The Bitcoin rally is on pause, but it again posted knock-out gains in August

Good morning.

There’s nowhere else to put your money. That could very well explain today’s impressive bounce in stocks as the calendar flips to September.

European and Japanese equities finished August in the green, and are padding those gains this morning. U.S. futures too are climbing as I type.

Elsewhere, crude is jumping ahead of today’s OPEC+ meeting and Bitcoin continues to trade sideways.

In today’s essay, I examine the big winners from last month.

Let’s see what’s moving the markets today.

Markets update

Asia

• Asia is in the green with the Nikkei up nearly 1.3% in afternoon trading.
• China stocks are on the rise even as China manufacturing data for August came in below expectations.
• Crude is bouncing higher ahead of today’s OPEC+ meeting. The market is betting the oil producing cartel will not tinker with output.

Europe

• The European bourses were bouncing back strongly after yesterday’s sell-off, with the Stoxx Europe 600 up nearly 0.9% in the first hour. At the start, nearly every sector was in the green with travel and leisure leading the way higher.
• The euro jumped and the yield on German bunds sank on Tuesday as Eurozone inflation data came in hotter than expected. The common currency is gaining again this morning as FX traders seem to think we could see the ECB getting less dovish in the months to come.

U.S.

• U.S. futures point to a solid open. Yesterday, all three major exchanges finished a whisker lower, but closed out August in the green. The S&P 500 is now on a seven-month winning streak.
• Breaking: the U.S. housing market is 🔥🔥🔥. House prices soared (again) in June, according to the much-watched CoreLogic Case-Shiller report.
• In IPO news: on Tuesday, Allbirds, the shoe brand favored by Silicon Valley types, filed to go public in a listing that could value the firm at $1.7 billion. Fortune‘s Phil Wahba tore through the document and filed this report.

Elsewhere

• Gold is down, trading below $1,820/ounce.
• The dollar is gaining.
• Crude is up with Brent trading below $72/barrel.
• Bitcoin is trading sideways, currently hovering above $47,000.

***

Winners and losers: August edition

It’s September 1, and already it appears there’s a change in the air. For starters, there’s a surge in trading volume, and you can see that in the gains so far in Asia and Europe.

I did a double-take this morning at the European open. I hadn’t seen the bourses pop like that in weeks.

But before we get into September, let’s review last month’s performance—as we do at the start of each month.

Last month at this time, we were talking about the impressive rally in crypto, wondering if it would last. Well, crypto bulls not only saw their holdings of Bitcoin and Ethereum hold their gains, but pad their returns. Bitcoin climbed nearly 15% in July. It’s now up 31.4% over the past two months, and up 61.3% year-to-date (as the chart below shows).

And to think: just six weeks ago, Bitcoin was underperforming the S&P 500.

Elsewhere, the gains weren’t nearly as impressive. But the big story of August—or, rather, the big story of the past two weeks—has been the tech rally. The Nasdaq finished August +4%, outperforming the major U.S. exchanges.

Japanese shares also rebounded nicely while European stocks merely grounded higher.

The dogs of August were—no surprise here—Chinese stocks. Investors continued to sell off Chinese shares as Beijing’s regulatory crackdown continues. The Hang Seng closed yesterday down 4.5% for the year.

And what do we have to look forward to? Well, historically September is not a great month for returns.

“Although this bull market has laughed at nearly all the worry signs in 2021, let’s not forget that September is historically the worst month of the year for stocks,” wrote LPL Financial Chief Market Strategist Ryan Detrick in the firm’s markets blog. “Even last year, in the face of a huge rally off the March 2020 lows, we saw a nearly 10% correction in the middle of September.”

***

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

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