The biggest market shocks of H2 2020
Here, Money Management, rounds up the most impactful events of markets of the second half of the year. Click here to read the stories from the first half of the year.
September 2020: Australia officially enters recession
Even after even avoiding a recession during the Global Financial Crisis (GFC), Australia entered its first recession in 30 years in September after gross domestic product (GDP) shrank by 7% during the April-June quarter, the second consecutive quarter of negative growth after a 0.3% fall in the first quarter. As well as the COVID-19 pandemic, the country had been hurt by the bushfires at the start of the year with both events severely impacting travel and tourism, a big driver of Australia’s economy.
3 November 2020: RBA cuts rates for a second time
Following the first cut in March, the Reserve Bank of Australia (RBA) cut rates for a second time to a new record low, bringing them down from 0.25% to 0.1%. This brought Australia into line with other countries such as the UK and US although some countries had reached negative rates. RBA governor, Philip Lowe, said it was “extraordinarily unlikely” rates would move to negative but they would be unlikely to move higher for several years.
November 2020: Biden wins US presidential election
After a prolonged five-day process of vote counting, the Democratic Party nominee Joe Biden was named as the president-elect of the United States, beating the incumbent, Donald Trump. Markets were reassured by his victory as it was believed he would be a steadier president, even if some of his policies such as higher taxes on corporations and those earning over US$400,000 ($535,000) were not traditionally market friendly.
The S&P 500 rose 5.7% while the ASX 200 rose 10% during November.
10 November 2020: First successful COVID-19 vaccine trial
In the most-hoped for news of 2020, not one but three trials of COVID-19 vaccines were found to be successful. The first one on 10 November was Pfizer/BioNTech followed in quick succession by Moderna and the University of Oxford/AstraZeneca. Shares in these companies rose on the news while markets in general reacted positively in hopes of a return to normality. Stocks in sectors which had been hit by the pandemic such as travel, retail and energy also saw a boost after a difficult year.
Since the start of the year, the ASX 200 had managed to return to positive territory with gains of 3.4% to 9 December. This was less than the S&P 500, which returned 9% over the same period, but better than the FTSE 100 which lost 14.5%.
AUTHOR
Laura Dew
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