Equities and bonds both fell during the month of August as a more ‘hawkish’ tone from central banks weighed on sentiment. Equities did start the month in a positive fashion, following on from a very strong July, but swiftly changed course mid-month. The reversal was predicated on the comments from Fed Chair Powell at the Jackson Hole Symposium. Inflation remains a key focus with the annual rate of change still at elevated levels across the US, eurozone, and UK respectively.

As a result, the market expects interest rates to continue to climb, most notably in the eurozone and US with increases of 0.75% expected in September. This expectation has led to higher bond yields (which move inversely to price) on both sides of the Atlantic. Whilst leading indicators such as PMIs broadly held up in August, as did employment data, there is a growing consensus that the effects of higher interest rates will cause economic growth to slow further. In China, consensus growth projections have been trimmed further as authorities implement a series of both monetary and fiscal measures to support the economy.

For full details of last month's market movements you can download our monthly reports below.