As part of our ongoing service at Aloni & Goh Portfolio Managers, we’d like to take this time to update you in response to the COVID-19 pandemic and volatility in the stock markets.
Read More
Equity markets made new highs in February after shrugging off initial concerns about COVID-19. However, as outbreaks in South Korea, Italy and Iran occurred, the markets sold off sharply. This risk-off process is still ongoing and will likely result in volatility over the next few weeks as the world watches how the pandemic develops.
Equities extended their gains for most of January, leading to overbought conditions. The coronavirus situation is providing an excuse for the bull market to cool off a little. At the moment, it is very unclear as to how serious the situation is and to what extent it will affect the global economy. We are inclined to think that this outbreak will be contained in due course, as with previous outbreaks, without serious damage to the equity markets.
The resolution of the preliminary U.S.-China trade deal provided the boost the U.S. equity market needed to confirm the breakout to new highs and embark on a new intermediate term uptrend. The Canadian market, however, is showing signs of sluggishness despite making new highs.
The TSX just managed to nudge into new all-time highs, but seems to be struggling in the bid to establish a new intermediate uptrend. We are optimistic that it will eventually find some momentum over the next week or so, during this seasonally strong period in the stock markets.
Equity markets continued to show strength in the face of negative factors such as recession fears, slowing earnings growth, trade tensions, Brexit and political concerns. A sharp selloff early in the month, the third selling squall this year, was easily overcome and markets are near the highs again.
We are positioned nicely for a transition from a corrective phase to a new leg up and our Canadian portfolio values have reached all-time highs.
Volatility returned to the equity markets with U.S.-China trade tensions coming back to the forefront. Recession worries amid plunging bond yields also caused equities to sell off during August. While the selling squalls were large and dramatic, the market showed signs of resiliency with its ability to rebound.
Equity markets continued to generally drift higher during the quiet months of summer trading. The imminent rate cut by the Federal Reserve is the main supporting factor counteracting expected slowdowns in corporate earnings growth and the economy, while the resumption of U.S.-China trade negotiations have also provided some market stability.
Equity indices are near or at highs again after Trump and Xi’s meeting at the G20 provided reassurances trade tensions would not be escalating in the near future. Whether this results in a convincing leg up in the secular bull trend remains to be seen.
