August Market Summary: Yen, Tech, Jobs scare – with a happy ending

31 ^st August 2024

August ended being a strong, risk-on month, despite a tumultuous start, caused by:

1) A soft US jobs data, which raised questions about the strength of the world’s No. 1 economy;

2) A somewhat surprise rate hike in Japan, which upset those funding their trades in the low-yielding Japanese market;

3) Increasing doubts about the hefty valuations and strong earnings projections of US mega-Tech companies.

All three issues were appeased as the month went by: global economic data slightly disappointed but remains positive and far from recession territory; Japanese officials cooled down fears of further, imminent rate hikes, and Nvidia, the chip-making leader of the expected Artificial Intelligence (AI) revolution, saw its (positive) and much-expected earnings release turn into a quasi-macro event, used by many as an anchor of their AI optimism. Expectations of US rate cuts, the consequential lower US dollar, and falling oil prices also supported rising markets – oblivious of the escalation of the conflict in the Middle East.

Against this backdrop, most MIFL funds posted gains. For a view of the four factors that we expect will drive financial markets over the next few months, don’t miss our latest Market Outlook.