The wildest ride in August since 2015 came to an end yesterday with all the leading indexes closing the month in the red, yet well of month lows.
The Nasdaq lost 2.6%, the S&P 500 lost 1.8% and the Dow 1.7%. The US China trade war dominated the headlines, almost on a daily basis, the inverted curved yield also played a significant role for short term panic and then the ongoing interest rate and feud between the Fed and US President Trump firm stand towards lower interest rates and a weaker USD.
On the bright side, tensions between the two-trading superpower eased in the last week of the month, sending markets higher 3% on average from August lows and signaling a calmer negotiating environment ahead and US economic data came in stronger that expected on Consumer Spending and Consumer Confidence. The Volatility also picked substantially, the VIX surged to 3 -month highs before pulling back late in the month.
Investors reacted to the increased volatility with a move to safety, sending Gold to fresh 6-year highs, $1,550 per ounce and Silver to fresh 3 -year highs, $18.4 per ounce. Both Metals turned staggering returns for the month, Gold ETF GLD traded 8% higher and Silver ETF SLV 12.8% higher, both record moves in 2019. The short term bond yields scare and looming US recession predictions contributed to the overall panic mode, that served volatility traders well this month.
Looking ahead towards September, a notorious weak month historically, the FOMC meeting and the move towards an agreement on global tariffs is what investors are looking for to keep the strong 2019 gains path in check. All leading sectors closed the month lower, the retail sector is trading at 2019 lows and is the worst leading sector YTD while metals ETFS had their best month this year and are trading at multi year highs.
Oil prices closed the month red, losing $3 per barrel to a $55.11 per barrel close, that’s on global slowdown fears, record US shell production and record US exports while OPEC production cuts and lower US inventories helped stabilized Oil price moves lower.
Oil prices still trade at 20% below their 2019 April highs, at $66.5 per barrel.