The multi-year bull market came to an abrupt halt in 2020, as the COVID-19 pandemic brought global growth to a standstill sending share markets lower. However, as central banks swiftly cut interest rates and ramped up quantitative easing programmes, and with accelerated progress on a vaccine, a majority of first-quarter losses were erased in just a few months.
As the calendar turns, our ANZ Investments team looks at some key themes heading into 2021.
1. A healthy bounce in global growth
As we look ahead to 2021, we are optimistic on the outlook for global growth and expect a healthy return as the global economy claws its way back towards pre-COVID levels.
The vaccine rollout will be the focal point of the recovery, but the increasing likelihood of fiscal stimulus will further strengthen the case for a strong recovery.
2. Long-dated bond yields in the US look to have bottomed
After tumbling to record-lows in March, long-dated bond yields in the US stabilised and began to move higher.
The combination of more fiscal stimulus and growing inflation expectations should see these long-dated yields continue to trend higher.
3. What New Zealand looks like in a post-COVID environment
After stemming off a substantial spread of COVID-19, the New Zealand economy (domestically at least) was able to reopen after a relatively short lockdown.
However, as the global economy catches up, New Zealand will face some challenges around when and how to re-open its borders.
Another challenge for New Zealand will be central bank policy. The Reserve Bank of New Zealand has hinted that negative rates could be on the cards. While a sluggish recovery may see further accommodative policy, the prospect of negative rates has drawn criticism for its role in rising asset prices – most notably the domestic property market.