Third Quarter* 2021 Highlights
Central banks have shown a desire to reduce their monetary support.
The US Federal Reserve (Fed) has announced that it will likely soon reduce its bond purchases. Nine of the 18 officials expect a rate hike in 2022.
Oil prices have soared.
Rising demand has pushed up oil prices. Supply difficulties in the United States also pushed prices up. The Organization of the Petroleum Exporting Countries (OPEC) has indicated increasing production by the end of the year.
Vaccination continued as variants of the virus continued to cause concern.
More than six billion doses of vaccine have been administered worldwide. However, the Delta variant of COVID-19 continued to spread.
Are the impacts of COVID-19 still being felt?
Vaccination has enabled the continued reopening of the world’s economies. However, COVID-19 remained a health concern due to virus variants. Additionally, the ongoing effects of the pandemic have tested the global economic recovery.
Are you worried about the effects of the COVID-19 pandemic on your finances? Here are three things an advisor can do for you during COVID-19.
What is the effect of high global inflation on the economy?
Inflation has become an issue with the strengthening of the global economy. In most countries, officials consider that the rise in inflation is the result of the reopening of the economy and will not persist. It is, therefore, unlikely that they will raise interest rates soon.
Central banks could reduce their purchases of bonds that support the economy. The Fed said it would wait for further evidence of rising inflation and employment before changing its approach.
How are the significant economies faring?
The majority of significant economies grew during the last measured period:
China led the way in the second quarter of 2021.
The US economy has shown strength.
The economy expanded in Europe and Japan.
Have the financial markets go up or down?
Financial markets had a mixed quarter:
Most global equity markets fell in the third quarter due to slowing economic growth.
US stocks rose during the quarter.
The decline mainly affected emerging markets and China.
Gains were notably recorded in Japan and the United Kingdom.
What happened with the price of oil in 2021?
The price of oil rose, driven by strong demand and shrinking supply.
What happened with the price of gold in 2021?
The price of gold has fallen because the Fed will soon begin to scale back its asset purchases.
How are Canadian markets faring?
Results have been mixed in Canada:
Canadian equities fell during the quarter.
The healthcare sector underperformed.
The Consumer Discretionary and Materials sectors fell.
The Canadian economy had grown in the first quarter of 2021. Economists expected continued growth in the second quarter, but the economy contracted instead.
During the last period measured, Canadian economic growth slowed for the first time since the second quarter of 2020. The reduction in real estate activity set the tone for this decline.
In the third quarter, the easing of the confinement allowed an acceleration of economic activity in Canada. And job creation has lowered the unemployment rate.
Inflation remained high, driven by rising gasoline and housing prices. The Bank of Canada (BoC) reacted by reducing its bond purchases. In addition, the central bank maintained its key interest rate at 0.25%.
The Canadian household savings rate increased in the second quarter compared to the first.
Housing prices rose sharply in Canada over 12 months.
