ASX investors may be close to scaling the COVID-19 wall of worry, but they won’t have to wait long to hit the next obstacle.

The S&P/ASX 200 Index (Index:^AXJO) jumped 2% in morning trade as the ASX bank stocks led the charge yet again.

This takes the gain by the top 200 benchmark to around 30% since it hit its bear market trough two months ago.

This rally’s no bull

There’s a growing sense among professional investors that the rally isn’t a dead cat bounce. While it isn’t uncommon to see 20% odd jumps before a collapse during a bear market, it’s unusual for the rebound to push into 30% plus territory. It would take one springy cat to pull that off.

I believe consensus is catching up to my view that I expressed on March 30 that the worst is likely over for the ASX 200 thanks to the government’s JobKeeper program.

The last major bear stronghold (aka the big four ASX banks) is crumbling and this only adds to my conviction that financial markets have passed “peak-pain” – barring a second wave of infections.

Looming risks to the new bull market

But don’t pop the champagne just yet. I don’t think we have a clear run back to the pre-coronavirus top as there are other headwinds building on the immediate horizon.

One potential big obstacle is Hong Kong. The violent protests gripping the territory is shaping up to be a new battle front between US allies and China.

Investors aren’t paying much attention to this looming threat as they are too caught up in the coronavirus afterparty, but this would be a mistake.

Why you should watch Hong Kong

US Secretary of State Mike Pompeo declared yesterday that the Asian financial hub no longer enjoys a high degree of autonomy from China.

This paves the way for the US government to remove Hong Kong’s special trading status and to impose sanctions against key Chinese officials and freeze Chinese assets in the US.

Such a move would mark the biggest escalation in Sino-US relations since US President Donald Trump waged a trade war against the Asian giant.

Second trade war will be worse

The trade war put a big dent in our market before the COVID-19 pandemic dominated headlines. A second trade war that puts Hong-Kong in the middle of the battlefield will be far worse than the first, in my view.

This is because the first trade war was about economics and US politics. A potential second one will involve Chinese pride and I don’t see the communist politburo compromising on this issue – not when Hong Kong symbolises China’s humiliation at the hands of the West following the Opium Wars.

It’s also alarming to see China flex its muscles on the world stage in other areas outside of Hong Kong. It’s starting to act like a superpower and this leaves it little room to back down from challenges without looking weak.

You can bet that Australia will be caught in any crossfire as we are forced to pick a side.

But Trump may only be using Hong Kong as a leverage in the next round of trade tariff negotiations, so it’s a little too early to assume the worse.

Debt time bomb

Trade wars aside, another wall of worry that the ASX 200 will need to scale is the expiration of goodwill and government stimulus in September.

This is when the JobKeeper and JobSeeker programs end. Landlords and lenders that have shown (or were forced to) restrain during the crisis might be more aggressively chasing debtors.

Even APRA is warning the banks that the worst lies ahead and not to take make a “dangerously naive” assumption of a “V” sharped economic recovery, according to the Australian Financial Review.

By all means, celebrate the flattening of the COVID-19 curve. Just remember to keep exuberance in-check.

More reading

• ASX 200 up 2.4%: Blackmores raises $92m, big four banks jump, Nearmap rockets
• Why you shouldn’t fear an ASX share market crash
• Where will the Telstra share price be next year?
• 3 ASX shares Warren Buffett couldn’t ignore today
• What would $50,000 invested in the ASX 200 a decade ago be worth today?

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The next looming test for the ASX 200 bull market is just round the corner appeared first on Motley Fool Australia.

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As I mentioned here previously, the Westpac Banking Corp (ASX: WBC) economic team expects the cash rate to remain on hold at a record low of 0.25% until the end of 2023.

Barring a surprise flare up of inflation between now and then, I suspect that this forecast will provide accurate.

In light of this, if I had $10,000 sitting in savings accounts, I would look to put it to work in the share market where the potential returns are vastly superior.

If you have $10,000 to invest, I would suggest you consider these ASX 200 shares:

Bubs Australia Ltd (ASX: BUB)

The first option to consider buying is this infant formula and baby food company. It has been growing its sales at a very strong rate in recent years thanks to the widening of its distribution network and increasing demand in China. Until recently the company’s sales were being made at a loss, but it finally appears to have reached a scale which will make them increasingly profitable now. In light of this, I’m optimistic the capital raisings are over and it is onwards and upwards for the company from here.

Cochlear Limited (ASX: COH)

Another option to consider investing $10,000 into is Cochlear. It is one of the world’s leading hearing solutions companies and has sold more than 550,000 implantable devices globally. I don’t expect its sales to stop there and believe demand will continue to grow in the coming decades thanks to technological advances and the ageing populations tailwind. In light of this, I think it could be a great share to buy for the long term.

Kogan.com Ltd (ASX: KGN)

A final option to consider is this ecommerce company. I believe Kogan has the potential to grow very strongly in the coming years. This is due to the popularity of its offering and the ongoing shift to online shopping. In respect to the latter, online shopping was already growing very quickly, but the pandemic appears to have accelerated this structural shift. Combined with its other verticals and the rapidly growing Kogan Marketplace, the future looks bright for Kogan.

More reading

• 1 key trait to look for with most top ASX growth shares
• Should you ever buy ASX shares at an all-time high?
• Have $4,000? Invest in these 4 ASX shares right now
• ASX 200 edges down, bank share prices fly
• Is now the right time to be buying ASX bank stocks?

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended BUBS AUST FPO and Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Where to invest $10,000 into ASX shares immediately appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is back on form and on course to record another strong gain. At the time of writing the benchmark index is up 2.3% to 5,907.8 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Beach Energy Ltd (ASX: BPT) share price is down over 3% to $1.64. This follows a sharp pullback in oil prices overnight due to increasing U.S.-China tensions. In addition to this, analysts at Macquarie and Morgans have just downgraded the energy producer’s shares to neutral/hold ratings. They have $1.60 and $1.66 price targets, respectively, on its shares.

The Jumbo Interactive Ltd (ASX: JIN) share price is down 2.5% to $11.82. This is despite there being no news out of the online lottery ticket seller. However, prior to today, Jumbo’s shares were up 73% from their March low. This could mean that some investors have decided to take a bit of profit off the table today.

The ResMed Inc. (ASX: RMD) share price is down almost 3% to $23.44 despite there being no news out of the sleep treatment focused medical device company. Though, it is worth noting that its U.S. listed shares fell heavily overnight. As such, this decline appears to be playing catch up. Investors may have been taking profit after some stellar gains over the last 12 months.

The WiseTech Global Ltd (ASX: WTC) share price is down 2% to $21.89. This morning the logistics solutions company announced that it has renegotiated the earnout arrangements for a number of acquisitions. This has included replacing significant cash payments with shares. As these shares have been issued today and not all are escrowed, I suspect that some recipients have decided to cash them in immediately.

More reading

• WiseTech Global share price drops lower on market update
• 1 key trait to look for with most top ASX growth shares
• 2 ASX shares to buy and hold for monster returns in the 2020s
• These beaten down ASX shares could be bargain buys
• 2 ASX growth stocks that could become 10-baggers in the next decade

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Jumbo Interactive Limited and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why Beach, Jumbo, ResMed, & WiseTech Global shares are dropping lower appeared first on Motley Fool Australia.

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