Market review

August in review

The month began with a sharp selloff in equities due to poor US employment data and a surprise rate hike in Japan, causing turmoil in currency carry trades. However, markets recovered as central bankers in the US and Japan signalled dovish policies, boosting global bonds and equities on expectations of aggressive rate cuts.

5 Sept 2024

8 minutes

Chapters

01
Global equities
02
US
03
South Africa
04
China
05
Emerging markets
06
Europe and UK
07
Global fixed income
08
Global credit
09
EM fixed income
10
Commodities
01

Global equities

Shipping containers
A gloomy start ends on a brighter note.

August was a volatile month, with Wall Street’s ‘fear index’ (CBOE Volatility Index) recording its biggest one-day spike in history. The turbulent start to the month was punctuated by heavy selling in equity markets, which peaked in the first five days, following a surprise spike in US unemployment and a resurfacing of the ‘R’ word (recession) on trading floors. This coincided with an unusually aggressive policy stance by the Bank of Japan (BoJ) on 31 July, which saw the unwind in the yen carry trade reverberate across global markets. These market jitters would, however, later be alleviated, while dovish rhetoric from the US Federal Reserve (Fed) and the BoJ brought more calm to capital markets. The final weeks of the month saw equities pare back most of the losses suffered earlier in the month, as investors bought the dip following a near 9% drawdown from July peaks. A slew of positive US economic data and a strong second-quarter earnings season provided additional tailwinds for the relief rally. Growing enthusiasm for rate cuts continued to fan the rotation into small caps during the month. Regionally, the US led performance while China and Japan struggled.

Indices (total return in local currency)
S&P 500 2.4%
Nasdaq Composite 0.7%
MSCI ACWI 2.5%
Nikkei 225 -1.1%
EuroStoxx 600 1.3%
FTSE 100 0.9%
Hang Seng Index 3.9%
SSE Composite -3.3%

Source: Bloomberg, for the month ending 31 August 2024.

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