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July 2020 Portfolio Management Team Update

Home News & Commentary July 2020 Portfolio Management Team Update
Elvis Picardo

Elvis Picardo

Market & Economic Environment:  North American indices added to gains in June to cap their best quarterly performance in decades. The TSX Composite advanced 2.1% last month to bring its second-quarter gain to 16%, its strongest quarterly performance since 2009. Gains on the TSX were led by the Information Technology group, which rose 13.5% in June for a Q2 surge of 68.2%, led by Shopify Inc, which soared 119% in Q2 to become the biggest Canadian company by market capitalization.

The S&P 500 advanced 1.8% in June for a Q2 gain of 20%, its best performance since 1998; the Dow Jones Industrial Average’s 1.7% gain last month took its Q2 returns to 17.8%, its strongest quarter since 1987. The technology-heavy Nasdaq Composite surged 6% in June for a Q2 gain of 30.6%, its best since the dot-com frenzy of 1999. The broad global rally enabled the MSCI World Index to advance 2.7% in June and 17.7% in Q2, also its strongest performance since 1999. (Data Source: FactSet).

Our Strategy: Equity markets proved to be quite resilient to worsening news on the coronavirus front in the final weeks of the second quarter, holding on to their gains even as daily virus cases in the U.S. surpassed 50,000 and infections surged in South America and other regions. Improving economic data as a result of economic activity resuming in many regions has boosted consumer and investor confidence, enabling them to look past current problems to better times once the coronavirus is under control.

Although markets continue to discount a swift, V-shaped economic recovery from the global slowdown inflicted by the pandemic, such a recovery may take longer than anticipated, going by the recent updated forecast from the International Monetary Fund. The IMF sees the global economy contracting by 4.9% this year, almost two percentage points lower from its April forecast, and expects a sluggish turnaround in 2021.

The Portfolio Management Team (PMT) is comfortable with the current positioning of client portfolios, after the changes made in recent months. The PMT continues to monitor market conditions very closely as we head into the seasonally volatile summer months and will deploy available cash as opportunities arise.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.

This information has been prepared by Luft Financial. Opinions expressed in this article are those of Luft Financial only and do not necessarily reflect those of HollisWealth®. Furthermore, this does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.

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