Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
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Head of Fixed Income Strategy
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August market performance: Equities rally amid shifting economic winds
Market Rewind
Søren Otto Simonsen
Senior Investment Editor
In August, global equity markets surged, with the MSCI World Index climbing 2.5%. Investors regained confidence, pushing equities higher despite ongoing concerns about inflation and central bank policies.
In the United States, the S&P 500 rose 2.3% in August, rebounding after a quieter July. The U.S. market showed resilience as investors adjusted towards expected rate cuts and the US election as a constant curveball. European equities gained 1.4%. Stabilising energy prices and confidence in the European Central Bank’s inflation strategy helped boost market sentiment. Asian markets continued their steady rise with a 1.6% increase, driven by strong corporate earnings and supportive monetary policies. Japan, in particular, attracted investors seeking growth opportunities. Emerging markets posted a 1.4% gain, outperforming July. Despite challenges in China, other emerging economies showed resilience, drawing investor interest.
August saw mixed results across sectors. The real estate sector soared 5.7%, as investors flocked to tangible assets for stability in uncertain times. Healthcare continued its strong performance with a 5.4% rise, driven by robust demand and ongoing innovation. The information technology sector grew by 1.4%. While not as strong as earlier in the year, the sector remains critical, attracting investment despite rising costs and supply chain issues. The energy sector faced challenges, dropping 1.4%. Fluctuating oil prices and geopolitical uncertainties contributed to this decline, highlighting the sector’s volatility.
The bond market remained a stable haven in August, offering consistent returns amid equity market fluctuations. Global bonds continued to perform well, with sovereign and corporate bonds delivering reliable yields.
Sources: Bloomberg and Saxo
Global equities are measured using the MSCI World Index. Equity regions are measured using the S&P 500 (US) and the MSCI indices Europe, AC Asia Pacific, and EM respectively. Equity sectors are measured using the MSCI World/Sector indices, e.g., MSCI World/Energy. Bonds are measured using the USD-hedged Bloomberg Aggregate Total Return indices for total, sovereign, and corporate respectively.
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