ASX 200 (XJO) set to rise – Westpac & ASX insurance shares in focus

The Australian share market and the S&P/ASX 200 (INDEXASX: XJO) is expected to rise when the market opens this morning. Here’s what’s making headlines.

ASX delivers fourth-straight day of gains

The ASX 200 eeked out a fourth straight gain on Thursday, finishing 0.2% higher with the financials and IT sectors the biggest contributors; up 1.2% each.

For the financials, Westpac Banking Corp (ASX: WBC) led the way, adding 2.3% after the release of better than expected unemployment figures. The poll showed unemployment increased just 0.1% to 7.0% in October with the economy creating 178,000 new jobs, offsetting a sharp increase in those looking for work.

SEEK Limited (ASX: SEK) provided an update to the market, raising its full-year guidance after seeing revenue at levels well above what management assumed amid the pandemic. Revenue is now expected to hit $1.6 billion for 2021 and earnings $400 million, which compares to the $1.47 billion and $330 million predicted earlier this year.

Management has suggested the growth is coming from the rehiring spree across China and Australia as employers seek to find replacements for the many people across the economy laid off in March; a positive outlook for the economy but SEEK’s valuation is looking stretched.

Featured video: Thematic ETF investing on the ASX

ASX insurance shares on watch, BlueScope upgrades guidance

The insurance sector, including QBE Insurance Group Ltd (ASX: QBE) and Suncorp Group Ltd (ASX: SUN), was hit heavily yesterday, with a court ruling falling against Insurance Australia Group Ltd (ASX: IAG) having the potential for far-reaching impacts.

The NSW Supreme Court of Appeal rejected IAG’s view that the business interruption caused by the pandemic was an ‘excluded event’ and therefore not insurable, meaning these companies may face major claims in the months ahead. IAG entered a trading halt while QBE finished the day down 3.9%.

Steel producer BlueScope Steel Limited (ASX: BSL) jumped 5.3% after offering a positive guidance update pointing to a 40% improvement in earnings from last year to $475 million; the result is also 80% above the previous six months. Management highlighted that all divisions are now performing near capacity, with Australia’s fiscal support seeing construction remain strong but particular coated and paint products used in home renovations.

BlueScope’s Asian business is expected to double in the second half as a result of its own success in returning to COVID-normal whilst the US is nearing full capacity despite the threat of further lockdowns. The company is nearing recent highs and in my view, offers solid exposure to a construction driven recovery.

AstraZeneca treatment shows positive signs, NVIDIA crushes expectations

It was another mixed but positive day for overseas markets, with the S&P 500 and Nasdaq heading 0.4% and 0.8% higher. The market remains hamstrung between increasingly stringent lockdowns, including school closures in New York, and further signs of suitable COVID-19 treatments, with AstraZeneca’s success boosting immunity in older patients reported in a peer-reviewed journal overnight. The company expects to release its own phase 3 trial results in the coming weeks.

Semi-conductor chip designer NVIDIA Corporation (NASDAQ: NVDA), which powers nearly every digital product from mobile phones to vehicles, surged after smashing expectations, seeing revenue hit a record of US$4.73 billion for the quarter, a 57% increase. The result was powered by record revenue from gaming products, up 37%, and data centres, up 37%, with its profit margin even improving to 65.5%, reflecting the incredible power of scale for this tech-driven business.

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