US Stocks In 2020 And The Prospects For 2021

  • 2020 has been a torrid year for stock markets globally
  • Fiscal and monetary stimulus rescued investors from a brutal bear-market
  • Digital transformation has accelerated and fortunes of the technology sector with it
  • With mass-vaccination still some way off, 2021 will see many trends continue

The US stock market is making all-time highs. It has been a torrid year. The 35% shakeout in the S&P 500, seen in March, turned out to be the best buying opportunity in several years. The market recovered, despite the human tragedy of the pandemic, fuelled by a cocktail of monetary and fiscal stimulus. When news of the rollout of a vaccine finally arrived in November, apart from a renewed rise in the broad market, there was an abrupt rotation from Growth to Value stocks. Value ETFs saw $8bln of inflows during November, there was also a weakening of the US$ and resurgence of European stocks. This was not necessarily the sea-change anticipated by many commentators, by the start of December, technology stocks had resumed their upward march.

November marked some market records. It was the strongest month for the Dow since 1987 and the best November since 1928. European stocks rose 14%, their best monthly gain since April 2009 – that headline-grabbing performance needs to be qualified, European indices remain lower than they began the year. For Japan’s Nikkei 255, the 15% rise marked its most positive monthly performance since January 1994, whilst for Global Equities, which returned 12.7%, it was the best month since January 1975.

Other financial and commodity markets also reacted to the vaccine news. OPEC agreed supply reductions helping oil prices higher, although Brent Crude remains around 22% lower than it started the year. The larger issue for stock markets is the logistical challenge of delivering the vaccination, this will test the healthcare systems of every country on the planet. The OPEC deal may fray at the edges, demand for oil could arrive later than anticipated. Nonetheless, risk assets have generally benefitted whilst both gold and silver have remained range-bound. After their strong rally in the summer, precious metals seem to have had their time in the sun. Interestingly, Bitcoin appears to be dancing to a different tune. Over the past two months, it has risen more than 120%, breaking the previous highs of December 2017 to breach $28,000.

1 2 3 4
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.