Global equity markets had a positive August with the US and Asian markets leading the way.
In fact, US equities had their best August since the 1980s, after the sharp technology-dominated rally since March has sent their blue-chip stocks to a record high. The S&P 500 ended the month up 7.0%, which is the best August since the index’s 7.1% increase 34 years ago. The Dow Jones 30 gained 7.6% in the month which was the biggest August gain since 1984.
The bumper month caps a strong recovery since late March that has added 56% to the value of the S&P 500, fuelled by aggressive fiscal and monetary stimulus.
|Monthly performance to end of August 2020|
|FTSE 100 (UK) *||+1.1%|
|Dow 30 (US)||+7.6%|
|S&P 500 (US)||+7.0%|
|Euro Stoxx 50 (Europe)||+6.6%|
|Nikkei 225 (Japan)||+3.1%|
*data from 31 July 2020 to 28 August 2020 due to bank holiday
In terms of currency, £ Sterling ended August at 1.34 US Dollars. This was 2.1% higher than the figure at the end of July. Against the Euro, £ Sterling ended August at 1.12 Euros, which was 0.8% higher than the July closing figure.
Inflation, as measured by the Consumer Prices Index including owner occupiers’ housing costs (CPIH) was 1.1% in July 2020 (this is July’s data which is reported in August). This was up from 0.8% in the previous month largely due to rising prices for clothing, at the petrol pump, as well as furniture and household goods. The 12-month rate for the Consumer Prices Index (CPI) rate which excludes owner occupied housing costs and council tax was 1.0% in July, up from 0.6% in June.
There were no further changes to the Bank of England base rate last month following the two previous cuts in March. The current rate remains at 0.1%.
With the world continuing to fight coronavirus, global equity markets are likely to remain volatile. So, it is increasingly important for investors to understand their ‘attitude to risk’, capacity for loss and investment objectives. At times like this, it is difficult to stay focused and ignore the fear but the benefits of investing in a well-diversified investment proposition in line with your Attitude to Risk are evident.