Economy and Market Update Feb 2021

Economy and Markets Overview: February 2021

Economy and Market Update Feb 2021

Economy and Markets Overview: February 2021

It’s February, the kids are back at school and the nation is getting back to business. It’s still not business as usual, but with the vaccine rollout about to begin there is a growing sense of optimism.

International Markets

There was a sense of relief on the global economic front in January as Joe Biden was sworn in as US President.

Financial markets rallied on expectations of more US government financial stimulus and a stronger focus on containing the COVID-19 health crisis.

There were also positive economic signs from our other major trading partner, China where a V-shaped recovery is underway.

China’s economy grew by 2.3% in 2020, the best performance of any major economy even though it was China’s slowest growth since 1976.

Australian Markets

Here in Australia, there were also signs of a cautious economic recovery. Consumer confidence hit a 14-month high in January, due to our success in dealing with the pandemic and supporting jobs.

The ANZ-Roy Morgan consumer confidence rating hit 111.2 points, just below its long-term average of 112.6.

Unemployment fell from 6.8% to 6.6% in December, a time when businesses typically hire casual staff for the Christmas-summer holiday rush.

Retail trade fell 4.2% in December but was still up 9.4% over the year. Inflation remains weak, with the consumer price index (CPI) up 0.9% in the December quarter and also up 0.9% in 2020 overall.

The exception is house prices, up 3% in 2020. This was reflected in the value of new home loans which rose 5.6% in November due to record low interest rates and government policy initiatives. The Aussie dollar finished the month slightly lower at US76¢.