Month in the Markets: shares move higher and shake off two big fears

India was the best-performing country, with its S&P BSE SENSEX reaching a new all-time high.

August proved another good month for global shares. Two big fears dominated markets in August: the spread of new Covid-19 variants and the potential for the Federal Reserve to claw back on monetary easing.

Investors, however, were able to look past these two risks. Over the course of the month, the S&P Global 1200 index rose by 2.4% and the D&P Developed BMI rose by 2.5%.

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As we have become accustomed to, the US led the way. The S&P 500 index outperformed global indices, gaining 3.2%. This now gives it a year-to-date return of almost 22%. Performance in other segments of the US market were positive but less impressive. The S&P MidCap 400 and S&P SmallCap 600 indices both gained around 2%, while the Dow Jones Industrial Average posted a return of 1.5%.

In terms of factors, all posted a gain. However, generally the ‘risk-on’ factors, such as momentum and growth, saw the best returns. The S&P 500 Momentum index saw a return of 4.5%, and the S&P 500 Growth Index 4.2%. Meanwhile,‘risk of’ factors such as low volatility and high yield shares saw weaker returns.

In terms of sectors, all posted a gain with the exception of energy. Owing to weakening oil prices in August, the sector experienced a collective decline of 2%.

In Europe, the S&P Europe 350 added 2.1%, while the S&P United Kingdom gained 2%. Smaller companies in Europe did particularly well, with S&P Europe SmallCap BMI gaining 3.6%.

Every European sector apart from consumer discretionary posted gains in August. The leading sector was information technology, with the index gaining 7.4%. This was roughly double the return of the second-best sector, utilities, which gained 3.8%. 

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Globally, Asian equities saw gains in August, with the S&P Pan Asia BMI up 3%. India was the best-performing country, with its S&P BSE SENSEX reaching a new all-time high. Hong Kong stocks lagged, with investors still fearful about China’s unpredictable regulatory crackdown.

The S&P Emerging index, meanwhile, posted a gain of 1.5%.

Latin American equities saw small declines in August, with the S&P Latin America BMI and S&P Latin America 40 down 0.3% and 0.1%, respectively. Driving these losses were political risk and Covid-19 fears in Brazil. Mexico, Colombia and Chile all saw gains.