Market update – June 30, 2020

It has been a while since my last update, and while there has been a lot that has happened in the last few months, there has been a downward trend in overall market volatility. Since March 24th, 2020 we have three months of overall positive re-growth in the market. You should be able to see evidence of this when you receive your quarter 2 statements later next month.

As you are aware, we are still very much in unchartered territory in dealing with the COVID-19 situation and knowing what the long-term effects will be both in our daily lives and in the market.

Recent Market Developments:

• North American equities have seen some increased volatility in reaction to new record high numbers of COVID-19 infections in some US states. This has fueled fears of another lock down, potentially resulting in a renewed decrease in economic activity.
• There have been some positive indicators in the US recently with increases in consumer spending and new home sales.
• There could potentially be a second stimulus bill coming in the US
• Canada extends the Canada Emergency Response Benefit (CERB) for workers who cannot yet return to their jobs.
• Geopolitical tensions heightened between South and North Korea as well as India and China.

There are still many reasons why one would balance being optimistic and cautious in navigating the market going forward:

• A reason for optimism moving forward: Prior to this market downturn the US had a solid economic foundation that they did not have heading into the 2008 recession. This recent market downturn was caused by fear and shock to COVID-19 versus negative economic indicators in 2008. In response to COVID-19 we have also seen a global coordination of federal responses that will help the move toward economic recovery.
• Some reason for caution moving forward: Possibility of a second wave of infection leading to renewed lock downs. However, if countries enter a second wave being more prepared it could lead to less detrimental effects.  Heightened geopolitical tensions will also likely result in some market volatility should tensions continue.

As always, if you want to book a time to discuss your portfolios or accounts in any way, please give me a call.

Sincerely,

Nicole Rothe BSc, CFP®, EPC

Financial Planner, Manulife Securities Investment Services Inc. | Rothe Wealth Management

The opinions expressed are those of the author, Nicole Rothe, and may not necessarily reflect the views of Manulife Securities Investment Services Inc.

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