What does 2021 have in store for Australian traders?

While Australia has coped with the COVID-19 crisis well in comparison to some other larger economies, it didn’t escape the economic and financial fallouts. The Australian stock market suffered several blows throughout the last 12 months, dropping by around 37% in mid-March but almost fully recovering by the end of the year.

Not all bad news

But forsome investors and traders, these peaks and troughs were welcome. Those who opt for short-term contracts for difference or CFD trading, for example,require price increases and drops to make a profit.

For investors engaged in this kind of trading, the volatility of 2020 presented an opportunity for them to leverage movements in their financial favour. However, this is easier said in hindsight, and while volatility can be ideal for CFD trading, it also increases the risk.Investors must recognise that the markets can always move against them and it can result in large or unexpected losses within a short period.

But as for 2021, which sectors are expected to have a high trading potential for CFD investors?

Still on top

Source: Pexels

Throughout most of the world’s stock markets, healthcare companies are unsurprisingly the ones to watch. Showing the most resilience during 2020 and gaining steadily so far this year, they are the ones most likely to hold their value in the months ahead. Companies on the ASX Health Care Index such as CSL, Fisher and Paykel, and Sonic Healthcare are all expected to perform well over the next year. Others to look out for include Cochlear, ResMed Inc, and EBOS Group. Any company that provides PPE, medical equipment, pharmaceuticals or private healthcare is expected to show an increase in value this year.

Others to look out for include tech companies that provide online services to members of the public. Additionally, energy companies should rally as people spend more time at home and therefore consume more energy. Some analysts have predicted that bank and financial institution stocks will also have the capacity to evolve as the local economy continues to recover.

It’s estimated that the Australian economy could grow by 4% in 2021 which will also drive up the value of the Australian dollar.

In terms of commodities, iron ore, one of the country’s biggest exports is enjoying heightened demand and high levels of cash liquidity. Likewise, gold, gems and mineral fuels are seeing a renewed demand after a less than a successful year.

Overall, the year ahead looks positive for the Australian economy. With winter looming, it’s hoped the rollout of the COVID-19 vaccine will be enough to quell a second or even third wave and to ensure the economy remains open and liquid. This will lead to renewed investor confidence in the stock market and foreign market, and more traders looking to profit from the positive movements of stocks, currency, and commodity values.

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Written by IG Markets

Last Updated: 16 March 2022

Published: 23 February 2021