Global markets finished the month positively in August, however that doesn’t tell the full story of a month filled with extreme volatility. On the 5th of August, Japanese markets had their worst one-day performance since 1987, with the Topix (a key index in Japan) plunging by 12%, although markets quickly began to recover the following day. This volatility impacted the global economy, and coupled with weak US economic data at the beginning of the month, led to some steep falls in the stock market. However, things stabilised and both the S&P 500 and FTSE 100 ended the month in the green, with real estate and healthcare being two standout sectors.
The Bank of England also cut interest rates on the 1st of August for the first time in 4 years, reducing the base rate from 5.25% to 5%. The prevailing opinion is that further interest rate cuts are expected across the UK and the globe. There is some element of caution in the UK market as the Autumn budget at the end of October moves closer; a budget that Keir Starmer has already warned will be “painful” and where the brunt will be picked up by those with the “broadest shoulders”.
