Diversified investors weather COVID-19 storm; macro investment outlook bright

June 1, 2022
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Despite COVID, a recession and a 37% drop in the Australia S&P/ASX 200 stock market index between February and March 1, many commentators agree 2020 was not as bad for diversified investors as many had feared.And the year ended with a bang. The S&P/ASX 300 index — comprising the ASX 200 plus 100 smaller-cap companies — gained almost 14% over the December quarter.This pushed its return for the 2020 calendar year into positive territory, at +1.7%.Among the reasons cited for the better-than-expected outcome in 2020 are:

  • the federal government’s economic support package (most notably JobKeeper);
  • debt forbearance schemes that saved borrowers from foreclosure;
  • record-low cash rates, which have helped borrowers service their loans; and
  • Australia’s handling of the pandemic, which resulted in fewer lockdowns than elsewhere.

Australian shares outperformed international shares in the December 2020 quarter, reversing the trend of the previous quarter.Markets worldwide rallied hard in November following news of the positive results of the Covid vaccine phase-3 trials and the outcome of the US election.Cyclical sectors and industries that had previously suffered relatively weak performance outperformed significantly, while technology stocks underperformed.

2021 Outlook

Heading deeper into 2021, there are reasons for optimism, including:

  • the rollout of COVID vaccines worldwide, which may help developed countries reach herd immunity in the second half of the year
  • untapped economic stimulus funding by governments worldwide and high saving rates, which may boost consumer confidence and potentially encourage consumer spending
  • a more predictable and stable US administration led by Joe Biden.

That said, the Australian economy may experience some turbulence in the months ahead, including after March 28, when JobKeeper is scheduled to end.However, the combination of improving global growth and low interest rates bodes well for growth assets generally this year. Time will tell.If you have any questions or concerns about your finances, or would like some advice or a second opinion, get in touch with Strategic Wealth Planners today.*The Market Herald , 2020, Trading in a pandemic: how the S&P/ASX200 fared during 2020This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual’s personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

June 1, 2022

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