With the majority of Europe and North America supposedly on holiday, August used to be a quiet month. This, of course, was in those blissfully tranquil days before the era of Donald Trump, Brexit and the Venezuelan crisis. These days, August is just another chaotic month, meaning there are now twelve such months each year.
A long expected rise in interest rates took place at the start of the month, with the Bank of England rising interest rates by a miniscule 0.25% to the dizzying heights of 0.75% – the ‘best news’ for savers since 2009, the last time they were this high.
Unfortunately, this optimism didn’t cross over into the retail sector; August saw the high street suffer another poor month. And after a spell of good weather, this time no one could place the blame on the ‘Beast from the East’. House of Fraser went into administration before being bought by Sports Direct for around a tenth of its previous valuation and the future of Homebase looks uncertain with 42 stores now set for closure.
On the Brexit front, August saw no real progress towards a deal on either side. Theresa May even announced that a no-deal Brexit ‘wouldn’t be the end of the world’. Perhaps not. But it still could signal the end of the UK’s 200 year reign as a significant player in the world economy.
The FTSE performed badly this month, finishing the month down 4% at 7,432. The pound also fell during the month by 1% against the dollar. All in all, not a great month for the British economy.
While Britain’s attempts to distance itself from Europe are cloaked in uncertainty, across the pond the US’s attempts to complicate economic ties with… well, just about everyone, show no such ambivalence and ambiguity. This month, Trump threatened to pull out of the World Trade Organisation and doubled tariffs on Turkish aluminium and steel, causing the lira to plummet.
Whatever you think of Trump’s protectionist policies, by the end of the month the US was awash with good economic news. Figures released in August announced that the US economy had grown at an annualised rate of 4.2% and the Dow Jones finished the month up 2% at 25,964.
In the Far East, continuing worries about a US-China trade war are wreaking havoc on the Chinese markets. In August, the Shanghai Composite index was down by 5% and Hong Kong did only slightly better, falling by just 2%. However, across the Sea of Japan, the Japanese markets closed up by 1% as the island nation’s economy returned to growth.
Emerging markets have had a typically turbulent month. In South America, Venezuela is in a state of full blown crisis. Food scarcity and violence have driven millions to emigrate into neighbouring countries. All this in a country with the largest oil reserves in the world. Argentina’s markets have also had a poor month, with the interest rates rising to 60% to prop up the flailing peso.
What an unsettled month. Hopefully the global markets are less of a mixed bag next month, something of an Indian summer remains a possibility.
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.