Market Update May 2021
“As yet, the wind is an untamed and unharnessed force; and quite possibly one of the greatest discoveries hereafter to be made, will be the taming and harnessing of it” (Abraham Lincoln)
🔷 April has now come to an end. Last month I spoke about the S&P likely to breach 4,000…this happened early in the month and with the exception of the Nikkei all other markets continued on their upward trends, data being
| Apr | 2021 | |
|---|---|---|
| S&P 500 | +5.3% | +11.3% |
| Nikkei | -2.1% | +5.0% |
| FTSE | +3.8% | +7.9% |
| MSCI W | +4.6% | +9.3% |
| SSE | +0.1% | -0.8% |
| EM50 | +1.8% | +3.9% |
🔷 And on the currencies, after a good start to the year, the USD was giving some of its 2021 gains back in April …data being
| Apr | 2021 | |
|---|---|---|
| GBP | -0.2% | -1.5% |
| EUR | -2.5% | +1.3% |
| JPY | -1.2% | +5.7% |
| AUD | -1.9% | +0.0% |
| CNY | -1.4% | -0.8% |
🔷 So the markets continue to gain with the S&P once again being the top performer with over 5% growth in April.
🔷 A lot is made these days (and rightly so) of the S&P 500 being a play on the tech giants with these companies occupying greater percentages of the overall index. Quarter one earnings for these companies beat market expectations by some way and we saw Facebook, Apple and Google all gaining around 10% in April. This undoubtedly has an effect on the market’s overall performance but tech is not alone in seeing growth.
🔷 Consumer Discretionary was a sector which actually has outperformed tech so far this year and these gains look set to continue. The pandemic is entering different stages around the world but the main global economic drivers such as US, Europe, China are all now well on the road to recovery through vaccination programs. This long weekend in the UK for example is finally allowing people to go out and spend some money. For the past 15 months with all the limitations, spending has been curtailed. Generally the consumer has saved more than usual and is ready to inject that back into the economy though spending. Whilst some aspects of life such as holidays may still be a little way off, steps are moving in the right direction and some normal spending will resume.
🔷 Employment also continues to increase with the latest figures out of the US showing the rate is down to 6% from a high of 14% just 12 months ago. The IMF who always lean on the side of caution announced that they expect 6% growth in US this year and over 8% in China, so all positive for the world’s two largest economies.
🔷 Many factors are pointing towards a post pandemic boom for economies. The feel good factor alone that we can revert back to being the social beings we are is enough to inject optimism and with optimism comes economic growth.
🔷 As far as the areas to look out for, the Biden presidency so far has been talking up a huge budget in respect of investments in new technologies and fighting climate change. Quite frightening that these days when we hear of stimulus packages its no longer billions of dollars but trillions
🔷 Investments positioned in these sectors for me have the greatest growth potential. Well managed funds that buy innovative companies with a focus on biotechnology, AI and sustainability both in manufacturing and energy is where my money is going.
🔷 Government spending globally in these areas simply has to increase and the beneficiaries will be these companies….and of course you if you buy them….