|What a turbulent last few months the world has delivered us!
We’ve seen COVID-19 go close to disappearing, then make a strong resurgence and now work towards (hopefully) disappearing again. We’ve seen some places go back to near pre-COVID norms while other places have become even more extreme. It certainly has been unprecedented.
To give an update and recap from a financial markets perspective, it’s a reasonably similar story. Financial Markets around the world have all acted a little differently, depending on their exposure to the virus, or depending on their primary industry sectors.
Here in Australia, for example, markets have remained reasonably flat and consolidated between July and September, hovering between 6,000 – 6,200 points on the All Ordinaries. This is understandable, given our financial market are heavily weighted in banking and resource companies (banks have had a significant profit downturn, and exports have been down for the resource companies). Once the banks and resource companies see a bit more positivity, then we will likely see some strong recovery across the Australian Share Markets.
Compare this, however, to the United States. Their market has been extremely strong since the major COVID downturn in March. This is based on a couple of factors – firstly, their markets are heavily weighted in tech based companies. These are the companies that have profited considerably from people working from home, shopping online and using more online services in general. Additionally, the US Federal Reserve has been consistently printing money (quantitative easing) to try and ease the burden on households and prop up the economy. This is a very short-sighted approach, as it creates long term issues with inflation, however in the short term, it has kept their market and economy strong.
The rest of the world has reacted similarly to Australia, recovery around half of the market losses that occurred in March. This is because they have taken the longer, but more sustainable, road to recovery.
So what does all this mean? It means that whilst we continue to have uncertainty around not only COVID-19, but the flow-on economic impacts, we will likely remain in a period of consolidation, with not a great deal of substantial movement (US Excluded). However, once we start to see some health and economic recovery, it may be time to buckle the seat-belts and get ready for take-off.
From a more personal note, I wanted to reach out and let you know that we have recently moved offices into the Nelson Bay CBD. My office is now located on the corner of Stockton and Donald Streets in Nelson Bay, diagonally across from Woolworths. I look forward to seeing you next in our new office!
The information provided in this post must only be considered general advice. It has been prepared without taking into account any persons individual objectives, financial situation or needs. Before acting on anything in the article, you should consider its appropriateness to you, having regard to your objectives, financial situation and overall needs.