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Summer doldrums! Following a five-month stretch of rising global stock prices, equity markets fell back slightly in August. After a better-than-feared earnings report season, investors re-focused on macro events. The tug-of-war in opinion regarding future central banks rate hikes, significantly higher yields on long-term government bonds, as well as worries over developments in the Chinese real-estate sector, all weighted down on risk willingness.

Tech stocks – the place to be in 2023 (so far)

As has been the case throughout 2023, information technology stocks were once again in focus in August. Following the very strong performance seen in the sector, earnings from bellwether chipmaker Nvidia, whose results were among the most anticipated, delivered yet another set of stellar numbers. After a minor consolidation, its shares continued to gain, confirming information technology as the place to be, so far this year.

Few surprises from Jackson Hole

The annual central bankers´ conference in Jackson Hole, Wyoming, delivered few surprises. Federal Reserve chairman, Jay Powell, stated that inflation was coming down but kept the door open for new hikes if warranted. Initially seen as hawkish by market participants, the statement was subsequently viewed as confirmation of the data-dependent stance communicated by the Fed for some time. Christine Lagarde, the head of the ECB, made some statements in her speech which were interpreted as slightly dovish, possibly against the backdrop of the bleak economic development in Europe, leaving a possible hike in September an open question. 

Several countries pledged further support to Ukraine

Ukraine´s counteroffensive seemed to have bogged down in August with few major breakthroughs. After a lengthy political process, Denmark, the Netherlands and Norway decided to supply Ukraine with US-made F-16 fighter jets, with training commencing shortly. Otherwise, attention was centered on the plane crash outside Moscow where the leaders of the Wagner mercenary group including figurehead Yevgeny Prigozhin were presumed killed. The crash, most likely caused by some kind of sabotage, was considered to have strengthened Vladimir Putin and the Russian regime.

The Chinese real estate sector back in focus

Apart from widespread disappointment over the lackluster growth in the Chinese economy so far this year, the real estate sector came under renewed scrutiny when the developer, Country Garden, failed to meet interest payments. Peer Evergrande had to seek chapter 15-protection in the US. The Chinese authorities responded by easing reserve ratios on banks, and also said they were prepared to cut duty tax on equity transactions in order to attract foreign investors to domestic financial markets.

A growing BRIC group

The BRIC group (Brazil, Russia, India and China) met in Johannesburg, South Africa, and decided to include a number of additional countries including Saudi Arabia, Iran and Egypt. The expansion was seen as an intention to challenge the Western world, not least as far as energy production is concerned.

World index down in August

The world index thus fell back slightly in August as measured in US dollars or Euros. Even though information technology and related sectors still lead performance tables by a wide margin so far in 2023 energy and healthcare outperformed the market in August, while utilities and financials lagged. Looking at the regions, the US outperformed Europe and Hong Kong declined the most.



At the beginning of August, almost everything struggled. It was particularly difficult for biotechnology and small caps, which continued to decline throughout the month. Despite reasonable earnings reports, medical technology and managed care had a surprisingly hard time. The pharmaceutical sector was the only sub-sector to properly bounce back from the initial decline, finishing on a reassuring plus.

Interest rates put pressure on the healthcare sector

The most important explanation for the weak development in the healthcare sector overall was the continued rise in interest rates, which for a while was significant, but which then fell back at the end of the month when inflation concerns subsided.

A September with an opportunity to surprise

Historically, September is a soft month, but has a good opportunity to surprise positively this year. Inflation continues to fall at the same time as many macro figures indicate good growth in the US and a continued good level of demand. The labor market is strong but no longer overheated to the same extent. Some analysts believe that final demand, and thus the economy, will decline during the fall when households’ reduced savings become evident. Time will tell.

Nevertheless, we believe that the opportunities for the sector outweigh the threats in this type of environment. The interest rate hikes should be over, and the economy may well have a soft landing. A minor recession in the US is still possible, and even likely in Europe. We believe the healthcare sector should fare better than many other sectors and we are more optimistic than usual for this time of year. Nevertheless, a certain amount of caution is, of course, both reasonable and appropriate.