ASX 200 (XJO) set to rise – my three takeaways from the week

The S&P/ASX 200 (INDEXASX: XJO) is expected to rise when the market opens this morning, according to data from the Sydney Futures exchange. Here’s what’s making headlines.

ASX 200 share market recap

It was a strong week for the Australian share market, the ASX 200 heading 2.1% higher despite an ASX shutdown on Monday and a weak close on Friday.

The strength was clearly driven by the financial sector with Commonwealth Bank of Australia (ASX: CBA) enjoying its best week since 2011, finishing 10.8% higher. The end of week spike came after APRA flagged a loosening of the ‘dividend cap’ applied during March.

Once again, Insurance Australia Group (ASX: IAG) was among the hardest hit, being forced to raise $750 million in capital after a court decision that threatens its profitability and potentially opens huge liability for business interruption insurance. Management also flagged remediation in the announcement, with some $70 million to $90 million in agreed, but not issued, premium discounts.

On the positive side, Mesoblast Limited (ASX: MSB) received a flurry of support after global giant Novartis agreed to provide a $50 million capital injection to fund the commercialisation of the Remestemcel-L regenerative medicine. The Mesoblast share price finished 11.3% higher.

Featured video: How Al Bentley built Simply Wall St

US markets weaker, Nasdaq buoyed by Tesla stock

US markets were broadly weaker for the third week of November, the S&P 500 falling 0.7% on Friday sending it down 0.8%, but the Nasdaq eking out a 0.2% gain on the back of the incredible run from Tesla Inc. (NASDAQ: TSLA).

Political risk has continued to increase, coming head to head with the huge spikes in COVID-19 cases which are clearly making investors nervous.

On Friday, the US Federal Reserve and Treasury Department, who together deliver the current fiscal and monetary policy, had a public spat with Treasury calling for unused stimulus to be returned and redirected; this would clearly be a negative for the US economy.

On a positive note, 472 S&P 500 companies have now reported with 85% beating expectations.

Back in Australia, explosives maker Orica Ltd (ASX: ORI) reported a 31% fall in profit to $168 million as a reasonably protected industry felt the pain of COVID-19 demand reductions, particularly in the US where 50% of revenue is sourced. Volumes were 1% lower with weak pricing sending revenue down 5% to $5.61 billion. The company now generates around 20% of revenue from the booming gold sector. The Orica share price fell 4.1% on Friday.

My top 3 takeaways from the week

One of the more powerful takeaways this week was the comments from Minister Jane Hume when asked about the Federal Government’s industry super fund performance assessment tool. Minister Hume was quoted as saying boards ‘don’t hug the index’ and ‘go and seek alpha’ rather than simply cutting costs and giving members a passive exposure, they could potentially build themselves.

Attention to detail, for lack of a better term, was in focus this week with shareholders in both ASX Ltd (ASX: ASX) and the broader insurance sector taking a hit. In the case of the former, it was the failure of the ASX’s trading and support platforms for the longest period in decades and the latter, the reliance of a since extinguished legislative term to protect from business interruption insurance claims; both will have a significant impact on profits.

Market’s reiterated that the pandemic is not over despite positive vaccine news, with the US underperforming the rest of the world as COVID-19 cases remained above 150,000 and employment fell. The best comparison is back at home, where retail sales have improved 1.6% in October, unemployment remains at just 7.0% and conditions return to normal.

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 or enter your email address below 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 enter your email address below and we'll send you the report right away.

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

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Disclosure: At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. 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. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

General Financial Advice warning
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.

© Rask Australia 2020

Join 20,000+ smart investors

Join the Rask Australia mailing and we’ll send you free investment reports, podcasts, expert insights, investing courses, ASX news and lots, lots more. All free. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian-owned.

feedback-icon

What can we do better? Please give us us some feedback :)

We care about your experience, please let us know if you have any suggestions to improve our site.