August 2020

• Global markets continued rising in August as unprecedented monetary stimulus, improving economic data and strong technology earnings supported investor confidence.
• U.S. equities reached repeated record highs, led by major technology companies and growth sectors.
• The Federal Reserve introduced a new policy framework allowing inflation to run above target temporarily, reinforcing expectations for prolonged low interest rates.
• Asian markets benefited from strong Chinese economic recovery and continued export resilience.
• Emerging markets advanced further alongside weaker dollar conditions and improving global liquidity.
• Gold prices remained elevated despite some consolidation after reaching record highs.

Asia (ex. Japan)

Asian markets outside Japan delivered strong gains during August as Chinese economic recovery continued strengthening and regional exports improved significantly. Manufacturing activity across much of Asia recovered sharply due to robust global demand for technology products and medical equipment.

Taiwan and South Korea remained among the strongest-performing markets globally due to continued semiconductor demand and strong technology sector earnings. Chinese equities also benefited from improving industrial production and consumer activity.

Europe

European equities advanced during August as accommodative central bank policies and improving economic indicators supported investor sentiment. The European recovery fund agreement reached earlier in the summer continued boosting confidence across the region.

Economic activity improved steadily from earlier pandemic lows, though tourism and travel-related sectors remained significantly weaker than broader markets due to ongoing restrictions and limited international travel.

United States

U.S. equities continued reaching new record highs during August as major technology companies reported exceptionally strong earnings and investors remained highly optimistic regarding liquidity conditions and economic recovery prospects.

The Federal Reserve announced a significant shift in monetary policy strategy by adopting average inflation targeting, signalling that interest rates would likely remain near zero even if inflation temporarily exceeded traditional targets.

United Kingdom

UK equities delivered more modest gains during August compared with U.S. and Asian markets, reflecting continued exposure to financial and energy sectors alongside lingering Brexit uncertainty.

Economic activity improved steadily following earlier lockdown easing measures, though concerns remained regarding rising coronavirus cases and the eventual withdrawal of fiscal support programmes.

Japan

Japanese equities advanced during August as exporters benefited from improving Asian demand and recovering global manufacturing conditions.

Investor sentiment was also influenced by Prime Minister Shinzo Abe’s resignation announcement late in the month, though markets remained relatively stable due to expectations of policy continuity and ongoing monetary support from the Bank of Japan.

Emerging Markets

Emerging markets continued performing strongly during August as weaker U.S. dollar conditions, improving trade activity and abundant global liquidity encouraged sustained investor inflows.

Asian economies remained key outperformers due to stronger virus containment measures and significant exposure to global technology demand, while commodity exporters benefited from recovering metals and energy prices.

Commodities

Commodity prices remained broadly supportive during August as improving global economic activity and liquidity conditions boosted demand expectations. Oil prices stabilised following earlier recovery gains as supply discipline remained relatively firm.

Industrial metals continued rallying strongly due to Chinese infrastructure demand and recovering manufacturing activity, while gold prices consolidated near record highs amid low real interest rates and ongoing monetary expansion.