Extract from Redwood Financial’s Economic Review August 2019. Data compiled by TOMD
In August, trade tensions between the US and China continued to weigh on sentiment. Statements from President Trump and China’s commerce ministry on 29 August, detailing that the countries were engaged in trade talks, brought some respite to global equities at the end of the month. US equities climbed alongside European and Asian stocks on the final trading day.
Most European indices racked up losses in August barring Switzerland, Denmark and Romania. In the UK, the FTSE 100 fell 5.00% to close at 7,207.18, just shy of having its worst month in four years as sterling’s recovery, trade troubles and a sharp drop in mining stocks, took their toll on the export-heavy index. The decline in FTSE 250 was less marked, the midcap index closed August on 19,393.63, a loss of 1.39% over the month. The Junior AIM also finished the month in negative territory, down 6.43%. The Euro Stoxx 50 fell 1.16% to finish on 3,426.78.
US consumer spending came in stronger than expected in the month, which could ease fears of a potential recession. On Wall Street, the NASDAQ finished August down 2.60% on 7,962.88, the Dow Jones closed on 26,403.28, down 1.72%. In Japan, the Nikkei 225 closed on 20,704.37, a monthly loss of 3.80%.
On the foreign exchanges, sterling closed the month at $1.21 against the US dollar. The euro closed at €1.10 against sterling and at $1.09 against the US dollar.
Brent crude closed the month lower at $59.08 a barrel, a loss of 7.77%. Oil prices fell on concerns that disruption from Hurricane Dorian could dampen demand. Gold closed the month up 7.51% at $1,519.87.