The mini-crash in stock markets seems to be old news, with levels recovering back towards those seen at the end of July. In the UK, reports that GDP grew by 0.6% in the second quarter of the year suggests that the economy remains in something of an upswing, whilst retail sales also rebounded strongly on the back of the Euros football tournament and widespread summer discounting. There remain things to be mindful of though and having fallen to the lowest levels since the beginning of the year, the price of oil has been ticking up again, buoyed by escalating conflict in the Middle East and news on Monday that Libyan production would be shutting down, taking around 1 million barrels per day off the global market. Although rising energy prices can be inflationary, for now global inflation levels do appear to be moderating, and it seems likely that this, alongside other factors, could lead to the central bank easing cycle picking up pace in the months ahead.
As the end of August approaches, investors might just be mindful of the September effect - a perceived belief that this month tends to be a bad one for markets. Whilst the data I have seen relates only to the US, the S&P500 Index and its predecessor have risen less than 45% of the time during September since 1928. Over the last 20 years it has been the worst performing month for all three of the main US indices. There is of course no guarantee this trend will continue, and returns will vary from year to year, but with at least six Central Bank meetings coming up, and a closely watched US jobs report due on 6th September, whatever happens it seems entirely possible that market volatility will remain a factor to be mindful of.
