Monthly market summary – Review of August 2024

3 minute read

Our market summary

The end of July and the start of August began with a resurgence of volatility in stock markets, as both bond yields and equity markets declined, making it an eventful period for investors. Early in the month, disappointing US economic data heightened concerns about a potential slowdown in the US economy. This, paired with an interest-rate hike from the Bank of Japan, triggered a significant sell-off in global equity markets. However, by month's end, markets recovered as investors started to factor in anticipated interest-rate cuts by the US Federal Reserve (Fed). Overall, global equities ended the month up by 0.2%.

US

In early August, fears of a US recession were fuelled by disappointing jobs and employment data, and manufacturing data well below expectations. However, later in the month, better economic data and a dovish message from Fed Chair, Jerome Powell, calmed markets. Overall, US equities rose 2.4% in dollar terms, but due to the dollar's weakness against the pound, sterling-based investors only saw a 0.1% return.

Europe

In August, European equities underperformed compared to the US in local currency terms but yielded 1.8% for sterling-based investors. The French service sector got a boost from the Olympics, pushing the eurozone Purchasing Managers’ Index (PMI) higher than expected. Nonetheless, the overall economy remains sluggish, and earnings from cyclical companies were disappointing.

UK

In the UK, large-cap stocks were hampered by the strength of the pound weighing on overseas earnings. There was also weak performance from commodities based on growth concerns, and the aversion of investors to economically sensitive areas impacted mid-cap and small-cap stocks. Nonetheless, UK equities still delivered returns of 0.7% in August.

Emerging markets

The strength of the pound again weighed on overseas returns as emerging markets were up 0.4% in local currency, but down 0.7% for sterling-based investors. The continued challenges in the Chinese real estate sector and the spillover effects on the broader economy are still being felt. The weakness of the Chinese consumer was evidenced by poor earnings results from the e-commerce platform, Pinduoduo, better known by Western consumers for its Temu brand.

Fixed income

August was a positive month for fixed income investors. The volatility observed at the start of the month led to a flight to quality, and with investors pricing-in more aggressive rate cuts, it was a strong month for government bonds with US Treasuries up 1.2% and UK gilts returning 0.5%. Meanwhile, global corporate bonds were up 1.1% and sterling corporate bonds returned 0.3%.

Source: Quilter Investors as at 30 August 2024. Total return, percentage growth in pounds sterling except where shown, rounded to one decimal place. The performance shown for global equities is represented by the MSCI AC World Index,, US equities by the MSCI USA Index, European equities by the MSCI Europe ex UK Index, UK equities by the MSCI United Kingdom All Cap Index, ,emerging markets by the MSCI Emerging Markets Index, US Treasuries by the ICE BofA US Treasury (GBP Hedged) Index, UK government bonds by the ICE BofA UK Gilt Index, global corporate bonds by the Bloomberg Global Aggregate (GBP Hedged) Index, and sterling-denominated corporate bonds by the ICE BofA Sterling Corporate Index.

Important Information

Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments may go down as well as up and investors may not get back the amount originally invested.

This communication is issued by Quilter Investors, a trading name of Quilter Investors Limited. Quilter Investors is registered in England and Wales under number 04227837 and is authorised and regulated by the Financial Conduct Authority (FCA) under number 208543. Registered office: Senator House, 85 Queen Victoria Street, London, United Kingdom, EC4V 4AB.

This communication is for information purposes only. Quilter Investors uses all reasonable skill and care in compiling the information in this communication and in ensuring its accuracy, but no assurances or warranties are given. Investors should not rely on the information in this communication when making investment decisions. Nothing in this communication constitutes advice or a personal recommendation. This communication is for information purposes only and is not an offer or solicitation to buy or sell any Quilter Investors portfolio or fund.

Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.

Data from third parties is included in this communication and those third parties do not accept any liability for errors and omissions. Investors should read the important information provided by the third parties, which can be found at www.quilter.com/third-party-data. Where this communication contains data from third parties, Quilter Investors cannot guarantee the accuracy, reliability or completeness of the third-party data and accepts no responsibility or liability whatsoever in respect of such data.

Marcus Brookes

Chief Investment Officer & Managing Director

Marcus is chief investment officer and managing director of Quilter Investors. Marcus joined Quilter Investors in December 2021 from Schroders Personal Wealth, where he also held the role of chief investment officer. He has considerable investment management experience with a deep understanding of the multi-asset sector having managed multi-manager fund ranges for more than 20 years.

Quilter Investors market update quarterly webinar – October 2024 (Q3 2024)

Watch the quarterly webinar on the latest market update

Published today

Monthly market summary – Review of July 2024