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Newsletter September 2017

EQUITY OVERVIEW - EQUITIES REMAIN IMMUNE TO GEOPOLITICAL EVENTS

Equity markets were resilient in August to geopolitical events as major indices rose to higher levels. The Dow Jones Industrial Index reached 22,000 for the first time.

Emerging markets continued to experience the benefit of a weakening U.S. dollar, with a rise in August. For emerging markets, a weaker dollar makes it easier for those holding debt denominated in U.S. dollars to repay them. This is a significant factor since emerging markets carry a large amount of debt. A weaker dollar also helps exporters of commodities, as a weak dollar tends to boost commodity prices.

Companies are already struggling with tight margins so any increase in expenses would further reduce margins unless higher costs are passed onto consumers in the form of higher prices.

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Sources: Bloomberg, Reuters, Dow Jones