Market Update January 2021
Welcome to the January edition of the Market Update
Highlights:
- Globally there were over 85 million confirmed Covid-19 cases at the start of January and over 20 million in the United States alone.
- Democrat wins in the Georgia runoff election will give the incoming Biden administration more flexibility with economic policy and the structure of further stimulus.
- Stricter lockdown measures were implemented throughout Europe, including the move to tier 5 restrictions in England as the UK prepares for its vaccine rollout.
- US-China relations deteriorated as the US began enforcing new visa restrictions on Chinese party officials and investment bans on companies with Chinese military links.
- The RBA minutes for the December meeting revealed the board believes it will take some time for output in Australia to reach its pre-pandemic level.
Global economies
The global economy continues to recover as investors weigh the impact of further lockdowns against the optimism of vaccine rollouts and fiscal support.
US
A projected victory in the two Georgia Senate runoff elections has handed Democrats control of Congress and the White House, raising the prospect of higher taxes and big spending on a third coronavirus package.
Europe
The UK has been inoculating people with the Pfizer vaccine on an emergency basis and became the first country in the world to start deploying the AstraZeneca vaccine.
China
The Chinese economy continues to power along. Industrial production improved 0.1% to an annual rate of 7.0% in November and in line with expectations, boosted by fiscal stimulus measures, while year-on-year retail sales rose 0.7% to 5.0% (versus 4.4% expected).
Aasia Region
Japan’s September quarter GDP was upgraded from an annualised real 21.4% to 22.9%.
Australia
NSW is on high alert following a Covid-19 outbreak in Sydney’s Northern Beaches, while a new, more infectious strain of the virus has been identified throughout the country, including four in Victoria and one case of a quarantine hotel worker in Brisbane.
If you have any questions regarding this report or would like to discuss your portfolio, please contact me directly on 07 5528 0998.