2020, a chaotic trading year, and 2021 one full of hope

Fears of the rapid spread of COVID-19 during the first part of the year caused stocks, gold and bonds to -initially- drop, also causing sharp swings in normally stable markets such as money market funds.

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But, more recently, a major stock market revival has occurred, along with a resurgent enthusiasm for investment that had not been seen in decades, all spurred by stimulus packages launched in the world's major markets, notably the US, later accompanied by the news about the successful development of various coronavirus vaccines.

In the last weeks of December, the world's main markets saw the indices being pushed to new all-time highs. The Dow Jones Industrial Average (DJI) and the S&P 500 ended 2020 with records.

These records were also seen in Europe, where Germany's DAX closed in record territory just after Christmas, and in Asia, where Tokyo's Nikkei hit a high seen almost 30 years ago, in the days of Super Nintendo.

The indices that stood out for their results during the just ended year are
Nasdaq +43,6%
Kospi +30,8%
S&P 500 +16,3%
Nikkei +16%
Shanghai Composite +13,9%
Dow Jones Industrial Average +7,2%
DAX 3,5%

Of course, when it comes to price growth, all those good news were overshadowed by the bizarre rise of Bitcoin, whose price went from $ 4,000 to more than $ 28,000 in nine months; without forgetting the Tesla papers, whose value grew 743% during 2020.

Aside from the "cryptocurrency," whose most extraordinary moves were seen in recent weeks, markets ended this chaotic year in relative calm, with few trades on Thursday, but enough to hit all-time highs.

In terms of raw materials, COVID hit the oil market hard, sinking crude to historical lows (in December 2019 it was close to US $ 62 but closed 2020 at 48.4). In April, the price of a barrel of oil even turned negative for the first time in history.

This collapse in material prices was to be expected, considering that much of the world economy went into recession … But as markets and factories reopened, those prices improved, which was noted with some basic products, highlighting materials widely used in industrial processes, such as silver (more than 47% improvement) and copper (about 26%). These and other industrial raw materials are expected to continue their recovery during 2021. Gold was another basic whose price improved significantly (+23.5%) in 2020.

For its part, the dollar fell to its lowest point in 32 months (on 12/30 it ended at 1.23), before recovering slightly to close 2020 at 1.2214 against the Euro.

The devaluation of the dollar is not necessarily bad news, of course, since it stimulates the market for export products and services from the US and represents a significant boost for emerging markets. And precisely, investors have been concentrating on emerging economies in recent months to take advantage of the relatively weak exchange rate gap of the dollar. A weak dollar also equates to low inflation, and that's good news for the consumer, which could spell another boost for stocks in 2021.

On the other hand, the currency situation weakens the dollar's leadership position in many ways, especially as a world reserve currency, a much-watched measure that has fallen to a level last seen in early 1996.

The detailed tendencies, if continued, can indicate where the investment trends could point in 2021, especially if the promises of massive anti-COVID inoculation are made, if early results are noticed (in or during the third quarter) and if the markets react with the realization in the reality, just as well as they have recently, only with what until now has been only hopes and good news of future potential …

Fuente: PT – THP