Monthly markets review - August 2016
An overview of events in August 2016 when developed markets were largely flat and emerging markets made gains.
- The MSCI World index was little changed in August (in US dollar terms) and was outpaced by emerging market equities which were supported by investors’ focus on higher yielding assets.
- US equities were little changed as expectations grew that the Federal Reserve would raise rates again this year.
- Eurozone equities advanced, supported by some strong quarterly earnings. Cyclical sectors such as materials, financials and industrials were the top gainers.
- UK equities performed well as the Bank of England launched a series of monetary easing measures in the wake of economic uncertainty following the Brexit vote.
- Japanese equities gained slightly. The government released details of a fiscal spending package designed to run alongside the Bank of Japan’s continuing aggressive monetary policy easing.
- Emerging markets extended their recent upward trend. Several markets continued to benefit from comparatively high real yields, including Russia, Brazil and Colombia.
- In fixed income, the easing measures announced by the Bank of England were supportive for gilts, while sterling corporate bonds made further gains.