BT Investment Solutions’ (BTIS) monthly market commentary provides timely updates on market movements, addressing key economic events and their impact on portfolios.
Markets this month were hit by a mixed bag full of events, from energy pricing pressures, nuclear diplomacy, name calling in the US senate and the ’wait and see‘ credit crisis of China’s property giant, Evergrande.
We also witnessed the AUKUS alliance which was formed between Australia, the UK and the US which included the building of nuclear submarines for Australia, while France was left out in the cold.
Countries and markets around the world continued to react to the resurgence of COVID-19’s Delta variant. At home, Australia finished the month with 60% of its population under stay-at-home orders reporting record numbers of daily COVID cases.
The Delta strain continues to run rampant across Sydney, with case numbers continuing to soar and some form of restrictions expected to last for months. Throughout the rest of the world however, a dire situation is unfolding as Delta’s unprecedented virulence is forcing countries to reimplement restrictions and reassess their reopening strategies.
FY 2020/21 began as COVID-19 continued to rapidly spread throughout the world, severely impacting global economies. This unpredictable pandemic resulted in declining consumer spending and sentiment, culminating in the contraction of many major economies. However, by the end of the calendar year, there were signs of economic recovery following the successful development and distribution of COVID-19 vaccines.
With the continuing outbreak of COVID-19 in Melbourne and by the end of the month, Sydney was feeling the full force of the Delta variant. The resulting three-week lockdown has seen considerable pressure being placed on the domestic economy.
Over the course of May markets saw global inflation fears catalyse volatility. While the high vaccination rates across Europe and the US led to increased consumer sentiment, a rapidly deteriorating outbreak of COVID-19 throughout India sent shockwaves around the world.
April saw life in Europe, the UK and the United States slowly return back to what could be described as the new Covid-19 normal.
As the first quarter of the year ended, the impact of the COVID-19 pandemic on risk markets almost seemed non-existent. Over March we saw US markets return to all-time highs, further upgrades to the global economic outlook, additional US stimulus packages and central banks reaffirming monetary policy and inflation expectations.
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Information current as at 15 June 2020. © Westpac Financial Services Limited 2020.