Insights

Global equity markets churned higher in August, even as investors contemplated the fast-spreading delta variant, signs of cooling global growth, accelerating inflation, and the path for monetary policy.

In April, sentiment was reinvigorated and risky assets got some much-needed reprieve after the worst meltdown since the global financial crisis. Investors welcomed some tentative signs that the COVID global infection curve may be flattening, which sparked discussions about re-opening the economy.

The macroeconomic outlook continued to gather momentum heading into the second quarter as the global vaccine campaign accelerated, while plans for large-scale fiscal spending in the US also emboldened calls for a rapid recovery through 2021.

The fastest bear-market recovery in history showed little sign of wavering in August. Investor optimism remained buoyant on signs of progress in developing a vaccine to quell the pandemic, which helped to instill confidence in a swift global economic revival.

The crisis in confidence stemming from COVID-19 has become increasingly self-fulfilling, which has brought into question our outlook for global growth as government efforts to contain the virus restricts economic activity and as individuals self-isolate in response to the fast-spreading pandemic.