Webinar - Key market drivers for 2021
Damian Cilmi outlines the key takeaways from the recent fund manager insights webinar 'Key Market Drivers for 2021'.
A fascinating discussion with some of Australia’s leading fund managers with expertise across global and domestic equity markets and fixed interest gave some great insights into what investors can expect over the next 6-12 months
Despite the uncertainty that COVID-19 has brought to most countries globally, stronger than expected economic growth, low unemployment and signs of inflation are setting up for an interesting 12 months ahead, where the global economy has shifted from emergency settings to near full employment
US inflation has been running over 5% annualised. While some commentators point out the large contribution to used car prices is temporary, we are seeing higher prices across staples such as food and fuel. The market is divided on this topic and it will make for an interesting second half of 2021 where wage growth will be keenly observed. At our recent webinar, 79% of advisers expected inflation to be between 1-3% with 21% predicting an inflation rate over 3%.
Australian unemployment is now under 5% for the first time in 10 years and with such a strong number, the RBA is questioning the need for emergency and stimulatory monetary policy.
The 26% of respondents at the recent Praemium Panel session had correctly estimated that Australian tapering would commence this year with the RBA announcing a reduction in their bond-buying program from $5b to $4b per month
All eyes are now on the US with some Federal Reserve Members expecting interest rates to increase next year and most pundits expecting an increase by 2023. In preparation for this, tapering is expected to commence later this year. Just over a third of advisers attending our webinar expect a rate increase in the US (37%) with 44% predicting no tapering over the next year.
So what does this mean for investment opportunities? Well, there’s little optimism for credit, with 0% of our adviser community anticipating this will be the top-performing asset class. Almost two-thirds (65%) expect international equities to be the best performing asset class over the next year with 32% favouring Australian Equities.