How did Markets Perform in First Quarter of 2021?
April 2, 2021 | By - Neelam Motwani

How did Markets Perform in First Quarter of 2021?

What an eventful start to the first quarter of 2021! The United States welcomes its new President Joe Biden that holds a powerful accrual of USD1.9 trillion worth of relief package for all its citizens amid COVID-19 pandemic. 

The popular battle of COVID-19 vaccines versus COVID-19 variants also made an impact on the market. The hedge funds, the oil market, and major grizzly bear movement of the major economies of the world. On the other hand, first quarter of 2021 also welcomed the hope of normality in the global economy. Let’s have a look at some of the major volatile movements in the first quarter of this year. 

Major Market Shift in First Quarter of 2021

The oil market saw the best start of the year since 2005 holding a 25% gain in the price. Global stocks also witnessed a movement in the new highs, which is surprisingly very different from the movement last year. 

commodity market

The forecast also whispers that some of the stratospherically valued stocks might follow an opposite trend in the next quarter. Investors might see a disappointment in the movement of popular stocks like Tesla. But let’s get real! Bond Bears brought a major shake in the recent market. The government debt market, as a matter of fact, witnessed a worse run since the 2013 ‘taper tantrum’.

stock

While emerging markets outlook 2021 currency debt holders saw a trade down by 7%, US Treasuries and German Bonds followed a depreciation movement fall by 6 to 6.5%. Economists are raising bets on growth and inflation for the country after the approval of the relief package, while some are worried that the Federal Reserve might spook the reeling support for the country.

currency

The Second Coming After First Quarter of 2021

The second quarter of 2021 appears promising after last year’s false start especially in stock market 2021. The prospect of the sustainable reopening of the economy is a posibility in the next three months.

Inflation Pressure

In the next three months, the forecast states that the COVID-19 vaccination program will be able to cover almost 70% of the population in most developed economies. Such a start of positive vaccine progress along with the US fiscal stimulus has now gained the attention of the investors who were worried about the slow growth in 2020. It might also result in upward pressure on the interest rates on most of the banking industry in the globe. 

However, the inflation pressure and interest rates might take the next 12 months to increase to a significant point where the economies will also register a positive recovery from the lockdown outputs last year.

What does it mean in 2021 equity outlook, if you ask? Considering the overall situation and the speed of economic recovery, the broad-based inflation pressure is unlikely to emerge until 2023. In the year 2022, economists might witness premature liftoff in the US Federal Reserve. The first Funds rate hike likely to appear by early 2024 after the smooth liftoff.

Global Economic Recovery

Let’s consider the recovery of one of the most powerful economies, the United States. With USD1.9 trillion American Rescue Plan of 2021, the US recovery might take a supercharge speed as the lockdown restrictions will ease eventually. The stimulus package is equal to 8.4% of US GDP and is followed after the stimulus package of USD900 billion that was passed in December 2020.

USD1.9 trillion package

What does it really mean in stock market forecast next 6 months? It indicates that the country is leading the charge in the path of fiscal support and might become the fastest growing economy this year. 

However, the situation might not be true for the rest of the world. Only if there will be spillover effects of the stimulus package, other countries might hope for a faster recovery. However, according to the macroeconomic study, the stimulus package of the United States will likely boost the growth of stronger economies like Europe, China, and Japan by at least 0.5% points in the next 12 months resulting in over 1% point growth in the global GDP.

While economists are still monitoring the economic situation, 2021 might likely boost trading in the world. This will result in lifted economic growth. No one surely expected such devastating volatility in the history of economics, but the COVID-19 pandemic surely explained to the world the importance of PAUSE, not in just economic movement but also in people’s lives. Keep reading AlShorts, short news in 30 seconds, for the latest economic plans and bulletins across the world.

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