MARKET UPDATE

11 December 2020

The ASX200 index is currently at 6740 and continuing to recover from the COVID crisis. It was 12 months ago that we were in the grip of the COVID market crash, with the market losing 39% between 20th February and 23rd March 2020, where it bottomed out at 4,402.

Fast forward to 2021 and most economic sectors are recovering strongly. The outlook for this year is strong, but it hinges on the successful rollout of the vaccine. The biggest threat is considered to be a ‘mutant’ virus strain that’s resistant to current vaccines. Although the vaccines can be reprogrammed, and its likely we’ll need a booster each year, the logistics of getting a new batch out quickly could mean further economic shutdowns if the current vaccines aren’t effective.

Over the month of February the majority of Australian companies released their interim earnings, which covers the period of July – December 2021. These earnings will soon turn into dividends which will be paid to fund holders. Overall the reporting period was better than expected. Companies that did well include Afterpay, the banks, mining companies and electrical retailers such as JB HiFi and Kogan. Predictably those that didn’t do so well include Qantas and Flight Centre. These results highlight the uneven recovery from COVID.

We are seeing housing prices rebound strongly, especially in regional areas as people look for other options outside capital cities and the prospect of working from home, at least part time, looks like a permanent option. In Warrnambool the median price change has increased 9.6% over the last 12 months, which compares to a 4.3% rise nationally.

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