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• This fundie refuses to invest in gambling and fossil fuels
• Can ASX BNPL companies like Afterpay (ASX:APT) compete with Paypal?
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• Why Nuix, Hub24 shares are on watch
• 2 amazing ASX tech shares to buy right now

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Shares in buy now, pay later (BNPL) companies like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) all soared to new all-time highs over the last year.

Afterpay, in particular, has grown from a media darling into a bona fide ASX behemoth. With a current market capitalisation of almost $32 billion, it is larger than both BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).

From a low of just $8.01 twelve months ago, the Afterpay share price skyrocketed to $160 by February – a whopping gain of close to 1900%. Zip’s gains were almost as impressive, surging almost 1300% from a low of $1.05 in March 2020 to a new 52-week high of $14.53 by February. 

But the wind has gone out of their sails more recently. Volatility has returned to global markets as investors try to price in the continued impacts of the COVID-19 pandemic, and technology growth stocks have been hit particularly hard. There was also the recent announcement that US payments company Paypal Holdings Inc (NASDAQ: PYPL) is set to launch its own BNPL offering in Australia in June, in direct competition with both Afterpay and Zip.

Recent corrections

The Afterpay share price has plummeted over the last few weeks. Since hitting an all-time high price of $160.05 in early February, Afterpay shares have dropped almost 30% to $113.42. Zip shares have fared even worse, plunging 40% from their high of $14.53 to $8.59.

Sezzle Inc. (ASX: SZL), a US-based BNPL company, has also seen its share price plummet 30% from its February high price of $11.99 to $8.00. This might indicate that the drop in share price of both Afterpay and Zip is more to do with a general tech sector correction than concerns around Paypal’s Australia launch. Paypal’s BNPL service has been up and running in the US since last year.  

Recent financial performance of ASX BNPL companies

Afterpay released its first-half FY21 results to the market last month. In it, the company reported that $9.8 billion in sales had been processed through its platform during the six months ending 31 December 2020, an uplift of over 100% versus the first half of FY20.

Total income was up 89% year on year to $417.2 million, while earnings before interest, tax, depreciation and amortisation expenses (EBITDA), excluding foreign currency gains and losses, came in at $47.9 million, a jump of 521%.

Zip also released its first-half FY21 results last month. It was a record half for the company, with transaction volumes soaring 141% year on year to a little over $2.3 billion and total revenues up 130% to $160 million.

Zip also announced it was accelerating its US expansion plans after completing the acquisition of US-based BNPL provider Quadpay in the US in August 2020.   

Outlook for ASX BNPL companies

It is difficult to assess how much of an impact Paypal’s BNPL offering will have on the fortunes of both Afterpay and Zip.

Undoubtedly it will cause some disruption – Paypal’s offering is as cheap (if not cheaper) for consumers, and it is fully integrated into the company’s existing payment platform. This means it will roll out relatively seamlessly to all of Paypal’s 9 million Australian customer accounts.

However, it is worth remembering that both Afterpay and Zip are expanding into new international markets. North America and the United Kingdom were Afterpay’s fastest-growing segments in terms of underlying sales, active customers and active merchants for the first half of FY21. In fact, North America accounted for 43% of Afterpay’s underlying sales for the first half FY21.

This geographic diversification means it is less exposed to the threats posed by Paypal. It also shows that Afterpay has so far seen little negative impact on its US growth trajectory from Paypal’s BNPL product in the American market. Only time will tell if it can also shrug off the challenge in the domestic market.

More reading

• ASX 200 Weekly Wrap: Calm restored to the ASX 200
• ASX share market on watch: Goldman Sachs shares thoughts on inflation and interest rates
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to sell next week
• Leading brokers name 3 ASX dividend shares to buy

Rhys Brock owns shares of AFTERPAY T FPO, ZIPCOLTD FPO, Sezzle Inc, Commonwealth Bank of Australia and PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) enjoyed a week of relative calm after the volatility experienced in recent weeks. All five trading days last week saw movements below 1%. And four out of the five days saw positive or flat movements of the ASX 200.

Primary support behind these market moves came from both dovish comments from the Reserve Bank of Australia (RBA), as well as the federal government’s new tourism support package. The latter naturally saw shares of travel exposed companies rise strongly.

Corporate Travel Management Ltd (ASX: CTD) was the biggest beneficiary (more on that later), but the sentiment was overwhelmingly positive across most companies that were hardest hit by last year’s travel restrictions and lockdowns.

Meanwhile, ASX tech shares, the font of most of the volatility we have seen across the ASX over the past month or so, were a lot more stable last week. We still saw a mixed bag across the space though. Buy now, pay later (BNPL) companies like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) had lousy weeks. Whereas other beaten-down tech shares like Appen Ltd (ASX: APX) bounced back.

ASX gets a government handout (or two)

This was immensely helped by comments from the RBA last week. RBA governor Dr Philip Lowe commented on the rising bond yields that sparked the ‘rotation’ out of tech we have been seeing.

He poured water on bond investors’ expectations of higher rates in the near term future, saying he doesn’t see rates rising until 2024. So essentially, repeating what the RBA has been telling us all along. Even so, the markets likely found solace in these words.

Another factor that may have contributed to the eerie calm on the ASX last week was the final passage of a monster stimulus package over in the United States. Last week, US President Joe Biden signed the US$1.9 trillion ‘American Rescue Plan’ after it narrowly passed both houses of the US Congress.

The package contains direct cheque payments to most Americans, a boost in unemployment payments and vaccine rollout funding. It is estimated to give the US economy a major boost.

How did the markets end the week?

As we touched on earlier, it was a week of relative tranquillity on the ASX 200. Monday kicked things off with a 0.43% bump, which was backed up by a smooth 0.47% boost on Tuesday. Wednesday saw the only downwards move of the week with a 0.84% loss. Thursday was a flat day for the ASX 200, while Friday upped again with a 0.79% rise.

All in all, the ASX 200 started the week at 6,710.8 points and finished up at 6,766.8 points – a 1.16% gain for the week.

Meanwhile, the All Ordinaries Index (ASX: XAO) started out at 6,943 points and finished up back over the 7,000 point mark at 7,014.6 points, a gain of 1.03%.

Which ASX 200 shares were the biggest winners and losers?

It’s time for our wrap’s gossip pages, so put the kettle on as we unpack the biggest winners and losers for the week! As always, we start with the losers:

ASX 200 Losers

More reading

• Nuix, Hub24 enter ASX 200: prices on watch
• 2 amazing ASX tech shares to buy right now
• 2 blue chip ASX dividend shares in the buy zone
• ASX share market on watch: Goldman Sachs shares thoughts on inflation and interest rates
• 5 things to watch on the ASX 200 on Monday

Sebastian Bowen owns shares of A2 Milk, Bitcoin, National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk, Macquarie Group Limited, and Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended SMARTGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Just 3 months after listing, Nuix Ltd (ASX: NXL) will enter the S&P/ASX 200 Index (ASX: XJO).

After an initial public offering at $5.31 per share, the data analytics provider floated in early December and immediately became a market darling.

It rose as high as $11.86 in January. But it’s since sunk to $5.51 after investors savaged its half-yearly result.

But now that Nuix will join the elite 200 from 22 March, all eyes will be on the share price again. This is because index funds that follow the ASX 200 will be forced to buy into the stock, pushing demand upwards.

The same goes for Hub24 Ltd (ASX: HUB), which was also announced as a new entrant to the ASX 200 this month.

The Hub24 share price has had an up-and-down year but still sits slightly down year-to-date. No doubt the fintech is looking forward to a potential boost from index funds.

S&P Dow Jones Indices on Friday also announced 4 other companies would make it into the ASX 200 this month:

• Codan Limited (ASX: CDA)
• Champion Iron Ltd (ASX: CIA)
• Nickel Mines Ltd (ASX: NIC)
• Pilbara Minerals Ltd (ASX: PLS)

The ASX companies kicked out from the 200

If 6 companies enter the 200, then 6 must come out.

Unfortunately, these were the businesses that couldn’t grow quite enough to remain in the club:

• Bravura Solutions Ltd (ASX: BVS) 
• GWA Group Ltd (ASX: GWA)
• Sandfire Resources Ltd (ASX: SFR)
• Smartgroup Corporation Ltd (ASX: SIQ)
• Service Stream Limited (ASX: SSM)
• Tassal Group Limited (ASX: TGR)

The Bravura Solutions share price has tumbled almost 17% so far this year, and its demotion out of the ASX 200 will not help.

Fellow technology business Service Stream has suffered even more, taking a 33% haircut off its share price year-to-date. The Motley Fool reported last week it’s one of the most shorted stocks on the ASX.

The ASX 200 is a group of the 200 largest companies on the bourse. Membership is updated quarterly.

The above additions and removals will occur before market open on Monday 22 March.

More reading

• Top fund manager names these 2 ASX shares as buys
• 5 things to watch on the ASX 200 on Monday
• 2 top ASX growth shares to buy next week
• These were the worst performing ASX 200 shares last week
• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy

Tony Yoo owns shares of Nuix Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and Hub24 Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd, Hub24 Ltd, Nuix Pty Ltd, Service Stream Limited, and SMARTGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The tech sector has come under pressure this year due to rising bond yields. And with yields continuing to climb on Friday night, it looks set to be another tough day for the sector on Monday.

While this is disappointing, when the dust settles it looks like there will be some very attractively priced shares for investors to consider. Two to consider when the volatility eases are named below:

Appen Ltd (ASX: APX)

Appen is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence.

Its shares have come under notable pressure in recent months for a couple of reasons. One is the aforementioned rise in bond yields, the other is its underperformance in FY 2020 due to COVID-19.

In respect to the latter, Appen’s growth underwhelmed in the second half of FY 2020 after many tech giants put major machine learning and artificial intelligence projects on hold because of the pandemic.

However, given the growing importance of artificial intelligence for big businesses (and governments), these projects are expected to commence once trading conditions return to normal. So much so, management is forecasting strong operating earnings growth in FY 2021.

In light of this, the recent weakness in the Appen share price could be a buying opportunity for investors. One broker that believes this is the case is Ord Minnett. It recently upgraded its shares to a buy rating with a $24.75 price target. This compares to the current Appen share price of $17.85.

Kogan.com Ltd (ASX: KGN)

The Kogan share price is now trading 46% lower than the 52-week high it reached in October. This is despite the company revealing exceptionally strong sales and profit growth during the first half of FY 2021.

For the six months ended 31 December, the ecommerce company delivered a 97.4% increase in gross sales to $638.2 million and a 250.2% lift in adjusted net profit after tax to $36.5 million.

This was driven by the accelerating shift to online shopping caused by the pandemic. This underpinned a 76.8% increase in Kogan active customers to 3 million and strong demand for its Kogan Marketplace and Exclusive Brands segments. 

While its shares were richly valued at their peak, they appear attractively priced following their pullback.

Credit Suisse, for example, estimates that they trade at 25x FY 2021 earnings. Which, given Kogan’s strong long term growth potential, appears more than fair.

The broker feels this is the case and has put an outperform rating and $20.85 price target on its shares. This compares to the current Kogan share price of $13.80.

More reading

• 10 of the best ASX shares to buy in March
• Will the ASX share e-commerce boom last?
• These were the best performing ASX 200 shares last week
• Why this ASX 200 tech share is leading the pack this week
• The Appen (ASX:APX) share price has fallen 60% from its 52-week high

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 Appen Ltd and Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Brokers believe that some ASX tech shares are worth a buy by investors.

Not every business has the advantages that technology businesses do – the capital expenditure is relatively low and profit margins can be quite high.

However, valuation is an important factor for brokers, particularly in the shorter-term.

These two ASX tech shares are ones that brokers like:

Audinate Group Ltd (ASX: AD8)

Audinate is the business behind the digital audio platform called Dante.

A few brokers reckon that Audinate is a buy, including Morgan Stanley – it has a share price target of $10 for Audinate.

The broker thinks that Audinate has improved its position against the competition, which has increased the longer-term potential of the business. The broker believes that FY22 could be a good year of recovery.

In the FY21 half-year result Audinate boasted that its revenue has returned to pre-COVID-19 revenue levels.

Audinate reported that revenue was US$11.1 million for the half, the same as the prior corresponding period. It was an improvement from the second half of FY20’s revenue of US$9.3 million.

The ASX tech share’s gross margin improved year on year by $0.1 million to US$8.6 million. In the second half of FY20 its gross margin was US$7 million. So there was a material improvement half on half. 

Audinate’s earnings before interest, tax, depreciation and amortisation (EBITDA) was $1.8 million, slightly down year on year. It made a net loss after tax of A$1.2 million.

Dante enabled products went up 27% to 3,008 – which is a key leading indicator of future growth according to Audinate. The company believes that the pandemic could serve as a catalyst for an acceleration of transition from old analogue cable technology to networked audio and video.  

MNF Group Ltd (ASX: MNF)

MNF describes itself as a provider of cloud communications software and services in Australia and New Zealand. It says that its platform enables companies like Zoom, Google and Twilio to launch and scale communication services.

Broker Ord Minnett likes MNF Group and thinks that there will be more customer demand over the next year alongside a global recovery from COVID-19. It also thinks that MNF has growth potential in Asia and a good balance sheet. Ord Minnett has a share price target of $6.08 for MNF Group. 

In the FY21 half-year result the ASX tech share reported that recurring revenue improved by 15% to $55.7 million because of growing wholesale revenue. EBITDA increased slightly faster, rising by 16% to $19.6 million.

Underlying net profit (NPAT-A) grew by 30% to $8.4 million. Earnings per share (EPS) went up 62% to 7.83 cents, supporting a 32% increase in the interim dividend to 3.3 cents per share.  

MNF Group said that its net revenue retention (NRR) rate across its top 10 customers was 115%.

The company also said that trials have commenced with customers in Singapore, which marks a major milestone in MNF’s offshore expansion strategy.

The ASX tech share finished with net cash of $22 million.

The MNF Group CEO, Rene Sugo, said:

Importantly, our expansion into Singapore is progressing well. We have commenced technical trials with three major global customers. These trails are the final step before going live in the Singaporean market which we expect to occur later this financial year. We have taken a measured approach to ensure we are meeting the highest standard of customer service, consistent with our service levels in the Australian and New Zealand markets.

However, Mr Sugo explained that the company isn’t completely through this difficult period:

While we have seen sustained positive effects on the business as a result of changing nature of communications, the significant reduction in international travel continues to impact MNF’s global roaming business and domestic small business expenditure remains subdued. This offsets the strong gains in our recurring revenue and saw overall group revenue flat. Importantly, we see these as being temporary headwinds and expect revenue growth to recover as international travel resumes and there is improved confidence in the small business sector.

In FY21, MNF Group is expecting EBITDA of between $40 million to $43 million.

More reading

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and MNF Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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High-performing fund manager Wilson Asset Management (WAM) has revealed two ASX shares that it rates as buys within the WAM Research Limited (ASX: WAX) portfolio.

WAM operates several listed investment companies (LICs). Two of those LICs are WAM Capital Limited (ASX: WAM) and WAM Leaders Ltd (ASX: WLE).

One of the LICs is called WAM Research, which looks at smaller businesses on the ASX.

WAM describes WAM Research as a LIC that invests in the most compelling undervalued growth opportunities in the Australian market.

The WAM Research portfolio has delivered gross returns (that’s before fees, expenses and taxes) of 16.1% per annum since the strategy changed in July 2010, which is superior to the S&P/ASX All Ordinaries Accumulation Index return of 8.9% per annum.

These are the two ASX shares that WAM outlined in its most recent monthly update:

BWX Ltd (ASX: BWX)

BWX is described by WAM as a leading wellness company that sells natural beauty products throughout Australia, the US, Canada and the UK.

It owns and sells a number of different brands including Sukin, Andalou Naturals, Mineral Fusion and Nourished Life.

Last month, BWX announced that it had signed a 5-year, equity-linked strategic partnership with Chemist Warehouse, with the entire product range available online and an increased store presence in Australia, New Zealand and Ireland.

This new partnership will see BWX as a platinum supplier to Chemist Warehouse in exchange for issuing 881,613 shares, which equates to 0.6% of BWX’s share capital base, with potential future share issues based on performance targets.

WAM said that the partnership is expected to result in positive earnings per share (EPS) accretion for the ASX share within 12 months and is indicative of BWX’s opportunities for growth.

The fund manager is positive on BWX management’s ‘go global, go mainstream’ strategy, as the company now has 1.4 million total distribution points for all core brands globally and has forecast this to grow to over 2 million in FY22.  

Codan Limited (ASX: CDA)

Codan is based out of South Australia. It’s a business that’s involved in making equipment relating to communications, metal detection and mining technology for various groups like defence groups, governments and mining businesses for use in harsh environments.

The ASX share recently announced an acquisition called Domo Tactical Communications for $114 million. It’s a US business and it’s a wireless communications technology provider that has over 20 US government agencies as clients, as well as the UK, Canada, Australia and New Zealand.

The company expects that this acquisition will add to earnings. In the first 12 months of owning the business, Codan expects that Domo Tactical will generate $90 million of sales, $14 million of earnings before interest, tax, depreciation and amortisation (EBITDA) and $9 million of profit before tax.

WAM Research benefited from the Codan share price run up during February 2021 after its result release where sales grew 14% to $194 million and it made the biggest ever profit in its half-year result. Codan’s board grew the interim dividend by 40%.

More reading

• 5 things to watch on the ASX 200 on Monday
• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy
• Top brokers name 3 ASX shares to buy today
• Why the BWX (ASX:BWX) share price jumped 11% in February
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you looking for some ASX dividend shares to add to your income portfolio? 

Then you might want to take a look at the blue chip dividend shares listed below. Here’s what you need to know about them:

Wesfarmers Ltd (ASX: WES)

The first blue chip ASX dividend share to look at is Wesfarmers. It is the conglomerate behind a number of popular retail brands including Bunnings, Kmart, and Officeworks. It also owns a number of industrial businesses such as CSBP and Covalent Lithium.

Furthermore, it has a very strong balance sheet and the potential to add further value accretive acquisitions to its portfolio in the near future.

It was a strong performer during the first half of FY 2021. For the six months ended 31 December, Wesfarmers reported a 16.6% increase in revenue to $17,774 million and a 25.5% increase in net profit after tax to $1,414 million.

A key driver of this growth was its important Bunnings business. It reported a 24.4% increase in revenue to $9,054 million. This means the hardware giant contributes over half of its overall revenue.

One broker that was pleased with the result was Goldman Sachs. It has a buy rating and $59.70 price target, and is forecasting a fully franked FY 2021 dividend of $1.88 per share. Based on the latest Wesfarmers share price, this equates to a 3.7% yield.

Westpac Banking Corp (ASX: WBC)

Another blue chip ASX dividend share to buy could be Westpac. Like Wesfarmers, Westpac has been on form in FY 2021

Last month the banking giant released its first quarter update and revealed an impressive $1.97 billion first quarter cash profit. This was more than double the quarterly FY 2020 second half average cash earnings.

But perhaps the best part of the result was the bank reversing ~$500 million of COVID-19 related impairments. It made the move due to improving economic conditions and appeared to hint that more could be coming if conditions continue to improve.

Analysts at Morgans were pleased with the result and have put an add rating and $27.50 price target on its shares. In addition, the broker is forecasting a fully franked $1.32 per share dividend in FY 2021. Which, based on the current Westpac share price, represents a generous 5.4% dividend yield.

More reading

• ASX share market on watch: Goldman Sachs shares thoughts on inflation and interest rates
• Leading brokers name 3 ASX dividend shares to buy
• Will the ASX share e-commerce boom last?
• ASX 200 climbs, Westpac in the clear, Nine reveals a WIN-ning deal
• Morgans just added this ASX 200 share to its model portfolio

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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A couple of key figures at Goldman Sachs have shared their thoughts about inflation and interest rates. What could this mean for the ASX share market?

Josh Schiffrin, the global co-head of US and global interest rate products, and Brian Friedman, the global head of market strategies, has tried to shed some light about what’s going on.

What caused the market volatility in recent times?

Mr Schiffrin said that the recent volatility is down to the market looking at what the world will look like with COVID-19 vaccinations being rolled out and COVID-19 cases dropping.

He said that it’s no longer just about a reflation trade, but it’s now about the fact that the economy is recovering sooner than expected and what that means for growth and other knock-on effects.

Mr Friedman said that a lot of investor attention is now on central banks and what they will do in response to what’s happening. That change in thinking, combined with the stronger economy, will affect what assets investors want to buy.

What does that mean?

Mr Friedman said:

The future period of stronger growth and allowing for higher inflation calls for the market to be long real assets—equities, commodities and real estate—all of which have unlimited upside to growth instead of nominal assets. And as the economy and asset prices start to reflate, we expect to see higher volatility given the procyclical nature of Fed policy, and higher economic volatility emanating from enormous pent-up demand due to the pandemic and historically large fiscal packages.

He went on to say that as long as the 5-year US Treasury point of the yield curve is under control as break-even rates move higher, then that’s a large indication that the US Federal Reserve is staying dovish while growth prospects improve.

In Mr Friedman’s opinion, it is difficult to be negative about ‘risk’ assets if the economy’s growth is getting better and the Fed is remaining dovish. He is currently watching for news of infrastructure spending in the US.

What are some things to watch over the next couple of years for the US (and ASX) share market?

Mr Schiffrin said that Goldman Sachs is expecting that slow its bond buying in 2022 and finish by the end of 2022 or early 2023. After that, Goldman Sachs thinks that the Fed may start increasing the interest rate by 0.25% per quarter, probably starting in early 2024.

Mr Friedman thinks that the Fed wants to get the unemployment rate down and it won’t increase interest rates unless inflation becomes too high.

Interest rate sensitive ASX shares

There are lots of interest rate sensitive ASX shares that investors may keep their eyes on such as Macquarie Group Ltd (ASX: MQG) and Computershare Ltd (ASX: CPU).

Other businesses, like big banks, could also react to changing interest rates like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

More reading

• 2 blue chip ASX dividend shares in the buy zone
• Wilson Asset Management thinks these 2 ASX shares are a buy
• Leading brokers name 3 ASX dividend shares to buy
• Macquarie Group (ASX:MQG) is hungry for assets as its share price grows
• ASX 200 climbs, Westpac in the clear, Nine reveals a WIN-ning deal

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Friday the S&P/ASX 200 Index (ASX: XJO) finished the week in a positive fashion. The benchmark index rose 0.8% to 6,766.8 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to edge lower

The Australian share market looks set to edge lower this morning following a mixed finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the week 3 points lower this morning. On Wall Street on Friday night, the Dow Jones climbed 0.9%, the S&P 500 rose 0.1%, and the Nasdaq index dropped 0.6%.

Tech shares could fall

It could be a difficult day for ASX tech shares including Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) after a poor finish to the week on the tech-heavy Nasdaq index. This was driven by surging bond yields. The US 10-year treasury yield climbed to 1.625%, which is its highest level in over a year. As the local tech sector tends to follow the Nasdaq’s index’s lead, this doesn’t bode well for today’s trading session.

Oil prices drop

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week in the red after oil prices dropped on Friday night. According to Bloomberg, the WTI crude oil price fell 0.6% to US$65.61 a barrel and the Brent crude oil price dropped 0.6% to US$69.22 a barrel.

Gold price softens

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch on Monday after the gold price softened on Friday. According to CNBC, the spot gold price dropped 0.15% to US$1,719.80 an ounce. Despite this decline, the gold price still had its best week in seven weeks.

Quarterly rebalance

S&P Dow Jones Indices has announced its March 2021 Quarterly Rebalance. Six new companies will be added to the illustrious index on 22 March. Two companies joining the index are electronics products company Codan Limited (ASX: CDA) and investment platform provider Hub24 Ltd (ASX: HUB). The companies leaving the index include the underperforming Bravura Solutions Ltd (ASX: BVS) and Service Stream Limited (ASX: SSM).

More reading

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• 2 fantastic ASX shares with long runways for growth
• These were the best performing ASX 200 shares last week

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 Bravura Solutions Ltd and Hub24 Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Bravura Solutions Ltd, Hub24 Ltd, and Service Stream Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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