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Monthly Review August 2019: Quick Look

2 months ago

AUGUST: What happened?

-1.8%

S&P 500 INDEX

-1.2%

EURO STOXX 50

-5.0%

FTSE 100

-0.7%

CAC 40

-2.0%

DAX 30

-3.5%

BEL 20

-0.4%

FTSE MIB

-1.8%

IBEX 35

-3.4%

TOPIX

More tariffs mañana - President Trump slapped a 10% tariff on the remaining $300bn of imports from China- and then promptly changed his mind. It seems this tranche includes consumer electronics that top the American Christmas lists. And in the run up to next year’s presidential election, the president does not want to play the Grinch and force prices up. China promised ‘appropriate retaliation’. These trade spats have not been a gift to stock markets around the world.

No small change - The UK’s Royal Mint, maker of all banknotes and coins, has revealed that no copper coins were made during 2018, due to lack of demand. These are the smallest denomination coins, much loved by children and charities. And it’s not just in the UK that their days appear to be numbered. Shopkeepers in several European countries now round prices to the nearest 5 euro cents. Australia ditched copper coins decades ago and the US could be about to stop minting them in a ten year trial.

Accentuate the negative - Trade war turmoil has rolled over into fears for global growth. Financial markets have seen a rush to safe havens. Gold is enjoying its best performance for eight years. But the dash to buy government bonds has been the biggest story. As bond prices rise the yield on the bond goes down. The effect has been so sharp that the yields on government bonds totalling $15tn have been pushed below zero. In these strange times a guaranteed negative return appears a price worth paying for safety.

 

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