ASX 200 Weekly Wrap: ASX continues to hit post-COVID highs

Last week,  we discussed how the S&P/ASX 200 Index (ASX: XJO) hit its highest levels since March, when the market was in a coronavirus-induced freefall. The previous week saw the highest the ASX 200 has been since that fateful crash. But last week, the index built on those highs and climbed even higher. The ASX 200 closed at 6,405 points on Friday, after climbing another 3.5% last week. That looks pretty good against the previous week's 6,190-point close.

Where the previous week's gains were likely driven by the outcome of the United States Presidential election, as well as the Reserve Bank of Australia (RBA)'s move to once again cut interest rates to another all-time low (0.1%), last week's moves seem to be driven by good, old-fashioned positive news and investor sentiment, coupled with some encouraging news on the coronavirus scene of course.

Potential vaccine pushes markets higher

Covering that first, let us note that, on 10 November (11 November out time), the giant US pharmaceutical company Pfizer Inc (NYSE: PFE) announced that its coronavirus vaccine candidate effectively prevented more than 90% of COVID-19 infections in a major trial. This is extremely good news considering that experts had reportedly been hopeful the vaccine could achieve at least 60-70% effectiveness. Now, this vaccine has yet to pass the United States' Food and Drug Administration's tough Phase 3 trials. But this news is highly encouraging nonetheless, and helped kick off the ASX 200's stellar week.

Telstra, ASX banks surge

In other ASX news, we also had some major developments in the blue chip space. Chief among those was Telstra Corporation Ltd (ASX: TLS), which announced a plan last week to split the company up into three separate legal entities over the next year or so. Those entities will be called InfraCo Towers, InfraCo Fixed and ServeCo. Investors are speculating that this corporate split will enable one of these companies (likely InfraCo Fixed) to eventually buy back the government's national broadband network (nbn). Many investors are also hoping that the move will help the market realise the potential 'true value' of Telstra's infrastructure/network assets, and result in a higher Telstra share price. That view could have been somewhat validated last week, due to the Telstra share price rising 11.8% over the week to $3.13 at Friday's close.

It was also a big week for ASX banking shares. All four of the major banks had stellar weeks, but National Australia Bank Ltd (ASX: NAB) was the standout with an 8.33% rise over the week. Australia And New Zealand Banking Group Ltd (ASX: ANZ) followed up with a 5% gain, while Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) were more subdued, rising 4.8% and 3.1% respectively.

But perhaps the standout performers last week were ASX oil shares. The ASX's biggest oil pureplay, Woodside Petroleum Limited (ASX: WPL), was up 13.3% over the week. Other oil plays, Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO), fared even better, up 23.4% and 18.03% respectively.

It appears investors expect that the oil and banking sectors (both very cyclical) will be large beneficiaries from the Pfizer announcement.

How did the markets end the week?

The ASX 200 started the week at 6,190.2 points and finished up at 6,405.2 points, placing the week's gains at 3.47%. Monday started out with a strong 1.8% gain, which was then backed up with another 0.7% gain on Tuesday following the Pfizer announcement. This flowed into Wednesday's trade, when the ASX 200 banked another hefty 1.7% rise (the fifth day of gains in a row). Alas, this streak was broken on Thursday when the ASX 200 retreated 0.5%, and solidified on Friday with another 0.2% fall. But the late slump in the week wasn't nearly enough to dent the week's early momentum, and the ASX 200 finished up with a week-to-week gain of 3.47%.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a top week, starting out at 6,395 points and finishing up at 6,609.3 – a rise of 3.35%.

Which ASX 200 shares were the biggest winners and losers?

Every week, we salaciously look at the ASX shares that have topped and bottomed the ASX 200 charts the previous week. So to start, here are the worst-performing ASX 200 shares from last week:

Taking out last week's wooden spoon was gold miner Ramelius. The COVID-19 vaccine news from Pfizer resulted in gold prices plummeting (remember, gold is often viewed as a 'safe-haven' asset for uncertain times), so Ramelius' drop could be attributed to improving investor optimism. 

Super Retail Group (owner of the Super Cheap Auto franchise) and car-parts company Bapcor were also feeling the heat. These companies have done very well in 2020 as the coronavirus-induced recession elicited consumers to put off buying new vehicles. The vaccine announcement might have caused some investors to take some profits off the table here.

There were likely to have been similar factors at play with Domino's as well.

Now the losers have been dissected, let's now look at last week's winners:

Some very dramatic moves here on the winner's list last week!

Again, most of these results are probably related to the vaccine announcement. Virgin Money UK is a United Kingdom-based bank, and is likely benefitting from the same factors we discussed earlier with the big four ASX banks.

Unibail-Rodamco-Westfield is a real estate investment trust (REIT), with shopping centres in Europe that have been drastically affected by COVID lockdowns and restrictions. Oil Search is an ASX oil company (again, see above). All will likely benefit in a massive way if a successful vaccine rollout does in fact come to pass quickly, which the market evidently recognised last week.

But Fletcher is a different case. This construction products company seems to be benefitting from the release of a trading update during the week, which outlined a 54.4% increase in earnings.

What does this week look like for the ASX 200?

We have a couple of things to watch out for this week on the markets. We'll be seeing full-year earnings reports from both Elders Ltd (ASX: ELD) and Aristocrat Leisure Limited (ASX: ALL). Additionally, buy now, pay later pioneer Afterpay Ltd (ASX: APT) will be holding its annual general meeting on Tuesday. Since the Afterpay share price swung 12% lower between Monday and Wednesday last week, and then 10% higher between Wednesday and Friday, we can probably assume this week's meeting will attract some investor attention too.

Before we go, here is a look at the major ASX 200 blue chip shares as we start another week: