Perspectives | August 2021 | Global Indices

Summary of the month

• The situation in Afghanistan is becoming more complicated, following the failed U.S. operation to evacuate Afghan military personnel and refugees.
• At the Symposium Jackson Hole held the last weekend of August; Federal Reserve Chairman Jerome Powell hinted that the asset purchase program ($120 billion per month) could be modified before the end of the year. He also noted that such a move does not mean that an interest rate hike is on the horizon.
• The major global indices showed solid returns, continuing their outstanding performance so far this year. Both the S&P 500 and the Nasdaq 100 have achieved record levels, with the Financials, Communications and Utilities sectors standing out.

Macro corner | Global indices

Last month, more than 85% of companies reporting corporate results exceeded analysts' earnings estimates. While corporate profits rose 90% from year-earlier levels. Despite these outstanding results, the S&P 500 and other global indices experienced brief volatility due to rising tensions in Afghanistan. 

Following the attack on the airport in the Afghan capital, the S&P 500 and Nasdaq 100 briefly fell to new lows for the month. However, as the Taliban tighten their grip on Afghanistan, the markets seem to ignore the latest developments in Kabul, recording new highs in the last week of August. 

Consumer balance sheets remain strong after most households have increased their savings which has meant an increase of trillions of dollars over the past year across the board. After some members of the Federal Open Market Committee of the Federal Reserve hinted at a tapering of the asset purchase program, the indices recorded a slight decline.

In his speech at the Jackson Hole Symposium, Powell sided with the opinion of most of the event's participants, who believed that if the economy continued on the solid path of recovery, it would be appropriate to begin reducing the monetary institution's asset purchases.