Article written by Russell Investments – Q4 2020

Global share markets made good gains in the December quarter, with the MSCI ACWI Index – Net returning 5.3% in unhedged New Zealand dollar (NZD) terms. In hedged NZD terms, the Index returned 12.3%. Much of the gains were driven by encouraging developments on the COVID-19 vaccine front, with several leading pharmaceutical companies announcing vaccines that proved to be more than 90% effective in combatting the virus. This saw investors pile into stocks on hopes that those countries hit hardest by the pandemic will soon be able to begin the process of (fully) reopening their economies. However, hopes of a return to normal any time soon were tempered somewhat by a late surge in new infections globally and the emergence of a new strain of the virus in the UK, which scientists warned spreads more quickly than others. Stocks also benefited from easing US political uncertainty after members of the Electoral College officially confirmed Joe Biden as the country’s next president and congressional leaders finally agreed a new stimulus package. Sentiment was further buoyed by news Britain and the European Union had reached a post-Brexit trade deal – albeit with just days to spare – and strong rebounds in US, Chinese and euro-zone growth. Limiting the advance was a further escalation in tensions between Washington and Beijing and some sobering comments from US Federal Reserve chairman, Jerome Powell, who said US economic activity remains “well below” pre-pandemic levels.

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NZ1-00168-2020-10-25 AP0085 – 4Q20 NZ Market Overview_V1D2_2101