The main stock markets closed the month of August on an uptrend, despite some not-so-positive news such as fears over the spread of the Delta variant, the withdrawal of troops in Afghanistan by the United States (with all that it entailed) and the hurricane IDA that hit the United States.
In America, the SP500 index closed the month up 3.09%, leading to 7 months of consecutive rises, for a yearly performance of approx. 20%. Nasdaq also performed well, approx. +3.94%, recording the third best monthly increase of the year. Positive trend also in Europe with the EuroStoxx index that marks +1.94% on the month, with DAX closing at +1.70% and FTSI MIB at + 2.60%. The Swiss stock exchange SMI also continues to rise with an increase of 1.97%. Asian stock exchanges in contrast. The Hong Kong stock exchange closed down -1.36% as well as the Chinese CSI 300 -2.60%, this due to the restrictions imposed by the authorities because of the return of Covid-19 contagions which mainly affected the service sector as well as the persistent political uncertainty. Japan fared better with the Nikkei index gaining +1.11%.
Rising inflation and lingering concerns over the COVID-19 pandemic will likely remain in the spotlight as the post-pandemic recovery continues. In the weeks ahead, investors will monitor the increase in coronavirus cases and hospitalizations due to variants. This could pose a potential drag on equities, particularly if consumer spending declines or new restrictions are imposed that could weigh on the economic recovery.
The major central banks have indicated that they will not reverse their monetary policy in the short term in response to a temporary increase in prices. The Fed sees itself as being on track toward the hoped-for exit from post-pandemic monetary policy crisis mode. A timeline for the reduction of bond purchases, however, was not indicated as part of the latest Jackson Hole conference. According to the minutes of the last ECB meeting it can be seen that the ECB also wants to keep the key interest rates at the current level or at an even lower level until it is visible that inflation will be at 2% for a long period of time. These words do not seem to indicate an imminent reversal of rates. This leads us to believe that the bullish trend in the markets will continue, with the possibility of seeing an increase in short-term volatility.