Gold price approaches new record high
Investors rejoicing over July’s excellent performance were in for a cold shower in the following month, as August held no pleasant surprises in store. The S&P500 index fell by 6.8% and thee merging equity markets by 4.23% in dollar terms, and even holders of Hungarian state bonds had no cause for celebration, as the value of their investments dropped 0.27%. The EMBI, or Emerging Markets Bond Index, was virtually the only good performer, and rose by 1.81%. In our outlook for August we turned our attention to maize, which in line with our forecast, and on the back of the Russian export embargo, managed to maintain its upward trend and gained almost 8% in price over the last months of the summer.
Unfavourable and favourable macro data alternated with each other in August, and we even witnessed a new low in the US residential real estate market. (In July 3.83 million used and 276 thousand new homes had changed hands, against a backdrop of falling prices). Interestingly, according to ISM data, the American manufacturing industry gained new momentum in August, as the index rose from the previous month’s 55.5 to 56.3. The indicators that usually reflect the state of the economy offer noclear guidance, as the equity markets continue to be characterised by turbulent price movements andtrading patterns display no firm trends, so there is still good reason to err on the side of caution. We recommend slightly overweighting European, Japanese and Asian stocks, while in the case of the US and emerging markets we maintain a neutral position relative to the benchmark. We prefer regional peers over Hungarian bonds, as the positive shift in the EUR/HUF exchange rate and their more favourable government borrowing situation suggest that they could outperform.
Download the whole outlook here:
Monthly outlook - September
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