Global sharemarkets performed strongly in April


Performance update, April 2021

In summary…
 
Global sharemarkets performed strongly in April, continuing the positive sentiment that has existed for most of 2021 so far.  The three key themes for the continued strong performance are:
 

1.    The continued roll-out of the Covid-19 vaccine across the world;
2.    Better than expected results from US companies as many announced their annual results over April;
3.    An improved economic outlook – supported by a view that interest rates are expected to remain low for some time, and also the new government spending initiatives announced by President Biden in the United States.

In April, Global sharemarkets rose 4.0% across the board.  This was led by the United States market which returned 5.3% for the month.  Australia (+4.3%) and the UK (+3.8%) also performed well, while Europe (+2.5%) delivered a solid result.  The New Zealand sharemarket lagged the rest of the world, as it has for much of 2021, returning 1.4% over the month.  Likewise, emerging markets continued to trail developed markets, returning 0.04% for New Zealand investors.

April 2021 is a year on from when markets suffered when the Covid-19 virus negatively impacted investment returns.  As we look back a year on from the near market lows this time last year, global sharemarkets have returned 41.1% (currency hedged) over the last year.  Again, the US market has been one of the better performing markets, generating returns of 45.7% over the last twelve months.  Remember, this is relative to a low starting point, but it does show the positive market recovery from the lows in 2020.

Theme 1 – Covid-19 vaccine…


So far, around 8% of the global population has received one dose of the vaccine.  Within developed countries the UK is leading the charge at 51%, the US is at 44% and Europe is at 23%.  New Zealand and Australia (8%) are well behind.  Unfortunately, the number of cases of coronavirus has risen globally, which predominately reflects the devastating developments in India over the last two weeks of April.

Source: BlackRock Investment Institute, Our World in Data. 7 May 2021

Although economic activity contracted in Europe during the first part of this year, the economies of Europe are expected to return to positive growth over the months ahead as the rollout of the Covid-19 vaccine continues.  Europe is technically in a recession again, because economic growth also contracted over the last three months of 2020.


Theme 2 – Better US results…


US shares were propelled higher in April primarily by better-than-expected company earnings.  Of the 60% of S&P 500 companies that have reported their earnings, 87% have been above expectations by an average of 23%.  US economic data also remains very strong.  Over the March quarter the US economy expanded at an impressive 6.4% annualised rate.  The rate of growth in US economic activity is expected to peak later this year before slowing to a more sustainable level.


Theme 3 – An improved economic outlook…


April also witnessed further US Government spending plans.  In the latest announcement, President Biden confirmed his American Families Plan, involving $1.8 trillion in spending on childcare, education, and paid leave.  This will be partly funded by tax hikes, including an increase in the top income tax rate and an increase in capital gains tax rate for very high-income earners.  This package, along with the $2.2 trillion American Jobs Plan (which largely targets infrastructure spending), will be spread out over the next decade.  The $1.9 trillion spending package announced in February 2021 seeks to support US economic activity this year.

In somewhat negative news though, recent US inflation data is slightly stronger than expected.  Core inflation has jumped to 1.65% from 1.28% a month earlier, in part reflecting weak inflation data a year ago.  Although inflation is likely to increase over the medium-term, excess capacity in the global economy means the risks of an outbreak of inflation is low.  Accordingly, central banks in almost all developed countries have reiterated they are a long way from increasing interest rates, including New Zealand and Australia.

Against this background, fixed income markets around the world, including New Zealand, managed to deliver a positive outcome in April, partially recovering some of the losses from earlier in the year. New Zealand and US 10-year government bond yields were trading near 1.65% at the end of the month.  Commodities also performed well, rising 8.1%, with oil delivering a 9.8% return.  The New Zealand dollar finished the month at 71.62 cents versus the US dollar, up from around 70.00 cents at the beginning of the month.  Global Infrastructure and global property hedged to New Zealand dollars returned 3.8% and 5.7% respectively in April.


The outlook from here…


The outlook for markets remains fairly positive as the vaccine roll out gathers pace and interest rates remain low.  In addition, excess savings in the US, an increase in spending by US companies, solid economic growth in China and an increase in government spending around the world, bodes well for the global economy and sharemarkets over the medium-term.  Several risks remain, however, including disruptions to the Covid-19 vaccine rollout, rising coronavirus cases and a stronger than anticipated pick-up in inflation.

Previous investment market updates
 

March 2021

Global share markets increased by 4.2% in March 2021, compared to an increase of 2.7% in February 2021. The outlook for markets remains fairly positive over the medium-term as vaccine distributions are underway and global Covid-19 infections have begun to drop. There are still risks, however, as this positive outlook is anchored on timely vaccine delivery in 2021. Already there have been some hold-ups and export restrictions in Europe.

European markets increased by 6.2% for the month of March. The UK share market increased by 4.2% and the US market increased by 4.4%. Meanwhile, emerging share markets rose by 2.2% in the month.
The New Zealand share market lagged a bit but managed a 2.9% increase this month compared to last month’s decrease of -6.9%. The New Zealand 10-year government bond yields remained above 1.7% for most of March and closed off the month at 1.8%. The New Zealand government also required the Reserve Bank to consider house price inflation when setting its monetary policy.

Government bonds, both in New Zealand and internationally, remain a popular central bank tool to support economic stimulus. The Reserve Bank of New Zealand continued to keep interest rates relatively low. We expect the easy monetary policy set by New Zealand’s Reserve Bank and overseas central banks to continue for the foreseeable future. Central banks have indicated that in almost all developed economies, we are a long way from interest rate hike discussions.

We can expect the market ups and downs to continue for some time. It’s helpful to remember that KiwiSaver is an investment, and market movements are a normal part of investing. It’s important to keep your financial goals in mind when you’re thinking about investments, including your KiwiSaver account. That’s why making sure you’re in a suitable fund is important, and if you are, hang in there, as for most members KiwiSaver is a long-term investment.
One of the benefits of being with a full-service provider like AMP is that we have a team of experienced advisers who can help you make sense of what’s going on. We can also talk to you about getting a plan in place to help you get on track with your KiwiSaver – we’re here to help.

You can view returns for the AMP KiwiSaver Scheme here. You can view returns for the NZ Retirement Trust here.

February 2021

Global share markets had better returns in February

Global share markets increased by 2.7% in February 2021, compared to a 0.8% decrease in January 2021. The outlook for markets remains fairly positive over the medium-term as vaccine distributions are underway and global Covid-19 infections have begun to drop.

European markets increased by 3% for the month of February. The UK share market increased by 0.3% and the US market increased by 2.8%. Meanwhile, emerging share markets rose by 0.8% in the month.

The New Zealand share market on the other hand, fell by -6.9% with larger stocks being the hardest hit. This was impacted by the New Zealand 10-year government bond yields rising above 1.5% for the first time since early 2020, and closed off the month at 1.9%, the highest they have been since early 2019.

Government bonds, both in New Zealand and internationally, remain a popular central bank tool to support economic stimulus. The Reserve Bank of New Zealand continued to keep interest rates relatively low. We expect the easy monetary policy set by New Zealand’s Reserve Bank and overseas central banks to continue for the foreseeable future. Central banks have indicated that in almost all developed economies, we are a long way from interest rate hike discussions.

We can expect the market ups and downs to continue for some time. It’s helpful to remember that KiwiSaver is an investment, and market movements are a normal part of investing.

It’s important to keep your financial goals in mind when you’re thinking about investments, including your KiwiSaver account. That’s why making sure you’re in a suitable fund is important, and if you are, hang in there, as for most members KiwiSaver is a long-term investment.

One of the benefits of being with a full-service provider like AMP is that we have a team of experienced advisers who can help you make sense of what’s going on. We can also talk to you about getting a plan in place to help you get on track with your KiwiSaver – we’re here to help.

You can view February's returns for AMP KiwiSaver Scheme here.

You can view February's returns for the NZ Retirement Trust here.

January 2021

Global share markets dropped in January

Although global share markets decreased by -0.8% in January 2021, the outlook for markets remains fairly positive over the medium-term as vaccine distributions are underway.

European markets decreased by -2.0% for the month of January. This was due to concerns about the Covid-19 viral variants being detected, and a stricter wave of lockdowns occurring in Europe. The UK share market decreased by -0.8% and the US market decreased by -1.0%.

Meanwhile, emerging share markets once again produced strong monthly returns and rose by 3% in the month. The New Zealand and Australian share market rose by 3.0% reflecting an overall positive New Zealand investor sentiment.

With the start of 2021, numerous economies are seeing many of their financial support programs end. There is still an array of risks in the medium-term as expectations are anchored on vaccine delivery in 2021.

Government bonds, both in New Zealand and internationally, remain a popular central bank tool to support economic stimulus. The New Zealand 10-year government bond yields rose above 1% for the first time since March 2020, lifting to 1.12% in January. This trend has accelerated in the first week of February.

The Reserve Bank of New Zealand continued to keep interest rates relatively low. We expect the extremely easy monetary policy set by New Zealand’s Reserve Bank and overseas central banks to continue for the foreseeable future. Central banks have indicated that in almost all developed economies, we are a long way from interest rate hike discussions.

We can expect the market ups and downs to continue for some time. It’s helpful to remember that KiwiSaver is an investment, and market movements are a normal part of investing.

It’s important to keep your financial goals in mind when you’re thinking about investments, including your KiwiSaver account. That’s why making sure you’re in a suitable fund is important, and if you are, hang in there, as for most members KiwiSaver is a long-term investment.

One of the benefits of being with a full-service provider like AMP is that we have a team of experienced advisers who can help you make sense of what’s going on. We can also talk to you about getting a plan in place to help you get on track with your KiwiSaver – we’re here to help.

You can view January's returns for AMP KiwiSaver Scheme here.

You can view January's returns for the NZ Retirement Trust here.

December 2020

GLOBAL SHARE MARKETS WERE STRONG AGAIN IN DECEMBER

With the roll-out of several vaccines around the world, global share markets increased by 3.5% for the month, despite a resurgence of Covid-19 infections in some large economies.

European markets rose by 2.3% for the December month. The UK share market rose by 4.6%, despite Covid-19 lockdowns and last-minute trade negotiations at the end of Brexit transition period. This is a surprise given the deteriorating Covid-19 situation in the United Kingdom due to a new viral variant. Meanwhile, emerging share markets once again produced strong monthly returns and rose by 7% in the month.

The US share market rose by 3.1%. Political uncertainties remained, leading up to the eventual departure of Donald Trump from office, before President-Elect Joe Biden is inaugurated on 20 January 2021. As the holiday season advanced, investors generally focussed more on positive developments than on political issues.

The New Zealand share market rose by 2.6%, while the Australian share market rose by 2.5%. Although the New Zealand share market did not rise as much as the global share market, it’s growth still reflected an overall positive New Zealand investor sentiment.

The Reserve Bank of New Zealand continued to keep interest rates low. The New Zealand dollar rose more than 2.5% against the US dollar, reflecting the decreasing likelihood that the Reserve Bank will introduce a negative Official Cash Interest rate in 2021.

Government bonds, both in New Zealand and internationally, remain a popular central bank tool to support economic stimulus. We expect the extremely easy monetary policy set by New Zealand’s Reserve Bank and overseas central banks to continue for the foreseeable future. Monetary authorities do not want to risk reducing activity in their economies already hit hard by demand and supply shocks arising from Covid-19.

We can expect the market ups and downs to continue for some time. It’s helpful to remember that KiwiSaver is an investment, and market movements are a normal part of investing.

It’s important to keep your financial goals in mind when you’re thinking about investments, including your KiwiSaver account. That’s why making sure you’re in a suitable fund is important, and if you are, hang in there, as for most members KiwiSaver is a long-term investment.

One of the benefits of being with a full-service provider like AMP is that we have a team of experienced advisers who can help you make sense of what’s going on. We can also talk to you about getting a plan in place to help you get on track with your KiwiSaver – we’re here to help.

You can view December's returns for the AMP KiwiSaver Scheme here.

You can view December's returns for the NZ Retirement Trust here.

November 2020


GLOBAL SHARE MARKETS WERE EXCEPTIONALLY STRONG IN NOVEMBER.

Despite a resurgence of Covid-19 infections in some large economies, with vaccine prospects improving, global share markets increased by 12% for the month.

European markets rose by 18% for the November month, its strongest performance on record. The Dow Jones Index recorded its largest one-month rise since early 1987 with the US share market up by 11%, after confidence improved following the Presidential election as political leaders in the US started to work together.

The UK share market rose by 12.4% for the month despite Covid-19 lockdowns and Brexit looming around the corner. Meanwhile, emerging share markets managed a 9.3% gain.

The New Zealand market on the other hand rose by 5.6% for the month while the Australian share market rose by 10.2%. Despite the New Zealand share market not rising as sharply as the global share market, it still reflected an overall positive New Zealand investor sentiment.

The Reserve Bank of New Zealand continued to keep interest rates low. The New Zealand dollar rose more than 6% against the US dollar reflecting the decreasing likelihood of the Reserve Bank introducing a negative Official Cash Interest rate in 2021. Government bonds, both in New Zealand and internationally, remain a popular central bank tool to support economic stimulus. We expect the extremely easy monetary policy set by New Zealand’s Reserve Bank and overseas central banks to continue for the foreseeable future, as monetary authorities do not want to risk reducing activity in their economies already hit hard by demand and supply shocks arising from Covid-19. We can expect the market ups and downs to continue for some time. It’s helpful to remember that KiwiSaver is an investment, and market movements are a normal part of investing.

It’s important to keep your financial goals in mind when you’re thinking about investments, including your KiwiSaver account. That’s why making sure you’re in a suitable fund is important, and if you are, hang in there, as for most members KiwiSaver is a long-term investment.

One of the benefits of being with a full-service provider like AMP is that we have a team of experienced advisers who can help you make sense of what’s going on. We can also talk to you about getting a plan in place to help you get on track with your KiwiSaver – we’re here to help.

You can view November's returns for the AMP KiwiSaver Scheme here.
You can view November's returns for the NZ Retirement Trust here.

October 2020


GLOBAL SHARE MARKETS WERE WEAKER FOLLOWING THE RESURGENCE OF COVID-19 IN EUROPE AND THE US ELECTIONS.

Global share markets declined by 3% for the month. The resurgence of Covid-19 infections in Europe and BREXIT negotiations contributed to this decline. Moreover, with the unresolved US fiscal stimulus package before the US presidential election, investors were left disappointed which further contributed to a weaker overall market return.

The European markets were the weakest, dropping by 7.3% for the month due to the resurgence of Covid-19. The US market dropped by 2.7% for the month, signalling disappointed investor sentiments that the US fiscal stimulus package plan had not been concluded by US politicians. Meanwhile, emerging markets managed a 2% rise. The New Zealand market on the other hand, was more positive and rose by 2.9% while the Australian share market rose by 2.0% for the month. This reflects positive New Zealand investor sentiments.

Central banks continued to keep interest rates low, reflecting concerns about the economic impact of Covid-19 with still no recent updates on major vaccine progress. Government bonds, both in New Zealand and internationally, remain a popular central bank tool to support economic stimulus. We expect the extremely easy monetary policy set by New Zealand’s Reserve Bank and overseas central banks to continue for the foreseeable future, as monetary authorities do not want to risk reducing activity in their economies already hit hard by demand and supply shocks arising from Covid-19.

We can expect the market ups and downs to continue for some time. It’s helpful to remember that KiwiSaver is an investment, and market movements are a normal part of investing.

It’s important to keep your financial goals in mind when you’re thinking about investments, including your KiwiSaver account. That’s why making sure you’re in a suitable fund is important, and if you are, hang in there, as for most members KiwiSaver is a long-term investment.

One of the benefits of being with a full-service provider like AMP is that we have a team of experienced advisers who can help you make sense of what’s going on. We can also talk to you about getting a plan in place to help you get on track with your KiwiSaver – we’re here to help.

You can view October's returns for the AMP KiwiSaver Scheme here.
You can view October's returns for the NZ Retirement Trust here.

Important information

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The information included in this article is of a general nature and is not a substitute for financial or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. For financial advice, we recommend you contact your Adviser or if you don't have an Adviser, contact us on 0800 267 263 and we can put you in touch with one.

AMP KiwiSaver Scheme
AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme (the 'Scheme'). The Supervisor of the Scheme is The New Zealand Guardian Trust Company Limited.
For more information, download a copy of the AMP KiwiSaver Scheme Product Disclosure Statement and Fund Update Booklet, which have been lodged on the Scheme's offers register entry at companiesoffice.govt.nz/disclose.

New Zealand Retirement Trust
For more information, download a copy of the NZRT Product Disclosure Statement (Workplace or Personal sections) and Fund Update Booklet. AMP Wealth Management New Zealand Limited is the issuer and manager of the New Zealand Retirement Trust. The Supervisor is the New Zealand Guardian Trust Company Limited.