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S&P/ASX 200 morning report – Z1P, FMG & Intel stock in focus

The S&P/ASX 200 (INDEXASX: XJO) is set to rise when the market opens on Monday. Here’s what’s making headlines across local and global markets.

ASX continues stellar run, Fortescue reveals bumper profits

The ASX 200 reached an 11-month high last week, adding 1.3% for the week despite falling 0.3% in late trading on Friday.

The commodities sector remains key to the market strength, with Lynas Rare Earths Ltd (ASX: LYC) jumping 13.7% on Friday and 26.1% for the week after announcing a deal with the US Government. Management revealed it had partnered with the US Department of Defense for the construction of a $60 million processing plant based in Texas. This is another step in the reshaping of global supply chains as the US seeks to reduce its reliance on China which dominates the sector.

Billionaire owner of iron ore miner Fortescue Metals Group Limited (ASX: FMG) Andrew ‘Twiggy’ Forrest used a speech on Friday to report the company had made a profit of US$940 million in December alone, with the board confirming first-half profit would be between US$4.0 to US$4.1 billion. Forrest also took the opportunity to lay out an ambitious plan to turn Fortescue into a green energy and steel production powerhouse, however, shares fell 2.2% on the news.

Featured video: Claude Walker on The Australian Investors Podcast

Zip leaps into overdrive, Intel gets hacked

Buy now pay later company Zip Co Ltd (ASX: Z1P) was the top performer for the week, adding 28.8% after releasing a strong set of quarterly sales numbers which saw its new US business experiencing significant growth. In a recent analysis, Zip was shown to trade at a significant discount to the likes of Afterpay Ltd (ASX: APT) and Affirm (NASDAQ: AFRM) despite generating similar growth and revenue per user numbers.

Australian retail sales fell 4.2% in December from November, but were 9.4% higher than 2019 figures, likely contributing to Coca-Cola Amatil Ltd’s (ASX: CCL) first revenue growth in three quarters, up 0.4% in December.

Intel Corporation (NASDAQ: INTC) fell 9.3% on Friday after a data hack forced management to bring forward its earnings report. The company delivered a fifth consecutive record year of revenue, up 8% to US$77.9 billion, despite a 1% fall in December quarter revenue. Intel’s Mobileye business remains the highlight – the company which provides autonomous driving and crash protection systems for vehicles grew 30% quarter-on-quarter and 10% on the year.

My top 3 takeaways from the week

As per usual, here are my three investor takeaways from local and global markets during the week.

Records are made to be broken

It was another week of records in global sharemarkets with the Japanese Nikkei 225 hitting a 30-year high during the week, powered higher by pent up demand and inventory restocking across the world.

The S&P 500 and Nasdaq are regularly topping records despite the pandemic, placing pressure on passive, index-focused strategies, with the likelihood that more active management will be required in the years ahead to both protect capital and ensure investors are exposed to appropriately valued companies.

QE & stimulus here to stay

Biden’s inauguration and immediate signing of Executive Orders, along with Secretary of the Treasury Janet Yellen confirming that debt is of little concern to US policymakers, signal fiscal stimulus and money printing policies are set to continue for the foreseeable future.

This is directly impacting the AUD, and potentially the Australian economy, as our bond rate sits among the highest in the world, attracting large capital flows as a result.

Bubble talk gathers steam

The talk of ‘bubbles’ seemed to move into overdrive this week, with more hedge fund managers joining the chorus, so I was interested to read this article that showed bubble headlines in every year since 2010. There are certainly excessive valuations in some areas, but a broad-based bubble assessment lacks the deeper assessment required.

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

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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 in Zip Co.

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