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ASX ends week at new high despite COVID gloom

Volatile week ends at records, Star withdraws offer, Silverlake swimming

The ASX 200 (ASX: XJO) managed to deliver another positive week, despite finishing just 0.1% higher on Friday. 

The benchmark added 0.6% over the week, pushed higher by a recovery in the healthcare sector, which added 4.7% behind CSL Limited (ASX: CSL) being 5.7% higher despite any real news.

  • The Aussie market appears to be moving towards the only quality we know, being healthcare, whilst the US market heads back towards big tech.

    Crown Resorts Ltd (ASX: CWN) had another tough week, falling 8.4% after Star Entertainment Group Ltd (ASX: SGR) withdrew its takeover offer, citing concerns about Crown’s license post the Royal Commission in Victoria.

    Gold miner Silver Lake Resources Limited (ASX: SLR) had a terrible finish to the week, falling over 11% despite achieving production guidance for both copper and gold, with a cost base of just $1,478 per oz.

    Whilst the mining sector fell 1.1% for the week, lithium and nickel-related companies were the highlights after BHP Group’s (ASX: BHP) deal with Tesla Inc (NASDAQ: TSLA), with Pilbara Minerals Ltd (ASX: PLS) finishing 8.5% over the five days.

    Wesfarmers Ltd (ASX: WES) also reached another record, adding 4.8% as it stands to benefit from another round of lockdowns.

    Consumer, tech dominates as US markets hit triple record, Twitter, Snap results

    The Dow Jones hit 35,000 points for the first time and all benchmarks finished the week at record levels as earnings season continues to surprise.

    The Dow Jones added 0.7% on Friday and 1.1% for the week, with both the S&P 500 and Nasdaq jumping 1% in the same session.

    Monday’s sell-off saw the uber bears come back into focus, making the early call for another correction, but long-term investors continue to look at earnings performance, with 87% of companies beating expectations thus far.

    Over the week, each of the tech and consumer sectors jumped over 3% buoyed by Snap Inc (NYSE: SNAP), owner of Snapchat and Twitter, with the former seeing revenue double and the latter delivering 74% growth as advertising and monthly users beat expectations. Snap now has over 293 million average daily users.

    American Express Company (NYSE: AXP), a proxy for the health of the domestic consumer, jumped over 1% after confirming travel and entertainment spending in the US was around 98% of pre-pandemic levels. This saw revenue jump around 50% and net profit move over US$2.3 billion as bad debt reserves were reversed.

    Pump and dump, headlines only half the story, BHP’s management quality

    ‘I might pump but I don’t dump’. These were the words of Elon Musk commenting on the Bitcoin and Crypto phenomenon in a discussion with Cathie Wood and Twitter’s Jack Dorsey; such is the power of being one of the richest people in the world.

    The comments highlight a growing issue in crypto markets, particularly on the fringes, where new products are being created nearly every day.

    The discussion highlighted a shared view of the incredible importance of cryptocurrency in levelling the global financial playing field but reiterated it was still in its infancy, with speculative fervour doing little to benefit its adoption.

    Magellan’s Hamish Douglass was on the other side of the fence, suggesting Bitcoin will eventually ‘go to zero’ whilst confirming the defensive and ‘quality’ positioning of his underperforming global equity strategy.

    The headlines of ‘lower returns ahead’ made a comeback this week, as they seem to every few years.

    Naturally, with markets near all-time highs, there is a likelihood that ‘markets’ may deliver lower returns on average in the future.

    Yet the majority of us are not investing in ‘markets’ but rather the companies that make up the market, each of which operates in vastly different sectors and is a living organism of itself.

    As Rio Tinto Limited (ASX: RIO) remains on the outer due to its demolition of Juukan Gorge, management at BHP continues to stand out.

    This week BHP announced its intention to exit its oil and gas businesses, not long after its coal exit announced in 2020. Not bad timing given the oil price is now back over USD$70 per barrel and energy companies are once again flush with cash.

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