In August, global stock market resumed downturn given the hawkish policy stance from central banks and slowdown of economic growth. SP500 slumped by 4.2% to 3955. DAX plunged by 4.8% to 12835. China market slightly outperformed despite a mild decline as well. HSI was down by 1.0% to 19954. SHCOMP went down by 1.6% to 3202. Commodity prices remained weak. Copper price moderated by 1.5% to $7802. Aluminum price dropped by 5.2% to $2359. Gold price moved down by 3.1% to $1711. Oil price continued to underperform, plunged by 9.2% to $90.
Global economy continued to slow down, led by Europe and Japan. Global PMI dropped to 50.3 from 51.1. By regions, US PMI remained flattish at 52.8. Eurozone PMI went down to 49.6 from 49.8. Japan PMI dropped to 51.5 from 52.1. China PMI slightly rebounded to 49.4 from 49.0. On the other hand, inflation trend diverged in US and Europe. CPI moderated to 8.5% from 9.1% in US while rose further to 8.9% from 8.6% in Europe. Despite the falling CPI, Federal Reserve officials reiterated the hawkish policy stance in terms of interest rate hikes. Stock market plummeted again after Powell said in the Jackson Hole speech that the central bank will not back off in its fight against rapid inflation even this may lead to a lower growth. The situation in Europe was worse than other major economies. ECB is on the road to raise interest rate to fight rising inflation while demand drivers had fallen in a fast pace. Dollar continued to gain strength given the rising recession risk in Europe.
For the outlook of September, market may remain weak given the continuous high inflation, slower growth and tightening monetary policies in major economies. Country wise, China economy is still bottoming at current level with limited upside or downside risk. US economy may continue to moderate, but down less than Europe.