We hope that you and your family are having a great start to the year 2021. The mild weather thus far has given way to Canadian winters with double-digit negative temperatures. Apart from the extreme weather, the stay-at-home orders is also keeping people largely indoors. While society has been troubled by the limits put on their mobility; the light at the end of tunnel is now visible with vaccine inoculations underway. The daily worldwide new infections have shown a declining trend over the past few weeks, dropping from ~750k-800k to ~600k at the time of this writing. Below we mention a few noteworthy developments over the last month.
Macroeconomic and market developments
In January, both the S&P 500 Index and S&P/TSX Composite Index continued their upward momentum from last month helped by the Democrats wresting control of the Senate from the Republicans.
A single party control over the House and Senate implies less bottlenecks to pass the much-awaited fiscal stimulus by investors. The Biden administration has indicated a package of ~$1.9 trillion to help the economy and curtail the pandemic. Expectations of a large stimulus bill have fueled the expectations of rising inflation.
The reflation trade saw the financials, industrials and energy sectors advancing during the first half of the month. The second half of the month saw the “stay-at-home” stocks recovering some lost ground as fresh lockdown orders gathered pace around the globe.
Alimentation Couche-Tard, the Canadian convenience store operator abandoned talks to acquire France’s Carrefour SA, a supermarket operator, after opposition from the French finance minister on concerns of control over food supply.
How does this affect my investments?
The stock markets are inherently volatile and short-term market movements are impossible to predict. Historically, market declines have been followed by recoveries and new highs. By staying invested, your portfolio will be well positioned to benefit from a recovery.
If you have any questions about your investment portfolio, your advisor at O’Farrell Wealth and Estate Planning would be happy to discuss them with you.
O’Farrell Wealth and Estate Planning