August’s investment market commentary

August can be a troublesome month for financial markets, but this year saw riskier assets continue to climb from March lows as Andrew Yeadon’s update explains.
Share on facebook
Share on linkedin
Share on twitter
Share on email
Published 9 September
2½ mins

Although August can sometimes be a troublesome month for financial markets, this year broke from that pattern as risk assets continued their recovery from their March lows. While equities and commodities rose strongly, safe haven assets gave up some of their gains made earlier in the year. This was also true within asset classes, with the riskier areas providing the best returns, while more defensive areas trailed.

Arguably the most important event of the month was a speech made by Federal Reserve (Fed) Chairman, Jerome Powell, when he indicated clearly that the US central bank would look to take a more relaxed view on inflation moving forward. The statement implied that interest rates would remain lower for longer as part of the Fed’s plans to “reflate” the US economy.


While COVID-19 cases continued to rise world-wide, markets took some encouragement from reports of new and better treatments, progress on vaccines and an apparent reduction in death rates. However, as the month drew to a close it became clear that infection rates were rising precipitously in a few European countries (France, Spain etc.), which led to the reintroduction of some travel quarantines and local restrictions.

Most equity markets rose, with the MSCI AC World Index advancing +3.9% in Sterling terms. Japan (+5.4%) and the US (+5.2%) were the strongest performers, While Emerging Markets (+0.1%) and the UK (+1.4%) lagged. At the sector level, cyclicals tended to outperform defensives, with the standout gains seen in consumer discretionary (+9.8%), information technology (+7.0%) and industrials (+6.0%), while utilities was the weakest area, losing -3.7%. From a style perspective, investors continued to back growth (+5.6%) more strongly than value (+2.0%), while larger companies (+3.9%) slightly outpaced smaller companies (+3.4%).


In a break from the recent past, the reflation trade saw bond yields generally on the rise with yield curves steepening. As a result, longer duration higher quality bonds performed poorly, with the JP Morgan Global Government Bond Index delivering a loss of -1.1%. Although credit spreads narrowed a little, higher quality corporate bonds took their lead from broader interest rates, and the ICE Merrill Lynch Global Corporate Investment Grade also lost -0.8%. In contrast, lower quality corporate bonds fared better, with the Merrill Lynch Global High Yield gaining +1.3% (all hedged to Sterling).

The reflation trade also provided a boost to the more economically sensitive commodities. Overall, the Bloomberg Commodities Index rose +4.5%, boosted by sharp increases in agriculture (+3.3%), industrial metals (+4.7%) and crude oil (+2.9%). Among the main commodity sectors, only the safe haven of gold (-2.4%) lost ground as investor risk aversion waned through August.


While Sterling was a little firmer against most currencies, the biggest story in the foreign exchange markets was the weakness of the US Dollar, which reacted in part to Fed Chair Powell’s comments about being more tolerant on inflation moving forward. With investors also feeling a little more adventurous, the demand for the Dollar as a safe haven also faded. Over the month, the US Dollar lost -2.1% versus Sterling, -1.3% against the Euro and -2.2% relative to the Chinese Yuan.

(Notes: All monthly data is quoted in Sterling terms unless otherwise stated).

FTSE 1005897.765963.57
DJ Ind. Average26428.3228430.05
S&P Comp3271.123500.31
Nasdaq 10010905.8812110.7
£ Base Rate0.100.10
Brent Crude43.5245.28

This month’s values quoted as at 31/08/2020. The above values are sourced from Bloomberg and are quoted in the relevant currency.

Clients of Nedbank Private Wealth can get in touch with their private bankers directly to understand how their portfolios are responding to market events or call +44 (0)1624 645000 and speak to our client services team.


If you would like to find out more about how we help manage clients’ investments, please also contact us on the number above. Or you can get in touch using the links to the forms towards the end of this page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned here may not be suitable, and is included for information only and is not a recommendation. You should always seek professional advice before making any investment decisions.

about the author

Andrew Yeadon

Andrew Yeadon

Andrew joined in 2012, following 11 years with Schroders Investment Management, where he formed their multi-manager team. Prior to joining Schroders, Andrew spent 12 years at Brinson Partners (now part of UBS) where he progressed from graduate trainee to head of European equity strategy and portfolio construction.


His responsibilities include heading the London-based investment team, and chairing both the International Strategy Committee and the International Investment Committee. Andrew is also part of the international investment team for Nedgroup Investments, a sister company of Nedbank Private Wealth.

Access more of our insights


Weekly investment update

22 Sep

   |   4 mins

James Robertson reviews the week of 14 September, which was relatively quiet in markets, but resulted in varied performance across the different asset classes and another risk-off week for investors.


20 years on: déjà vu for tech stocks?

15 Sep

   |   9 mins

Rebecca Cretney reviews the slide in tech stock values, asking if this a repeat of the Y2K tech bubble bursting or if this is just due to current day events.


Weekly investment update

15 Sep

   |   5 mins

David McFadzean reviews the week of 7 September, where markets saw the trends in the first week of the month repeated, as investors remained risk averse.


8 October: our next quarter end investment webinar

11 Sep

   |   30 mins

David McFadzean is being joined by Andrew Yeadon to discuss the key events in Q3 markets, recent portfolio changes and what could happen before the end of 2020.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.

We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.

* Required fields

Contact Us

Give us a call today on +44 (0)1624 645000 or please complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.

Our office hours are weekdays from 8am to 8pm UK time, except for UK public holidays.

* Required field

Search suggestions