Thanks to COVID-19, 2020 turned out to be a miserable year for the ASX, though the record amount of support from central banks here and offshore as well as the Federal and state governments helped soften the blow and financed the turnaround in sentiment and share prices in the final 9 months of the year.
That rebound saved the markets from near implosion here and offshore and saw odd sight of a stockmarket boom amidst recession, rising COVID infection numbers and a soaring death toll, especially in the US, UK and Europe as the year ended.
The ASX 200 index fell 1.4%, or 95 points, to close 2020 on 6,587 on December 31, ending a chaotic and unfathomable year with a small loss.
Having hit a high of 7,162.5 points in February, the index plunged to a low of 4,546 points on March 23 as COVID-19 pandemic reached beyond China, ensnaring the rest of global life and the economy.
Thanks to those emergency support packages from the RBA, Fed and other central banks and the trillions of dollars in spending by governments across the world, markets bounced from the depths of late March.
The ASX managed to pick itself up, surging 45% since March 23, and closed out the year at 6,587.1 on Thursday, down 1.4% from where it ended 2019 on 6,684.1.
The All Ordinaries lost 1.3% over the course of 2020 to end the year at 6,850.60, with that loss accounted for by the 1.4% slip on December 31.
While the market recovery grabbed the headlines and market attention, the big surprise in 2020 was the Aussie dollar which jumped sharply when most analysts had thought it would struggle and remain weak.
It instead ended 2020 up nearly 10%, thanks especially to a big rise over the final two months of 2020, ending December 31 near 33 month highs above 77.40 US cents.
After the low of just over 57 US cents in March the currency soared by a third in the next 9 months, despite record rate cuts by the Reserve Bank and a determined attempt by the central bank to try and offset the currency’s rise without direct intervention.
That was a gain (substantial) of more than 7.5 cents for the year (it ended 2019 at a touch over 70 US cents) and since November 2 (The day before the Reserve Bank cut its cash rate to a new record low of 0.10% and revealed a $100 billion bond buying campaign targeted at the 10 year bond yield).
The yield on 10 year Australian bonds ended 2020 at 0.97%, down from 1.03% on December 30 and down a large 40 points since the end of 2019. That was mostly due to the cuts in interest rates (0.65% or rate cuts in the year) from the Reserve Bank and the bond buying campaign in November and December.
And thanks to the pandemic while Australians saved more than at any time in history, cut billions of their credit card debts and switched to debit cards and buy now pay later plans, they also hoarded cash – a record $14.5 billion over the course of 2020.
By the end of the year the amount of cash in the economy was approaching $100 billion at $98.5 billion.
Retail sales surged as well – another surprise – as stuck at home Australians switched consumption patterns in ways no one had thought possible in such shorter a period of time.
The internet became king, home delivery the order of the day for more and more consumers and sales of groceries, furniture, homewares of all types, takeaway food, liquor and even coffee and toasties became more commonplace.
Thanks to the internet boom, retail sales were up by more than 13% in the year to November, according to the Australian Bureau of Statistics. That’s the fastest annual growth rate in retail sales recorded. Online sales were up around 60% in the same time.
