THOUGHTS FROM THE DEALING DESK
The ASX 200 ended the year down just over 100 points for year but traded in a 3,000-point range from its highest to lowest point throughout the year . Given the sharpest sell off the market has ever seen in March , we saw a V shaped recovery to June as tech and retail stocks with an online channel lifted the market . This is a theme likely to continue into 2021 ; with online retail stocks getting a further boost if they report continued strong sales growth figures for the Christmas period . There were a number of online retail IPO ’ s in the last quarter of 2020 the biggest being Adore Beauty .
The pandemic has certainly accelerated the growth of online shopping but the proof will be how sales hold up as the stimulus starts to be withdrawn . This brings the main story for the market in 2020 into focus , the unprecedented global stimulus response . Equity strategists like many other market commenters did not foresee the effect or size of the stimulus packages . Forecasts were for a U or W shaped recovery based on previous downturns and caution remained , awaiting the next market sell off to new lows as previous downturns indicated .
This caution was evident in the response of many companies in heavily effected sectors , such as Travel and Property , undertaking capital raisings with the frequency of new capital-raising announcements reaching almost GFC levels . One sector that raised capital and cut dividends was the banking sector . One of the main reasons the market traded in a narrow band from July to November was the slow recovery for the banking sector . As economic data improved in the last quarter of 2020 , we saw a rotation from growth stocks such as Techs back into the banks and energy sector . With interest rates at historical lows and the likelihood of bank provisions reducing , a number of commentators highlighted the value trade as a theme for 2021 .
The first quarter of 2021 could again see some weakness in markets particularly if we see more national lockdowns such as the one recently announced in the UK . A new incoming US administration could also push for wider US lockdowns , which could see profit taking in US markets from their current record highs . With a number of vaccines now deployed across the globe , forecasters remain bullish for the market in 2021 . As the northern hemisphere comes out of winter in the second quarter of 2021 and the vaccines start to take effect , we could see some form of normality return .
Associate - Head of Dealing Desk jelgar @ burrell . com . au ( 07 ) 3006 7232
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