August 2021 on the markets

/ News

In August many different factors kept the markets on edge, but eventually managed to close the month in positive territory. The main factors are the strong employment numbers with the US reporting the addition of over 1 million jobs in July, and pushing the unemployment rate down to 5,4% from 5,9% in June, the lowest level since March 2020 when the covid-19 lockdowns kicked in.

While the economy is growing at very strong rate, concerns of a slowdown remain. The Federal Reserve is considering to slow down its bond-buying programs as the economy recovers and therefore central bank support is no longer as necessary as it was in 2020. This is known as »tapering«. Another factor is the high level of inflation – while it is not increasing at this time, it is expected to remain at high levels for the foreseeable future as supply disruptions and shortage of workers remain an issue. Higher gasoline prices also add to the concern.

Nonetheless US stock indices closed August in green with the S&P500, Dow Jones and Nasdaq Composite adding 2,90%, 1,21% and 4,00% respectively. The dollar gained 0,52% against the Euro, closing at 1,1808. Euro. Also European indices closed the month in green. The Eurostoxx 50 gained 2,62%, the German DAX 1,87% and the French CAC40 1,02%. The Slovenian SBITOP index booked a 2,50% gain. The British FTSE gained 1,24% drop while the Pound Sterling lost 0,54% against the Euro to 0,8582.

China once again underperformed the European and US markets due to the continued crackdown by Chinese authorities. Although the Hong Kong Hang Seng Index recovered in late August, it closed the month with a modest 0,32% loss. The Japanese Nikkei index on the other hand gained 2,95%.

A slowdown in Chinese growth resulted in a strong 7,37% drop of the oil price to 68,5 dollars per barrel. However it is also hurricane season and with hurricane Ida slamming into the Gulf of Mexico oil production facilities, oil could very well rebound in September.

Rudy Marchant
Fund manager Primorski skladi, d.o.o., Koper

Monthly report - August 2021

 

 

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