Economic Views

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.

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