The ASX 200 (ASX: XJO) has gotten off to a strong rally on Tuesday morning after good overnight gains on Wall St.
What ASX 200 investors need to know Tuesday
Last week, the ASX 200 finished its sixth straight week in positive territory, adding 4.2%.
The story was similar overseas, with the Nasdaq hitting a record intra-day high on Friday before blasting through it completely on Monday. The S&P 500 added 2.7% on Friday and a further 1.2% Monday to erase all losses for 2020. The rally was broad based and triggered by a far better than expected US unemployment result, with the economy adding 2.5 million jobs and the overall level falling to 13.3% from 14.7%.
Featured video: Steve Johnson the COVID-19 recovery & Uber stock
All 78 economists surveyed by Bloomberg had predicted further job losses with many commentators suggesting this is the biggest miss ever by economists.
The airline sector remains a key beneficiary of a reopening economy with Boeing up 11% and Qantas rising 3%. On the other hand, a more positive outlook is placing pressure on the healthcare sector with CSL and Fisher & Paykel Healthcare Ltd both off 3%.
In a sign the world is changing in front of our eyes, online retailer Kogan announced a 100% increase in sales in both April and May sending the company’s shares to record highs. At a market cap of over $1 billion, it’s now worth four times as much as Myer Holdings. I still struggle to see KGN becoming Australia’s Amazon.
The spoils haven’t been evenly shared with billions in market capitalisation shifting from traditional value sectors including energy, resources, and financials into technology and consumer-facing businesses. Many leading investors have been caught out once again after being unprepared for the initial volatility. Stanley Druckenmiller has suggested he was ‘far too cautious’ in his outlook for the recovery.
The biggest pharma merger ever?
More positive news emerged over the long weekend with OPEC+ extending supply cuts for a further month and calling out those nations who refused to cut as agreed, being Iraq and Nigeria.
AstraZeneca is said to have approached Gilead Sciences to discuss the biggest pharmaceutical merger in history.
The AUD is likely to continue its recent run as Brazil becomes the epi-centre of new COVID-19 cases, keeping iron ore prices above $100 per tonne. If you ask me, iron ore is substantially overvalued. Particularly in light of growing concerns around Australia’s relationship with China following a recent travel warning issued by the Communist Party.
If you’re looking to capitalise on the market’s growth, consider reading our report on The 5 Most Popular ETFs in 2020.
This report was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.