Global Market Overview – December 2020

Socially, December 2020 was always going to be one of the strangest ever experienced in the UK, with restrictions curtailing the usual holiday festivities. However, the continued shifting of exactly what the government’s social distancing policies entailed, meant that the month was even more disrupted than we had expected – with the bad news culminating in the identification of a new and more transmissible strain of COVID-19.

But despite the bad news and the chaotic Christmases, there is one overwhelming positive. When vaccinations began in December, it became clear that the problem of COVID-19 has changed from a huge, unknown problem into a more familiar series of problems involving vaccine production, vaccine distribution and vaccine adaptation. While these still aren’t easy or quick problems to solve, the human race has over two centuries of experience in dealing with them.

Markets focussed on the positive through December (with a few wobbles). Governments now know that stimulus and support doesn’t have to be forever, so will be prepared to tolerate a few more months. Companies know that consumers are ready to spend once allowed, and for those struggling industries such as airlines and travel, at least an end is in sight.

And of course, Brexit is done. Any deal was better than no deal from the market’s point of view, and that’s exactly what we saw. As we’ve noted many times, our portfolios are globally invested, so would have been reasonably protected from a no deal event. However, anything which reduces uncertainty in times like these is to be welcomed.

All major global equity markets saw gains in December, and once the Brexit news filtered through, the UK markets caught up quickly. Fixed income markets were also positive over the course of the month, although less so than equity markets.

Core views

The recovery is already happening… The world has never seen as much coordinated stimulus as in the past nine months. We believe this sets the stage for a strong economic recovery across the world in 2021. The return to growth will occur at slightly different paces in different places – much of Asia is already back on track, the US should have a vibrant start to the year, with Europe finishing strongly.

The virus won’t derail this growth… Lockdowns are unlikely to be as severe and as widespread as previously. At the same time the vaccine offers a concrete way to end this crisis. Looking at the long term and looking globally, there is more economic good news than bad news – despite how it can feel in the UK at the moment. Positive for credit and equity.


Investors should try to focus on the fact that investing in the stock market over the long term, is a powerful tool to preserve the purchasing power of their wealth and on ensuring that they have an appropriate asset allocation for the level of risk with which they feel comfortable. A disciplined approach to asset allocation and identifying good active managers who can navigate these conditions successfully remains of the utmost importance.

January 2021
With thanks to Seven Investment Management LLP for their views and market thoughts.
RiverPeak Wealth Limited

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