The S&P/ASX 200 (ASX: XJO) notched an impressive 2.4% gain for the week despite just four days of trading. Here are my three key investor takeaways from the week.
Not short of a dollar
As the Greensill Capital and Archegos debacles showed, few companies are short of a dollar in 2021.
Buoyant conditions combined with highly dilutive capital raisings amid the pandemic, that in hindsight likely weren’t required, have companies flush with cash.
Last week we saw Cleanaway Waste Management Ltd (ASX: CWY) accelerate its proposed acquisition of competitor Suez’s Australian business.
We also saw Seven Group Holdings Ltd (ASX: SVW) utilise the ‘creep’ provisions to take its holding in Boral Limited (ASX: BLD) to around 20% of the shares on issue.
Records made to be broken
The flood of cheap money is also sending markets themselves higher, with the S&P 500 now joining the Dow Jones to trade at a new all-time high during the week.
This time, however, it isn’t the tech stocks driving performance, but rather a broad group of investment banks, financials, materials and manufacturers among others.
This sort of dispersion offers opportunities to active investors and makes the decision to undertake a passive approach at this point of the market a difficult one.
Volatility disappears
After spiking to 37 points in January amid the GameStop (NYSE: GME) saga, the US VIX or volatility index is trading at its lowest point in a year, falling 30% last month and hitting just 17 points today. Where it moves next is anyone’s guess.
Looking ahead, the ASX 200 is tipped to edge higher at the open on Monday. Afterpay and CSL shares are making headlines.
