ASX 200 Weekly Wrap: Surging bank shares push ASX toward 6,000

The S&P/ASX 200 Index (ASX: XJO) has banked yet another week of gains, pushing 4.7% higher last week to end at 5,755.7 points.

I say 'banked' partly because it was the ASX big 4 banks that were the stars of the week (and who doesn't love a bad pun!). All 4 banks experienced massive buying pressure throughout the week, which helped push the ASX 200 to its highest levels since early March and tantalisingly close to the psychologically-important 6,000 point level.

Further easing of coronavirus restrictions, as well as positive comments from the Reserve Bank of Australia (RBA) governor Philip Lowe during the week, bolstered investors' confidence in the health of the Australian economy. This, in turn, flowed through to ASX 200 shares.

Banks star in the ASX 200 show

But perhaps no sector benefitted more than the ASX 200 banks. Generally speaking, the banks are viewed as proxies for the general health of the economy. That's probably the reason all 4 of the majors saw such a brutal sell-off in March when the extent of the coronavirus pandemic was becoming clear.

And it's also likely behind the dramatic shift in sentiment we saw last week.

The 'big one' Commonwealth Bank of Australia (ASX: CBA) saw the most muted gains last week, starting off Monday at $58.70 per share before finishing up on Friday at $63.75 – an 8.6% swing.

Westpac Banking Corp (ASX: WBC) faired far better. Westpac shares were languishing at $15.01 on Monday morning but finished up on Friday at $17.22 – banking a 14.72% pop.

National Australia Bank Ltd. (ASX: NAB) did one better again. It started Monday at $15.34 per share and ended Friday at $17.81 – a 16.1% surge.

But it was Australia and New Zealand Banking Group Limited (ASX: ANZ) which claimed the banking crown and saw a 17.47% rise after starting off Monday at $15.23 per share and finishing on Friday at $17.89.

The big 4 banks are major constituents of the ASX 200, which means their moves have a heavy impact on the direction of the index as a whole. As such, we can mostly thank the banks for last week's gains – although they weren't the only ones popping the champagne.

How did the markets end the week?

As discussed, the ASX 200 was a very happy camper last week. It started Monday on 5,497 points and ended up at 5,755.7 points – putting the week's gains at 4.7% overall.

Monday saw a healthy 2.2% gain, which was raised by Tuesday's 2.9% surge. Wednesday saw some consolidation with a 0.1% loss, but then it was back on Thursday with another 1.3% gain.

By Friday, it was clear investors might have gotten a little too excited, and the ASX 200 fell back 1.6% for the day. But it wasn't enough to overcome the rampaging bullish sentiment earlier in the week and left the ASX 200 with its hefty 4.7% gain for the week.

Meanwhile, the All Ordinaries (INDEXASX: XAO) was also on fire, rising from 5,608.8 points to 5,872.2 points to bring home a 4.7% gain for the week.

Which ASX 200 shares were the biggest winners and losers?

It's 'gossip pages' time, Foolish style – so let's see which ASX 200 shares were the week's biggest winners and losers. As always, let's start with the losers!

Taking out the wooden spoon last week was Technology One, a software company that has been trending steadily lower ever since releasing its half-year results a fortnight ago. It was unfortunate to also see a bearish broker's recommendation last week, which seemed to add to investors' concerns.

Saracen Minerals was another loser. Most ASX 200 gold miners were sold off last week as the price of the yellow metal lost some steam after rallying hard earlier in May. Saracen took the cake with its 5.37% loss though.

A shoutout has to go to CSL as well, a rare participant in the ASX 200 losers column. CSL shares have been losing steam ever since topping $330 per share back in mid-April. It seems investors have finally realised this company may have been overbought and sent the shares back down closer to earth this week. This is coincidentally getting pretty close to the lows we saw in mid-March.

Now the losers are out sight and mind, let's take a look at the ASX 200 stars of the week:

You would think at least one of the major banks would have made the list this week, but alas!

Instead, we have Southern Cross Media taking out the top spot. Southern Cross has been in the ASX 200 winners or losers column more times than not over the past 2 months. It seems to be in a love-hate relationship with its investors.

Southern Cross shares were up an eye-popping 71.43% this week, even though there was no real news out of the company. It seems punters just flicked the 'risk-on' switch with this one in a big way.

Although it's not one of the big 4, NAB's old flame Virgin Money UK (formerly Clydesdale Bank) came in second with a 22.45% gain (and that's after a 10.45% loss on Friday). This stock was one of the most beaten-down banking shares on the ASX during the March trough, so it's a surprise to see sentiment restored so powerfully.

The 'risk-on' trend can also be seen in the highly cyclical Boral and Austal as well.

What is this week looking like for the ASX 200?

It will be very interesting to see if the ASX 200 continues either the negativity we saw on Friday or the positivity we saw earlier last week as we start another 5 days of trading.

Coronavirus restrictions continue to be lifted across the country, which should provide a base of positive sentiment. We also have an RBA meeting on Tuesday that will determine whether the cash rate stays at 0.25% or is cut to zero. Expect some share market volatility on Tuesday either way!

On the other hand, we have seen international political tensions continue to rise over the past week, which could put a dampener on ASX 200 bulls. In particular, we have seen rising violence in the United States in recent days as well as continuing tensions between the US, Hong Kong and China.

Before we go, here's how the ASX 200 blue chips are looking as we start a new week.

•     S&P/ASX 200 (XJO) at 5,755.7 points
•     ALL ORDINARIES (XAO) at 5,872.2 points
•     Dow Jones Industrial Average at 25,383.11 points
•     Gold (Spot) swapping hands for US$1,740.25 per troy ounce
•     Iron ore asking US$99.73 per tonne
•     Crude oil (Brent) trading at US$37.84 per barrel
•     Crude oil (WTI) going for US$35.49 per barrel
•     Australian dollar buying 66.67 US cents
•    10-year Australian Government bonds yielding 0.90% per annum

Foolish takeaway

Last week delivered some startling share price movements, none more so than the big ASX banks. Whether this sentiment holds this week will be a crucial test for the ASX 200, especially considering that elusive 6,000-point threshold is now within sight.

Keep an eye both on Australia and the rest of the world this week Fools, both spheres have make or break potential over the ASX's momentum.

Otherwise, as always, stay safe, stay rational and stay Foolish!