by Qontigo
- August: Negative Returns on lower Volume, mixed news
- Risk Ticks up in Developed Markets
August: Negative Returns on lower Volume, mixed news
August was a tough month for equities across the board, with both Developed and Emerging Markets down, with the exception of Japan:
This Chart is not published with the Equity Risk Monitors but is available upon request:
This drop in index levels occurred on slumping volumes relative to earlier in the summer/spring and mixed macroeconomic news including:
- Lower corporate earnings for the 3rd quarter in a row, although they surpassed expectations
- A rise in the CPI coupled with unexpected weakness in hiring
- Long rates reaching 16-year highs (but then receding somewhat by the end of the month)
- Looming defaults in the Chinese property sector
- The Jackson Hole Conference where the message appeared to be further discipline in the face of continued inflation
The following five charts are from the US, Developed Ex-US, Europe, Emerging Markets, and China Risk Monitors for September 1, 2023:
Risk Ticks up in Developed Markets
While index risk has generally continued to trend lower from the highs of last fall, in the last week there were spikes in predicted risk nearly everywhere. In the US, Developed Markets exUS and Europe, the one-week index returns were positive but exceeded the one-week return expectation from the corresponding risk models:
The following 3 charts are from the US, Developed ex-US, and Europe Risk Monitors for September 1, 2023:
It is rare to see returns and changes in risk simultaneously positive, but the last week was a partial reversal to index weakness in the first 3 weeks of the period.
