Citi Personal Wealth Management

Market Outlook 2021
A New Beginning:
Investing in a Post-COVID World

Market Outlook: December 2020

Summary

Most equity investors likely experienced solid gains this year on the back of massive advanced economy monetary and fiscal stimulus. However, we think that most are likely to say good riddance to 2020 and ready for a new beginning with vaccines potentially coming to the global population’s rescue.

By no means are we out of the woods on COVID-19 with cases still rising across the U.S. and Europe (as well as many other economies), but financial markets often react ahead of forecasted events. While we are seeing regional lockdowns with loopholes (meaning the lockdowns are much less severe than in March and April), by spring of 2021 investors could be seeing a steady rollout of vaccines across the U.S. and other advanced economies. As advanced economies continue to recover, global trade volumes should rise sharply. Combined with a potential trade deal between the UK and the European Union and a new U.S. Administration that seems much more likely to use a multilateral approach to trade than tariffs (perhaps some tariffs are even removed), this should set the stage for increased capital expenditures and higher corporate profits, particularly in overseas markets. The latest projections from the International Monetary Fund suggest that world trade volumes in goods and services could rise by 8.0% year-on-year in 2021.