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

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

ASX posts rare losing week, Tyro share price under the pump

The ASX 200 finished flat on Friday, sending the index to its first negative week in over a month, down 0.6%.

Afterpay Ltd (ASX: APT) was once again the standout, moving 10.0% higher and overtaking Telstra Corporation Ltd (ASX: TLS) as it moved to a market capitalisation of $38 billion. The company has been a key beneficiary of the low interest rates, not only via its access to the capital required to fund its buy now pay later transactions but also in terms of its valuation.

Tyro Payments Ltd (ASX: TYR), which manages EFTPOS terminals around Australia, was the subject of a short attack, falling 11.8% before entering a trading halt. Management has deemed the views of activist firm Viceroy Research ‘false assertions’ which suggest the group offered inferior, outdated technology.

Any doubt that interest rates were not having the desired effect on the economy will be quickly forgotten with new home loans increasing 5.6% in November to $24 billion, representing a 23.7% increase on the same time in 2019. Banks are clearly not shying away from lending, which will support property markets in the short-term, at least until interest rates are forced higher.

Featured video: 21 ways to save & invest your money in 2021

US markets lower, Biden announces rescue plan

US markets struggled on Friday, with the S&P 500 falling 0.7% and the Nasdaq 0.9%, leaving both 1.5% lower for the week.

It was a trifecta of news, with incoming President Joe Biden announcing his ‘Rescue Plan’ for the American economy, flagging another US$1.9 trillion in spending. The question now is whether this legislation can be passed in full, with markets shuddering at Biden’s comment regarding potential tax hikes.

Not unexpectedly, retail sales fell 0.7%, with expectations they would remain flat, with the political impasse and spiralling death rates clearly beginning to slow the economy.

Investment bank JP Morgan (NYSE: JPM) smashed expectations, reporting a 42% increase in profit for the quarter to US$12.1 billion on the back of a slight increase in revenue; shares fell 1.8%.

Meanwhile, Wells Fargo (NYSE: WFC) fell 7.8% after management highlighted the impact low interest rates were having on its interest margin. Profit was stronger than expected at US$2.99 billion, but an unexpected fall in revenue clearly shocked investors; expect similar themes in the Australia market, with loan growth the only saviour.

My top investor takeaways from the week

Social media facing the heat

The major social media advertising firms, but particularly Alphabet (NASDAQ: GOOGL), Facebook (NASDAQ: FB) and Twitter (NASDAQ: TWTR), may have done themselves a disservice this week.

Already under pressure from both sides of politics due to their ‘filters’ on content, the decision, rightly or wrongly, to continue to block users has placed additional pressure on lawmakers to curb their control and ability to censor them.

Energy sector going from strength to strength

The energy sector, specifically oil and gas, continued its stellar run, finishing 4.1% higher in Australia on the back of cooler weather in key Asian markets and much-needed supply cuts from OPEC.

The oil price is nearing US$60 once again, which appears to be a false market, the most attractive plays in the sector remain those with a foot in both camps, being traditional and renewable energy sources.

Australia a global laggard

Without joining the chorus against Afterpay, its ascension to the 13th largest company on the ASX offers some insight into the issues facing our country.

After years of reliance on China, we have underinvested in technology and innovation, with a ‘lay buy’ business among our most innovative companies.

By comparison, our competitors in the US and China are creating leaders in areas ranging from robotics to artificial intelligence and even the creation of vaccines.

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?

Howdy, ASX investor.

I really care about your experience today.

Please, let me know if you have any suggestions we can use to improve our site and help others invest in ETFs. 

Cheers! 

Owen Rask