ASX 200 (XJO) to rise – my key investor takeaways from the week

The S&P/ASX 200 (INDEXASX: XJO) is set to rise when the market opens this morning according to the latest SPI futures. Here’s what ASX investors need to know.

ASX share market recap

The ASX 200 delivered its worst week since April, falling 3.9% after Friday’s 0.5% weaker close. That said, it was a strong month given the background of uncertainty, with the index 1.9% higher.

By far the news of the day was under-pressure wealth manager, AMP Limited (ASX: AMP), receiving a non-binding offer from Ares Management to purchase 100% of the company. The news sent the AMP share price soaring 19.5%, offering some validation to those who have seen value in the company’s asset management and banking divisions. Management confirmed the offer but also highlighted that it has received significant interest in each of its businesses, with hopes of a bidding war to come.

The other highlight was ResMed Inc. (ASX: RMD) who made the incredible pivot towards manufacturing ventilators in 2020. The company reported a 37% increase in net profit to US$184.4 million after ventilator sales spurred a 10% increase in revenue, to US$751.9 million. ResMed shares finished 9.5% higher for the day.

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US markets choppy, big tech reveal quarterly earnings

It was a rough finish to the week, despite the strong GDP results, with the S&P 500 falling 1.2% and the Nasdaq 2.6% as the world’s largest companies provided earnings updates. The rough day sent both indices down 5% for the week and over 2% for the month, the second consecutive month of losses. Given the backdrop of the impending election and over 100,000 COVID-19 cases in the US, some weakness was expected.

It was a mixed day for the technology sector with Apple Inc (NASDAQ: AAPL) falling 5.6% after announcing a 20% fall in iPhone sales but revenue slightly ahead of estimates at US$64.7 billion for the quarter. Accessories, including the AirPods, remain the key growth driver, up 20.8% for the quarter.

Amazon.com Inc (NASDAQ: AMZN) offered a more mixed result, with the cloud computing division up 29% and revenue slightly ahead of expectations at US$96.1 billion for the quarter. CEO Jeff Bezos did however flag higher costs and shrinking margins as COVID-related costs hit earnings.

Facebook Inc (NASDAQ: FB) was among the hardest hit on Friday, falling 6.3% despite overcoming a boycott of ad sales to beat revenue expectations by 10%, hitting $21.47 billion. In the case of Facebook, this 20% quarterly sales growth was considered a slowing!

Alphabet Inc (NASDAQ: GOOGL) was the winner of the day, reporting revenue of US$46.2 billion. Growth was driven primarily from its booming YouTube division, where ad sales grew 32% as the world turned digital during the pandemic.

Not quite out of the woods, resilience is key

The key takeaways from Melbourne’s first week out of lockdown are that we are not quite out of the woods yet. Despite the great news and feeling of normality returning, border closures continue to dominate headlines, as does the second wave hitting Europe and the US.

This week offered a reminder that Australia remains an attractive hunting ground for companies, with Coca-Cola Amatil Ltd (ASX: CCL), AMP and Link Administration Holdings Ltd (ASX: LNK) all under offer from global players. The common trait for each of these businesses was resiliency amid the pandemic.

Whilst they don’t offer the incredible growth rates of the popular technology companies, it is clear that slow, consistent growth will only become more valuable in the years ahead. The question is who’s next? In my view, any company with consistent, non-cyclical recurring revenue will be popular, particularly given the incredibly low cost of debt.

The Westpac Banking Corp (ASX: WBC) share price will be on watch today as the ASX bank is set to release its full-year FY20 results.

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From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

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Disclosure: At the time of publishing, Drew owns shares of Link Administration.

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The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

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