Market Pulse - August 2019

Key themes

US-China trade tensions intensify

Markets continue to bet on central-bank intervention

Global economic data remains uninspiring

Markets snapshot

Equity markets were volatile in August, as US-China trade tensions flared up again. Investors flocked to bonds and other safe-haven assets, sending the US dollar higher.

US Federal Reserve (Fed) chair Jerome Powell underlined the deteriorating global economic outlook, but did not stray too far from July’s less dovish ‘mid-cycle adjustment’ message.

Over the month, the MSCI AC World equity index fell by 2.0% (1.2% in euro terms). The US outperformed, while the UK posted a sharp fall.

Worries of a ‘no-deal’ Brexit spiked following Prime Minister Boris Johnson’s decision to suspend Parliament until mid-October, although MPs quickly rushed to thwart his plans through a new bill. 

Eurozone sovereign bonds rose on weak economic data and expectations of policy easing by the ECB in September, with the German 10-year yield plunging to all-time lows.

Chinese economic data provided little reason for optimism, with industrial production growth falling to the lowest level in 17 years.

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