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  • Profit-taking − especially by investors in American technology stocks − continued during much of last week, but many markets rebounded towards the end. As a result, the MSCI All Country World Index of equities has been largely unchanged over the past week. It is a normal pattern for stock markets to take a breather after a sharp upturn like the one we have seen in recent months.
    Meanwhile there has been no shortage of news headlines this past week, for example that after first pausing Phase 3 trials of its COVID-19 vaccine, AstraZeneca has now resumed them. Some pharmaceutical companies are saying that a vaccine may be available before the end of 2020. This has fuelled risk appetite in financial markets, despite new virus spread reports.

  • International stock markets showed signs of stabilising after last week's price plunge. The downturn is explained primarily by profit-taking in the technology sector, which has seen surging share prices in recent months. In the United States, the tech-heavy Nasdaq Composite index − which had gained a record-breaking 76% by September 2 after bottoming out in March − lost 6% later in the week and fell by another 4% when US exchanges reopened on September 8 after a national holiday.

  • Optimism about economic growth, as well as low interest rates and bond yields, are generating continued risk appetite despite uncertainty about COVID-19 developments. Last month will go down in history as the best August for equities since 1986, with America's broad S&P 500 index gaining 7%.