August was about China's slowdown, US rate rises potentially 'peaking' and crypto being back on the rollercoaster. Given all of this, markets remained fairly subdued, with the VIX sitting at 13.6 by the end of the month, still significantly down on its long-term average.
In the US, economic data remained pretty gloomy. This downbeat mood was not helped by Moody's Investors Service downgrading 10 US lenders. It was the weak jobs data that appeared to take the pressure off Fed rate rises, which in turn became a buy signal for traders - at 8.83 million, this was the lowest figure since early 2021. However, a cautionary note, the Fed being the Fed has the very real potential to surprise and, at the moment, it appears to be driven by the hawks.
In China, economic data appeared to undershoot on most metrics. "Sluggish" and "downwards" are words of choice when describing China, with most economists downgrading their forecasts. Certainly not helping were China's exports and imports, which fell by more than expected in July - exports were down 14.5% year-on-year and imports down 12.4%. This was followed by China's CPI falling 0.3% in July and PPI down 4.4%.
The result has been a China stimulus push as it seeks to reengage its economy and stop the downward spiral - one action was banks cutting interest rates on mortgages and deposits; another was boosting the capital markets. Unfortunately, the general feeling is not enough is being done so far, with more "talk" than "walk". Further bazookas are required to get this ship moving!
Although parts of the month looked weak, it was a strong close into month end, with equities and commodities up. Ultimately, most markets were down for the month and it was only in the latter stages that markets had a bit of wind behind then, driven by the belief that the Fed rate rises had peaked and China stimulus would restart its economy. The S&P 500 closed the month -1.6% and Nasdaq -1.9%, somewhat masking the continued resurgence in the tech space, with Amazon and Alphabet up more than 3%. In Europe, the FTSE 100 was -3.4% and Dax -3.0%. Asia was facing its own headwinds, primarily driven by China, with the SSE Composite down more than -5% and Nikkei -1.7%
Commodities were marginally down during the month, with the Bloomberg Commodity Index down -0.6%. However, oil markets were up on tightening supplies due to low US stockpiles, increasing global demand and OPEC+ cutting production. Ultimately, oil was up for the month, although not by a huge margin, with WTI +1.9% and Brent +1.5%. In precious metals, gold was marginally down -2.1% and silver -0.6%.
As we mentioned above, crypto was back on the rollercoaster in August. What was a tough month for crypto looked to turn around with news that Greyscale Bitcoin had won a landmark legal ruling against the SEC to launch a spot ETF. This rally soon fizzled, with the SEC reminding the market who is in charge, delaying its decision on spot ETFs. By the end of the month, bitcoin had fallen by -10.5%.