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Boyce Financial Services Pty Ltd as Trustee for
Boyce Financial Services Unit Trust (AFSL 522265).




MAY 2021: Finance Update

21 June 2021

The month that was – May 2021

The usual approach of many in the past has been “sell in May and go away” – referring to the sell off that is often seen in the run up to the end of the financial year in Australia. This year was quite different with global shares showing a 1.3% positive return and the Australian market up a very healthy 2.3% gain in May.

So what is driving the markets?

Global Markets

The main positive factor effecting global markets is the progress of the vaccine roll-out in America and Europe. The US is progressing well with 80% of the US population having received at least one dose and 45% of Europeans also receiving one dose. This, combined with very strong corporate profits in the United States and continued low interest rate guidance from central banks has seen Wall Street make new record highs. 

Inflation remains a key concern but the majority of commentators see this as temporary as high inflation numbers from a year ago fall out of the annualised figures. Some inflation is necessary – and whilst it is in the range of 2-3% it should be manageable. As global supply/demand dynamics return to normal, as economies open up from Covid lockdowns, inflationary pressures are expected to ease. If we see inflation rising rapidly markets may react negatively, with growth equities and interest rate sensitive assets such as government bonds the most sharply impacted. 

The Chinese economy for the year to March is showing a very robust 18 per cent increase in GDP with continued strength in industrial production and retail sales. Overall emerging markets outperformed the developed markets due to weakness in the US Dollar. Of particular note was India – which has been among the worst hit by the pandemic, but had one of the best performing markets in May.


The Australian economy is responding to the stimulus provided by the Commonwealth Government and this stimulus continues. 

  • The RBA left the cash rate unchanged at a record low of 0.1% at its June meeting and the Federal Budget reaffirmed its spending on major infrastructure projects, tax cuts and business tax relief – all aimed at creating jobs. 
  • The GDP number for the March quarter was a positive 1.8% qoq – a third consecutive quarter of economic growth.
  • Business and consumer surveys continue to be strong and the RBA board expects GDP to grow by 4.75% this year. 

All these factors underscore the positive outlook.

The Australian share market saw a continuation of the move into value stocks with Financials and Consumer Discretionary sectors amongst the strongest over the month. Company revenues are lifting and so should profits. These higher earnings can be expected to translate to higher share prices. 

End of Financial Year Consideration

As the end of the 2021 Financial Year approaches it is important to think about making sure all required superannuation contributions are made and minimum pensions drawn. Contributions must be received before the close of business on 30 June, which usually means transferring cash at least three days prior to ensure that funds are cleared and in the account.

Budget Changes

The May budget saw some beneficial changes to superannuation contribution requirements, particularly for those over 65, as well as many tax announcements for individuals and business. A summary of these was provided in our Boyce Budget Summary, so if you have any questions or need a refresh please reach out to your Boyce Financial Services adviser.

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