than 4% between Monday and Friday last week.

So what was the catalyst behind the week’s double-up gains? Two words: easy money.

RBA flags QE

On Thursday, Reserve Bank of Australia (RBA) Governor, Dr. Philip Lowe, told Australians that the RBA is now ‘considering’ further easing, which may include the purchase of longer-term bonds (such as 5 or 10-year bonds). Until now, the RBA has been intervening in the bond market, but in the purchasing of shorter-term bonds. But if the RBA does indeed expand this program, Australia will almost certainly be described as entering official quantitative easing territory.

Further RBA intervention into these markets is generally regarded as conducive to higher share prices. As such, I believe these comments were partly behind last week’s ASX 200 push higher. Dr Lowe’s comments did nothing to dampen speculation that the RBA is about to initiate a further reduction in the cash rate from 0.25% to 0.1%, which also likely helped.

It’s also worth mentioning the stunning initial public offering (IPO) of Aussie Broadband Ltd (ASX: ABB). The Aussie Broadband share price skyrocketed 90% on its first day on the ASX boards when it closed at $1.90 after listing at just $1 per share. It was even better intra-day too — at one point, the shares were up more than 122%.

How did the markets end the week?

The markets ended the week well, as we already discussed. But here’s the long version of the story. Monday saw a strong start to the week with a 0.5% gain, which was backed up with another 1% top-up on Tuesday. Wednesday saw this streak end with a 0.3% loss, but this was quickly forgotten on Thursday with a 0.5% gain on the back of the RBA’s comments. Friday saw another 0.54% cool-off, but it wasn’t enough to stop the ASX 200’s substantial gain for the week.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a strong week, starting at 6,312.85 points and finishing up at 6,385 points for a 1.1% gain for the week.

Which ASX 200 shares were the biggest winners and losers?

It’s gossip time (Fool style) now, where we look at the week’s biggest winners and losers. So put the kettle on and we’ll start with the losers first, as always.

Worst ASX 200 losers

 % loss for the week

Flight Centre Travel Group Ltd (ASX: FLT)

(9.1%)

Mesoblast Limited (ASX: MSB)

(7.7%)

Webjet Limited (ASX: WEB)

(7.2%)

Zip Co Ltd (ASX: Z1P)

(7.1%)

Embattled travel stock Flight Centre took out last week’s wooden spoon. There was no major news out of Flight Centre last week to give this move a catalyst. However, the company was on the receiving end of some negative broker coverage recently, which was likely behind this move. Rolling COVID cases around the world are doing travel shares like Flight Centre no good, and investors are probably taking notice.

Biotech company, Mesoblast, was next with a 7.7% swing. Again, there was no major news out of Mesoblast last week, but investors have been continually selling off Mesoblast shares ever since its late September 42% plunge. I suspect last week’s moves represent an exiting by some burned shareholders.

Another travel share in Webjet was up next, and just like the other two, this stock’s fall wasn’t prompted by any company announcements. I suspect this company’s sell-off was driven by similar factors to Flight Centre.

Finally, we had a rare entrant in the losers column with Zip. Zip shares have been bouncing around in recent weeks. Last week, it seemed to be a poor reaction to the company’s first quarter update that prompted this selling pressure. It’s hard to see how any investor would be put off by a 96% jump in sales volume, but the numbers don’t lie!

Now the losers are out of the way, let’s take a gander at last week’s winners:

Best ASX 200 gainers

 % gain for the week

Unibail-Rodamco-Westfield (ASX: URW)

23.3%

Link Administration Holdings Ltd (ASX: LNK)

21.55%

GUD Holdings Limited (ASX: GUD)

12.5%

Super Retail Group Ltd (ASX: SUL)

9.9%

An unusual presence in the winners column last week was our ASX 200 winner, shopping centre owner Unibail-Rodamco-Westfield. URW was finally on the receiving end of some goodwill from investors after the company announced an office sale in Paris. Despite last week’s gains, the Unibail share price is still down more than 70% year to date.

Next up, we had admin services provider, Link Administration. Link last week received a takeover offer from a private equity consortium of $5.20 per share in cash. This prompted a quick re-rating from the market towards this price.

The less-than-elegantly-named GUD Holdings was also on form last week after the company released a strong quarterly update to the market. With sales up 14% over the prior corresponding quarter, it’s no surprise investors were feeling generous with this one.

And finally, Super Retail Group (the name behind Super Cheap Auto and Rebel) was also in form, despite no major news out of the company. Maybe it was some aftershocks from the budget two weeks ago, maybe it was the performance of fellow auto parts provider GUD, or maybe it’s Maybelline. Either way, investors were no doubt grateful.

What does this week look like for the ASX 200?

After the stunning performances of the past two weeks, it will be interesting to see if the ASX 200 holds the line and keeps the winning streak alive, or gets cold feet and retreats back towards 6,000 points this week.

We had a very decisive result in the New Zealand election on Saturday, which delivered the Labour Party’s Jacinda Ardern a second term with a rare parliamentary majority. This could be on investors’ minds as we start the week, given the enticing prospect of a trans-Tasman travel bubble that Ms Ardern has previously flagged.

In other political news, I suspect that with the United States elections drawing ever closer, investors’ minds will increasingly be preoccupied with the various possible outcomes. I’ll be watching for any major, potential market-moving developments from across the Pacific this week as a result.

So before we go, here’s a look at how the major ASX 200 blue chip shares are looking:

ASX 200 company

Trailing P/E ratio

Last share price

52-week high

52-week low

CSL Limited (ASX: CSL)

46.39

$299.00

$342.75

$242.67

Commonwealth Bank of Australia (ASX: CBA)

16.93

$69.24

$91.05

$53.44

Westpac Banking Corp (ASX: WBC)

14.01

$18.66

$29.39

$13.47

National Australia Bank Ltd. (ASX: NAB)

17.25

$19.22

$29.23

$13.20

Australia and New Zealand Banking Group Limited (ASX: ANZ)

13.15

$19.31

$28.28

$14.10

Woolworths Group Ltd (ASX: WOW)

42.58

$39.20

$43.96

$32.12

Wesfarmers Ltd (ASX: WES)

33.64

$48.20

$49.67

$29.75

BHP Group Ltd (ASX: BHP) 16.54

$36.25

$41.47

$24.05

Rio Tinto Limited (ASX: RIO)

15.51

$95.45

$107.79

$72.77

Coles Group Ltd (ASX: COL)

24.17

$17.72

$19.26

$14.01

Telstra Corporation Ltd (ASX: TLS)

18.57

$2.84

$3.94

$2.76

Transurban Group (ASX: TCL)

$13.70

$16.44

$9.10

Sydney Airport Holdings Pty Ltd (ASX: SYD)

89.86

$5.91

$9.07

$4.26

Newcrest Mining Limited (ASX: NCM)

27.18

$31.55

$38.15

$20.70

Woodside Petroleum Limited (ASX: WPL)

$18.42

$36.28

$14.93

Macquarie Group Ltd (ASX: MQG)

15.80

$134.34

$152.35

$70.45

And finally, here is the lay of the land for some leading market indicators:

  •    S&P/ASX 200 (XJO) at 6,176.8 points
  •     All Ordinaries (XAO) at 6,385 points
  •     Dow Jones Industrial Average at 28,606.31 points after rising 0.39% on Friday night (our time)
  •     Gold (Spot) swapping hands for US$1,899.04 per troy ounce
  •     Iron ore asking US$120.37 per tonne
  •     Crude oil (Brent) trading at US$42.93 per barrel
  •     Crude oil (WTI) going for US$41.12 per barrel
  •     Australian dollar buying 70.8 US cents
  •    10-year Australian Government bonds yielding 0.72% per annum.

Foolish takeaway

With the ASX 200 reaching a post-March high, it was certainly a good week for ASX investors. Who knows what twists and turns this week will bring! I’m still anticipating quite a lot of volatility on global markets when the US elections finally get underway early next month.

As such, I think ASX investors should take the gains of the past two weeks with a pinch of salt and at least be mentally prepared for some ups and downs. So as always, stay safe out there, stay rational and stay Foolish!

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Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Link Administration Holdings Ltd, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Super Retail Group Limited, Telstra Limited, and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Apple, Flight Centre Travel Group Limited, and Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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