The price of wheat goes through the roof!

Ádám Halóka
Investment expert

Equities performed extremely well in July, as the S&P500 index rose by 6.88% in dollar terms and the BUX by 5.77% in the local currency, while the USD-denominated MSCI EM Equity Index, which represents emerging markets, rose by 8%.

Share prices rose mainly on the back of favourable macroeconomic figures and news, such as the announcement by the International Monetary Fund at the start of the year of an improvement in its global-growth forecast for 2010 from 4.2% to 4.6%, while China showed year-on-year GDP growth in the second quarter of 10.3% combined with an easing of inflationary pressure.

The US economy expanded by an annualized 2.4% in the second quarter, which, although representing a slowdown compared to the figure of 3.7% for the previous quarter, appears to have been sufficiently convincing for investors, especially in light of earlier declines, to further increase their exposure to equities.

At the beginning of August, however, the markets began a correction, and even the persistently favourable surprises of the corporate reporting season were unable to prevent the decline. From the firm resistance levels of 1120-1130 points, the S&P 500 index took a sharp downward turn, accompanied by substantial trading volumes, in the direction of the X axis of the graph. At the same time, the good news for investors keeping their savings in Hungarian forints was that the forint was able to remain relatively stable despite the fall in international risktaking propensity, holding at levels of 280 forints to the euro.

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