A decidedly mixed month August, July’s gains continued into the early days, but problems emerged as doubts grew about the health of the US economy.
The Fed downgraded its view of the US economy, the second such move in six weeks and then Fed chairman Ben Bernanke described the state of the economy as being "unusually uncertain".
Many in the markets took that to read that the central bank would do something dramatic, more than what it had said it would do at its August meeting which was that it would not start cutting the size of its balance sheet, as it had planned.
A speech by the Fed chairman on Friday left the markets still wondering, but the downward revision in US second quarter economic growth and the continuing weak employment data prompted another fall at the end of the month.
But in Europe, Germany and the UK were booming by comparison (certainly Germany).
China slowed, Japan’s economy hit the wall and according to the latest data on second quarter growth, is on the edge of a slide back into the red.
In Australia doubt and confusion continued through the June 30 reporting season, but not to many investors were convinced by the reported numbers while many companies refused to give an outlook view of the current half or coming year.
Big miners like BHP Billiton and Rio Tinto did well, but the surprise was the way old line media in newspapers and TV networks bounced back and the sector overall was probably the best profit performers (from a low base) in the industrials.
So how did the various markets finish the month?
Well, Wall Street was down with the biggest losses since the recession of 2001 for the month.
The S&P 500 has lost 4.5% this month and is down 5.7% in 2010.
The Dow lost 4.7% and Nasdaq 6.2%, with the growing doubts about tech stocks overshadowing the sector, especially after Intel’s downgrade last Friday.
Gold was up around 5.6%, thanks to the renewed outbreak of volatility.
That compares to the 5% fall in July, when markets were far more positive.
Oil lost 8.9%, including $US3 a barrel, or 4% overnight.
While it was the first monthly fall since May, it was a nasty one.
In contrast, copper finished up around 3.6% for the month, a bit slower than the 12% surge in July.
But that in itself is a bit odd given that oil and copper are the two commodities that respond strongly to suggestions of changes in economic activity (being premier industrial commodities).
Europe’s Stoxx 600 Index rose overnight to trim the loss for the month to 1.6%.
London’s FTSE 100 lost 0.6% for the month, but Germany’s DAX shed 3.6%, despite the country’s economy experiencing the best recovery of all 27 countries in Europe
In Australia, the ASX200 index was down 48.5 points, or 1.1%, at 4404.2 yesterday, while the All Ordinaries Index dropped 44.3 points, or 1%, to 4438.8.
As Australian markets fell 2% after rising 4.5% in July, half the monthly fall happened yesterday, the last day of trading for August.
But the market peaked on August 9 and from that level the ASX 200 is down 191 points or well over 4%, while the All Ords was off 178 points, or around 4%.
Tokyo shares plunged 3.55% yesterday, ending at a fresh 16-month low as worries over a persistently strong yen hit exporters.
The Nikkei index dropped 325.20 points to 8824.06, its lowest close since April 2009.
For the month, the Nikkei dropped a nasty 7.5% and is now down 22% from its April peak, putting it back in bear territory.
The Shanghai Composite Index fell half a per cent yesterday to be up less than 0.1% for August after July’s 10% rise.
The Shanghai index has rebounded 12% from this year’s low on July 5, which has cut the year’s loss to 10%.
The Australian dollar lost half a cent over the month against the US dollar to close at 89.18 yesterday in Sydney. the trade weighted index fell to 69 from 69.4% at the end of July.
