A look back at markets in August when hopes of a Covid-19 vaccine and a shift in Federal Reserve policy helped to support shares.
Shares were broadly higher in August amid hopes for a Covid-19 vaccine, signs of continued economic recovery and ongoing policy support measures. Government bond yields rose (meaning prices fell).
US equities – as represented by the S&P 500 – reached a new peak. The Federal Reserve confirmed its readiness to offer further support, while increasing its flexibility to do so by adjusting its measurement of inflation.
Eurozone shares rose. Top performing sectors included economically-sensitive areas like industrials and consumer discretionary. There were concerns about rising Covid-19 infections in some countries, notably Spain.
UK shares also gained. Signs there could be a solid recovery in the domestic economy during Q3 2020 helped UK small and mid cap equities play a supportive role for the market over August.
Japanese shares gained too. Late in the month, Shinzo Abe announced his resignation as prime minister, citing a long-standing health problem.
Emerging market (EM) equities recorded a positive return as hopes for a Covid-19 vaccine increased, and on the Federal Reserve’s suggestions that US interest rates could remain low for longer.
In fixed income, government bond yields rose (meaning bond prices fell) and the US dollar continued to decline. Corporate and emerging market bonds performed well.
In commodities, precious metal prices rose with US dollar weakness providing a strong tailwind.
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