Market Pulse - August 2023

• Market Pulse
• 07.09.23
• ILIM

Key themes

• Global stock markets were weaker in August, dragged lower by broadly resilient economic data and the potential for interest rates to remain high in 2024.
• In macro terms, market participants continued to see signs of a ‘soft landing’ – an economic slowdown without a recession – in the US, as activity data was robust and core inflation fell. Evidence of slowing remained in the eurozone and China, however.
• Core inflation measures decelerated in July in both the US and the eurozone, but officials from both the US Federal Reserve (Fed) and the European Central Bank (ECB) spoke of the need to keep policy restrictive to tame inflation.

Markets snapshot

• Global equities were weaker in August. The MSCI All Country World index fell by 2.0% (-1.2% in euros) over the month as stocks were dragged lower by broadly resilient economic data and the potential for interest rates to stay high in 2024.
• The MSCI USA was down by 1.7% (-0.1% in euros).
• European ex-UK equities lagged, with the economic outlook less supportive, falling by 2.2% (-2.4% in euros).
• Emerging market (EM) equities underperformed developed markets, falling by 4.7% (-4.6% in euros). The asset class was dragged lower by weakness in Chinese equities, which declined by 8.3% amid continued soft economic data and a lack of significant stimulus measures to support growth.
• Bond markets were close to flat in August, eking out a small gain. The ICE BofA 5+ Year Euro Government bond index rose by 0.3%.