I hope you and your family are well and have had the chance to be outside to enjoy some summer weather. As we enter the fifth month of the global coronavirus pandemic, COVID-19 infection rates in many parts of Canada have slowed, and restrictions are gradually being lifted. Although it is likely to be many months before our lives and work resemble anything close to “normal,” the progress is encouraging.
Here is a brief update with some of the week’s developments and related thoughts.
Macroeconomic and market developments
· North American equity markets continued move higher, with investors gaining confidence from coronavirus vaccine trial developments and improving employment and economic data as businesses in several regions re-opened.
· The United States remained the country worst affected by COVID-19 globally, with some states such as Florida reporting record numbers of infections and deaths from the disease. As rates of infection remain controlled in most parts of Canada, the two countries agreed to extend the closure of the border for non-essential travel to August 21.
· The Canadian dollar strengthened against the U.S. dollar as the Bank of Canada kept its key lending rate on hold at 0.25%. The central bank forecasts a 7.8% decline in Canadian GDP this year as a result of the pandemic shutdown and indicated that rates would remain low “for a very long time.”
· Trade tensions between the U.S. and China heightened as President Donald Trump signed legislation to impose sanctions on China in response to its interference with Hong Kong’s autonomy.
How does this affect my investments?
Equity markets in many developed economies have recovered strongly in mere months since March’s pandemic-induced downdraft, despite uncertain economic conditions and many unknowns related to the virus itself. While the market recovery has been unpredictable, so too is it is impossible to know when the next downturn will occur. Studies, in fact, have shown that attempting to “time the market” by selling your investments before a downturn can be counterproductive, as investors often miss out on significant market gains after they have cashed out. Rather, adhering to a personalized long-term investment plan that reflects your objectives, such as the one we developed to meet your needs together, typically yields better results.
If you have any questions about your investment plans, I would be happy to discuss them with you. Please do not hesitate to contact me at 250-614-1366
Gilchrist Financial Team
Sources: CI Investments Inc., Bloomberg Canada, cnbc.com, Globe and Mail.