August 2019

• Global markets experienced heightened volatility in August 2019 as trade tensions between the United States and China escalated sharply once again.
• Bond yields fell dramatically, with several major sovereign yields turning negative as investors sought safe-haven assets.
• Equity markets globally experienced sharp swings amid growing fears of slowing global growth and potential recession risks.
• Central banks increased expectations for further monetary easing in response to deteriorating economic conditions.
• Emerging markets remained under pressure due to weaker trade conditions and increased risk aversion.
• Gold prices surged further as safe-haven demand intensified.

Asia (ex. Japan)

Asian markets outside Japan experienced significant volatility during August as renewed tariff announcements between the United States and China intensified concerns regarding global trade and manufacturing activity. Chinese equities weakened despite ongoing domestic stimulus measures aimed at stabilising growth.

Technology-heavy markets such as South Korea and Taiwan faced increased pressure due to semiconductor weakness and concerns surrounding global supply chains. India also experienced volatility as slower economic growth and weaker business confidence weighed on sentiment.

Europe

European equities declined during August as worsening trade tensions and weak manufacturing data increased fears of recession across the eurozone. Germany’s industrial sector remained particularly weak due to softer export demand.

Bond yields across Europe fell to record lows, with several sovereign yields moving deeper into negative territory as investors anticipated additional European Central Bank stimulus measures.

United States

U.S. equities experienced sharp volatility during August as escalating trade tensions and recession fears unsettled investors. The inversion of parts of the U.S. Treasury yield curve intensified concerns regarding future economic growth.

The Federal Reserve cut interest rates again during the month and signalled continued willingness to support the economy if downside risks persisted. Despite volatility, employment and consumer spending conditions remained relatively resilient.

United Kingdom

UK equities weakened during August as fears surrounding a potential no-deal Brexit intensified under the new government. Sterling fell sharply amid rising political uncertainty and concerns regarding future trade arrangements.

Business confidence remained subdued, while the Bank of England maintained a cautious policy stance amid deteriorating global and domestic conditions.

Japan

Japanese equities declined during August as global trade tensions and yen appreciation pressured exporters and manufacturing-related sectors.

The stronger yen during periods of heightened market stress weighed on corporate earnings expectations, while the Bank of Japan maintained its accommodative monetary policy framework.

Emerging Markets

Emerging markets weakened during August as escalating trade tensions and rising global recession fears reduced investor appetite for risk assets.

Export-oriented Asian economies faced particular pressure, while commodity-exporting nations experienced softer demand expectations and weaker commodity prices.

Commodities

Commodity prices were mixed during August. Oil prices remained volatile as concerns over slowing global demand offset geopolitical supply risks.

Gold prices surged to multi-year highs as investors sought safe-haven assets amid falling bond yields and increasing global uncertainty. Industrial metals weakened due to trade-related growth concerns.