ASX 200 (XJO) set to fall – Zip & Netwealth share prices in focus

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

ASX 200 finishes in the green, Zip share price rockets

The ASX 200 benefitted from a strong overseas lead and news that unemployment has fallen to just 6.6% to finish 0.8% higher on Thursday.

Surprise, surprise, technology was the leader once again, adding 2.7% after BNPL player Zip Co Ltd (ASX: Z1P) released a quarterly update. The group once again doubled customer numbers, hitting 5.7 million with more in the US (3.2m) than Australia after just a short period of operation.

Revenue increased 88% to a record $102 million during the quarter, hitting $40.2 million in the month of December alone. Transaction value jumped 72% on the previous quarter to $1.6 billion with over 38,000 merchants signed up. The result was a 23.1% increase in the Zip share price. As a shareholder in Zip, it has been a wild ride in 2020, particularly as the sector faces increasing competition.

Not unexpectedly, shopping centre owner Vicinity Centres (ASX: VCX) devalued its property portfolio by $570 million, or 4%, due to the continued weak trading of its Melbourne CBD assets. This wasn’t a surprise to the market as the underlying value of the assets remains well above the current price. Vicinity shares fell 2.5% on the news.

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Cleanaway CEO steps down, Netwealth going from strength to strength

Cleanaway Waste Management Ltd (ASX: CWY) shares fell 8.5% after CEO Vik Bansal announced his departure from the company. The CEO has faced a number of bullying complaints after driving the recovery of the business from its difficult position several years ago to the $5 billion company it is now.

Netwealth Group Ltd (ASX: NWL) followed Hub24 (ASX: HUB) releasing a quarterly update of its own, reporting a 14% increase in funds under administration to $38.8 billion; a 36% increase on 2019. The driver was increasing inflows of $2.6 billion from new advisers joining the platform along with 74.1% growth in its discretionary managed accounts business, which hit $7.6 billion. Chair Jane Tongs, whom the Wattle Partners team have known and respected for many years, also decided to step down. Netwealth shares finished the day 11.7% higher.

Both Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO) announced strong oil and gas production for the quarter, with revenue up 32% and 16%, respectively, despite falling oil and gas prices. Volume has been the key driver, but the sector continues to await more regulatory guidance, making it a difficult investment proposition.

MSCI World Index reaches new high, chip supplier ASML reports

Global sharemarkets continued their remarkable beginning to the year, the S&P 500 and Nasdaq moving 0.1% and 0.6% higher, respectively, overnight. But it was the MSCI World Index, which holds a more diversified exposure to major global and not just US-based companies, which reached a new record.

The positive move came after the ECB committed to its EUR$1.85 trillion bond-buying program and weekly US unemployment claims fell by 26,000.

The US 10-year bond rate moved over 1.1% again, as Joe Biden’s first day in office saw growing confidence of a huge stimulus package and thus the hope for bumper corporate profits in 2021.

ASML (NASDAQ: ASML), which is a supplier of manufacturing equipment to semiconductor businesses like NVIDIA (NASDAQ: NVDA), reported a 7.5% increase in sales during the fourth quarter of 2020, hitting EUR$4.2 billion. The full-year sales result of EUR$13.9 billion was an 18% increase, with the company benefitting from forward sales of its units as consumer technology businesses face huge demand for products ranging from smartphones to tablets as the digitisation trend continues.

Investors speaking of the gold rush used to talk about buying the ‘picks and shovels’ rather than the miners themselves, ASML is one such shovel in the tech gold rush.

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Disclosure: At the time of publishing, Drew owns shares in Zip and Cleanaway.

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