When COVID-19 vaccines began rolling out around the world in January, the world was hopeful that they could return to some semblance of normalcy. The World Bank Global Economic Outlook 2021 The report predicted a 4% expansion of the global economy, estimating that if the vaccination were deployed effectively, it would “trigger a surge in consumer confidence and ease pent-up demand.”
Now that we are almost halfway through the year, it is clearer to see how the vaccine rollout is affecting financial markets.
“Based on market trends, we see investors assuming that life will slowly continue to return to normal as the vaccine rollout continues, which will most likely prompt an increase in consumer confidence. The proof is that the S & P / ASX200 increased by 7.7% and that the American technology index (the Nasdaq) gained 6% this year ”. says Jessica Amir, senior market analyst at Bell Direct.
The vaccine has certainly been good news for the market. Investors have become more willing to look past the short-term challenges the pandemic still poses and appear to be looking to the future again. At first glance, the stock sectors hit hard by the pandemic quickly benefited from the vaccine rollout, with airlines and energy sectors getting a first boost. When Qantas announced that it expected positive cash flow in the second half of the year, although international travel is not yet back on the cards, their inventories jumped.
Although the vaccination program is in place around the world, many countries are still experiencing outbreaks of COVID-19, which means that the healthcare companies that produce the vaccines are still very active in the market. Exchange Traded Funds (ETFs) are an inexpensive way to access global markets and diversify your portfolio. You can trade ETFs through Bell Direct and gain exposure to multinational healthcare companies such as Pfizer, Johnson & Johnson and Moderna – which had their first profitable quarter in the first quarter of 2021 and recently announced a new deal with the Australian government to provide 25 million doses of the vaccine.
The slow rollout of the vaccine in Australia has caused consternation among the general public, with only about 8.5% of the 40 million needed doses currently being administered. But this prolonged deployment did not stop the labor market from recovering, and unemployment fell to a 13-month low of 5.5%. This indicates that as people earn more they can save more, which means that workers have more discretionary income to invest.
“With Australia’s household savings rate at an all time high, investors are flocking to the stock market to capitalize on companies that are performing positively in line with economic growth. The financial and mining sectors are two areas that investors should consider during this time, given that we are currently seeing banks and miners thriving. Ms. Amir added.
Tech stocks exploded during the peak of the pandemic, but recently fell again.
Afterpay is Australia’s largest tech stock and its shares have halved between February and now. Despite the drop, tech stocks appear to have rebounded, with Afterpay currently at $ 93.54, up from its May low of $ 84.50.
“It’s important to remember that markets move in cycles and the tech sector has already started to rebound from its monthly low in May. Investing should be approached with a long-term perspective, and for investors still committed to the industry, it would be wise to stay the course. It might also be a good time for investors and newcomers to ‘buy the trough’ and have access to the local tech darlings that are growing their businesses, before they hit their peaks. . Ms. Amir said.
It’s also worth looking further into tech stocks listed on global markets. The Asian tech market is expected to grow, mainly due to the strong online activity of its young, digital native population. One way to access this region is through the BetaShares Asia Technology Tigers ETF (ASX: ASIA), which offers exposure to 50 of Asia’s top tech and online retail stocks (excluding from Japan).
With over 230 ETFs now listed on the ASX, there is probably an ETF suitable for the theme you are looking for.
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