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Market rebound continues in May

Published June 2020

As more economies re-open after several months of lockdowns, the ANZ Chief Investment Office reviews recent market movements. 

Global equity markets continued their upward trend in May as investors were buoyed by further easing of lockdowns. The initial signs of success in human trials of a COVID-19 vaccine also helped investor sentiment.

The US S&P500 Index finished the month only 10% lower than its February peak. Returns on global shares continued to improve as well.

In the domestic market, Australian shares climbed again — led by bank and resource stocks — gaining 4.6% in May as lockdown restrictions began to lift. Higher commodity prices also boosted earnings expectations in gold, energy and iron ore companies.

The Australian dollar continued its rise against the US dollar, the Euro and the Japanese Yen.

In commodity markets, the price of West Texas Intermediate crude oil rose 88% in May — its largest ever monthly gain on record. However, it still ended the month around 45% lower than its January high.

Both the US and European central banks continued their aggressive quantitative easing programs — the ECB purchased more than €125b of government and corporate bonds in May.

In the meantime, economic data remained mostly negative in May. Official figures showed US unemployment rose to 14.7% in April — the highest level in post-war history. Approximately 10 million jobless claims were filed during the month.

US manufacturing data continued to show weakness in May, despite a positive increase from April. Similarly, US Q1 corporate earnings fell 14% compared to Q1 2019 — with financials, energy and consumer discretionary the worst hit sectors.

In the UK, Q1 GDP fell 2.0% quarter on quarter, its worst reading since 2008.

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Markets rebound strongly in April

With many countries gradually easing their lockdown restrictions, we’d like to share this review of recent market movements from the ANZ Chief Investment Office.

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