European equity markets declined in August, reflecting renewed investor concern with increasing trade pressure between the US and other countries. Both the Euro Stoxx 50 and FTSE 100 indices lost more than 3% in total return in the month, turning negative year-to-date.The British pound continued to lose ground against other major currencies in August. CPI price inflation rose from 2.4% to 2.5% in July, but RPI price inflation declined by 20 basis points to 3.2% in the same month. Realised volatility of equity indices picked up in mid-August on the back of trade disputes and emerging market uncertainty. The volatility risk premium increased for all indices in August, with the S&P 500 index ending the month around 3.5%.
Milliman Market Monitor London - 31 August 2018