August 2024 Market Update

Overview

Markets initially wobbled in August after weak employment data led to increased concerns about the health of the US economy and a spike in volatility across various asset classes.

However, inflation data continued to stabilise, with the Federal Reserve now odds-on to cut rates this month. Markets soon rallied, with most major indices ending August near all-time highs.

The UK looks set to lag the US in rate cuts with inflation still well above target, leading to a rally in the Pound Sterling, which hit its strongest level in two years. This held back returns for UK investors, with global stocks returning -0.8% in Sterling over the month.

The approaching rate cuts encouraged a drop in longer term bond yields in the US, where the 10y yield dropped 0.15% over the month. This led to a rally in several sectors, particularly Consumer Staples and Healthcare stocks, while Real Estate stocks also had a strong month, rallying 5.5%.

Japanese stocks struggled - falling 2.9% - as the Yen rallied from its multi-year lows and hurt domestic sentiment. Energy prices fell, with the likelihood of a flare-up in tensions in the Middle East appearing to recede while the economy slowed.

Full update below…