Market Update – May 2021

May 24, 2021


  • Investors extended expectations of accommodative monetary and fiscal policies following signs of a slowdown in the US recovery.

  • US President Biden is believed to be setting a new vaccination goal to have the first dose delivered to 70% of adults by July 4.

  • Europe has enjoyed better than expected economic data and a decline in reported Covid-19 cases recently as countries push ahead with vaccine rollouts.

  • New Zealand halted quarantine-free travel with Australia while New South Wales investigates the origins of the two locally acquired Covid-19 cases.

  • The RBA kept the cash rate on hold at 0.1% as expected and increased its 2021 GDP forecast from 3.50% to 4.75%, with 3.50% growth expected in 2022.

Global economies

Global Covid-19 cases continue to rise with over 150 million cases reported at the start of May, but the race is now on to vaccinate key demographics. The International Monetary Fund revised its projections for GDP growth upwards, with the US expected to grow by 6.4% in 2021 and China by 8.4% over the same period.


The United States has fully vaccinated more than 100 million people—including two thirds of all seniors—against the Covid-19 virus, according to the Centres for Disease Control and Prevention, providing further reassurance to markets that the worst of the pandemic is over.


The Covid-19 situation in Europe is improving as reported cases decline and countries push ahead with vaccine rollouts. According to the World Health Organisation, 5.5% of the European population have contracted Covid-19, while 7.0% have been fully vaccinated—a number which is expected to grow rapidly in coming months.


China has made deep inroads with its own vaccination program, which has so far inoculated over 240 million people, predominately with the Chinese-developed Sinopharm and Sinovac vaccines.

Asia Region

India has been devastated by a surge in Covid-19 infections, with over 20 million confirmed cases in early May.


Treasury’s projections are that nominal economic growth will exceed the nominal interest rate for at least the next decade.

Read the full May market update report  >>

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The information in this Market Update is current as at 12/05/2021 and is prepared by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445 on behalf of National Australia Bank and its subsidiaries. Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Before making any decisions based on the content of this document, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain and read the corresponding Product Disclosure Statement (PDS) and consider the contents of the PDS before making a decision about whether to acquire the product.

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