Market Watch: March 2021
What a decade the last twelve months have been! This time last year, the Pandemic was quickly changing from something that was happening on the other side of the globe to something very real in our community. The World Health Organization had just officially labelled COVID-19 a pandemic. On March 12th, 2020 (now known as Black Thursday) circuit breakers were triggered on the stock market during the worst single-day percentage drop since 1987. A few days later, at what was in hindsight the point of maximum uncertainty, Central Bankers stepped in around the world in an unprecedented way to prop up global markets and governments began the largest scale economic intervention since WWII.
As we move into the second quarter of 2021, there are still uncertainties about what lies ahead, however, there are some solid reasons for investors to feel optimistic. Vaccines are being shipped at a record pace, and around the world, people are rolling up their sleeves to get the shot. While many Canadians are in lockdown for the second time, the end may be in sight. The first wave of vaccinations has taken place, in communities across Canada, and more are scheduled in the coming months.
Annual events are once again being planned for later this year and people will gradually return to many of the activities they enjoyed pre-pandemic such as outdoor concerts, live theatre, sports events, attending conferences, and travelling to visit family and friends. This increased activity, and supplemental spending, will boost the economy here at home, and in countries around the world. As businesses were shuttered and people stayed home much of last year, global spending decreased and as a result, bank balances increased. It is estimated that going into 2021, Americans have close to $2 trillion in extra cash saved. As the economy re-opens, spending is expected to surge and that will fuel economic growth.
The World Bank estimates global growth of 4%, and the latest world economic output growth projections, from the IMF, estimate 5.5% in 2021. The IMF project growth in the U.S. to reach 5.1%, 4.2% in the Euro area, 4.5% in the UK and 3.6% in Canada.
In the United States, on January 27, the Federal Reserve pledged to keep interest rates at its current near-zero level until there is a full economic recovery from the pandemic-induced recession. In Canada, the governing council of the Bank of Canada reiterated its commitment to keeping policy interest rates, at their lower bound level, to maintain their target 2% rate of inflation.
We are not out of the woods yet! Markets will continue to be volatile for some time and if we learned anything from 2020, it’s that life and economies are hard to predict. One thing is certain, however, a broadly diversified portfolio of investments offers protection from market volatility. It’s also important to stay invested and focus on your investment goals. Our team is here to help. Should you have any questions regarding your portfolio, please do not hesitate to reach out.
As always, we are greatly appreciative of your business and your loyalty. It is our hope that you and your family stay safe. We would also like to thank you for your continued trust and for the opportunity to assist you in working toward your financial goals.
The information in this article is derived from various sources, including CI Global Asset Management, Financial Post, CNBC, Wealth Professional, and Reuters as at various dates. Index information was provided by TD Newcrest and PC Bond, and all quoted equity index returns are on a total return basis (including dividends). This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources and reasonable steps has been taken to ensure their accuracy. Market conditions may change which may impact the information contained in this document. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.