In spite of the relatively quiet trading, the FTSE 100 saw some volatile trading, falling by three percent at one point, only to stage a last-minute rally and finish up by 1.3 percent as trading closed for the month.
The UK's leading index has been affected by concerns about Russian military forces entering the Ukraine, as well as US air strikes against Iraq. This, combined with the traditional low trading volumes of the summer months has created an environment where the few trades which do occur cause large fluctuations in the market. Investors then see the disproportionate effect that those trades are having, and become reluctant to trade themselves. The slowing of IPOs and M&A activity over the summer has also not helped to boost trading volumes.
There are some new mergers and acquisitions in progress which could see a flurry of activity for September, and some investors may be waiting for those moves to take place before they start buying and selling themselves. In particular, Shire is a target for acquisition by AbbVie, and AstraZeneca has attracted the attention of rival drug maker Pfizer.