Market Pulse - August 2024
- Monthly Market Pulse
- 05.09.24
Key themes
- Global stock markets began August with a significant selloff but recovered to finish higher for the month.
- At the start of the month, soft US labour market data raised recessionary fears, and slowing inflation data also increased expectations for interest rate cuts. Bond yields were pushed sharply lower. Federal Reserve (Fed) Chair Powell indicated monetary easing would begin in September.
- Subsequent economic data, however, suggested a ‘soft landing’ was still likely, and, despite being lower overall over August, US Treasury yields rose slightly from their lows.
Markets snapshot
- The MSCI All Country World index rose by 1.8% (0.3% in euros) over August as global stock markets recovered from significant losses early in the month.
- The MSCI USA rose by 2.4% (0.1% in euros), supported by stocks outside the ‘Magnificent Seven’.
- European ex-UK equities rose by 1.4% (1.8% in euros), amid improved earnings and further expected rate cuts from the European Central Bank (ECB).
- Eurozone government bond returns were positive because of interest rate carry, with the 10-year German bund yield unchanged over the month at 2.30%. The ICE BofA 5+ Year Euro Government bond index returned 0.3% over August.
- Corporate bonds were supported by falling yields. European investment grade (IG) corporate bonds returned 0.3% as yields fell by 4 basis points (bps) to 3.52%. Global high yield bonds returned 1.3% as yields declined by 21bps to 6.41%.