August 2022

• Global markets weakened in August as central banks reinforced their commitment to combating inflation through continued aggressive monetary tightening.
• Federal Reserve officials emphasised that interest rates would likely remain higher for longer despite slowing economic growth.
• Energy supply concerns intensified across Europe ahead of winter due to reduced Russian gas flows.
• Technology and growth stocks came under renewed pressure following July’s rebound.
• Emerging markets faced headwinds from stronger U.S. dollar conditions and slowing global demand.
• Commodity prices delivered mixed performance amid recession concerns and ongoing supply disruptions.

Asia (ex. Japan)

Asian markets outside Japan weakened during August as slowing global demand, tightening financial conditions and continued concerns regarding China’s property sector pressured investor sentiment.

Chinese economic data remained relatively weak despite ongoing policy support measures, while technology exporters such as Taiwan and South Korea faced concerns regarding slowing semiconductor demand growth.

Europe

European equities declined sharply during August as energy supply concerns intensified following further reductions in Russian natural gas deliveries to Europe.

Investors increasingly feared that soaring energy costs and supply shortages could trigger recession across several European economies during the winter months. Inflation continued reaching record highs across the region.

United States

U.S. equities weakened during August after Federal Reserve Chair Jerome Powell delivered a strongly hawkish speech emphasising the need to continue tightening monetary policy aggressively to combat inflation.

Technology and growth stocks experienced renewed selling pressure as Treasury yields rose and investors adjusted expectations for higher interest rates lasting longer than previously anticipated.

United Kingdom

UK equities weakened during August as inflation pressures intensified further due to soaring energy prices and weakening consumer confidence.

Economic recession concerns increased substantially as households faced severe cost-of-living pressures ahead of winter, while the Bank of England continued raising interest rates.

Japan

Japanese equities delivered relatively resilient performance during August as weaker yen conditions continued supporting exporters and corporate earnings.

However, global market weakness and slowing external demand created volatility across manufacturing and technology-related sectors.

Emerging Markets

Emerging markets remained under pressure during August as stronger U.S. dollar conditions and rising global interest rates tightened financial conditions and reduced capital inflows.

Chinese economic weakness and slowing global trade activity added further challenges for several export-oriented economies.

Commodities

Commodity prices delivered mixed performance during August. Natural gas prices surged dramatically in Europe amid escalating supply concerns, while oil prices fluctuated due to competing pressures from supply disruptions and slowing demand expectations.

Industrial metals remained relatively weak due to concerns regarding Chinese growth and global manufacturing slowdown, while gold prices faced pressure from rising real yields and stronger dollar conditions.