The big political news towards the end of the month was Shinzo Abe stepping down last week as Japanese Prime Minister on health grounds. The Liberal Democratic Party is expected to hold its leadership election on the 14th September with votes cast by lawmakers of the national parliament and delegates from its local chapters.
The decision has caused some volatility to Japanese equities with Prime Minister Abe being the longest-serving Japanese leader, which brought with it both stability and a desire to tackle long-rooted issues (through “Abenomics”).
In investment markets, the trend of US technology stocks powering the broader US equity markets continued. The S&P 500 has been hitting fresh all-time highs towards the end of the month. The fortunes have now been shared globally and the FTSE 100 fell below the 6,000 level and very close to the level at the end of July.
Safe-haven assets have been in the ascendancy during 2020; Gold, Government Bonds and the US dollar have all performed well.
However, global risk appetite has swung into the ascendancy in recent months and these safe havens assets have lost ground. To highlight this, the UK ten-year Government Bond yield ended July at 0.1% and has increased to 0.34% – as yields increase in bonds – prices fall. This relationship is more pronounced on longer-dated bonds and these subsequently saw greater price falls during the month.
Gold had soared to a high early in the month but retreated from its high and continues to hover around the $2,000 mark.
Chief Investment Officer
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