August 2026 Market Review: Strong earnings and economic resilience outweigh inflation concerns

Global markets advanced in August as resilient economic activity and a strong corporate earnings season supported investor risk appetite. Equity markets posted broad gains despite persistent inflationary pressures, higher long-term bond yields and renewed geopolitical tensions in the Middle East. Emerging-market equities outperformed their developed-market counterparts, with emerging Asia benefiting from renewed semiconductor momentum.

Fixed income also delivered positive returns overall, although performance varied across regions. Short-dated US yields rose as expectations for policy easing were scaled back, while the 30-year yield ended the month slightly lower. A softer US dollar further supported US-dollar returns from global bonds. Commodities strengthened for different reasons: gold benefited from the weaker dollar and demand for real assets, industrial metals responded to firmer demand expectations, and oil hovered around USD 90 per barrel amid continued tensions in the Middle East. Against this backdrop, central banks remained cautious, as elevated energy prices threatened to slow disinflation and keep interest rates higher for longer.

Market and Macro Overview

• Global markets demonstrated resilience in August following a strong earnings season and continued AI-related investment. At the regional level, US equities were led by the technology sector, with the Nasdaq and S&P 500 outperforming the Dow Jones Index. Japan’s equity markets were supported by a global tech stocks outperformance and a softer yen, despite concerns about inflationary pressures driven by the Middle East conflict. Taiwan led Emerging Asia while China’s equity market performance remains subdued due to weak domestic activity. On the fixed income side, the US Treasury yield curve flattened in August, with the front-end repricing higher and longer-dated yields declining modestly.

  
  

• Central bank expectations shifted in a more hawkish direction during August. In the US, Chair Warsh’s Jackson Hole remarks increased expectations of a September rate increase, as inflation remained above the Fed’s target of 2.0% and economic activity proved resilient. Markets also anticipated further ECB tightening as higher energy costs and persistent underlying inflation outweighed softer growth concerns. In Japan, a weaker yen, higher energy prices and higher underlying inflation strengthened expectations of another rate increase in September as the BoJ continued its gradual policy normalization.

  
  

• United States inflation edged lower in July 2026, with headline CPI easing to 3.4% from 3.5% in June 2026, while core CPI declined to 2.5% from 2.6% over the same period. Recent data indicated that the unemployment declined to 4.1% in July, from 4.2% in June. This fall was due to a decline in the labor participation rate to a near 5-year low of 61.4% while payroll employment contracted by 23,000.

• Euro area annual inflation remained above target, increasing from 2.8% in June to 2.9% in July, with an Iran war-induced oil price surge driving the increase. Core inflation, which filters out volatile food and energy prices, accelerated to 2.5% in July from 2.4% previously, driven by services inflation. According to a flash estimate from Eurostat, Euro area annual inflation is estimated to rise to 3.3% in August 2026 due to higher expected energy prices.

(Source: Eurostat)

• South Africa’s inflation cooled in July 2026, with headline CPI declining to 4.3% (Previous reading of 5.0%), driven mainly by lower food and beverage prices, smaller municipal tariff increases and lower fuel prices. On the labor front, the official unemployment rate rose to 33.6% in Q2 2026 from 32.7% in Q1 2026, the highest reading in four years.

(Source: Statistics South Africa)

Equities overview

During the month, Middle East ceasefire discussions continued through the month, with no final deal being reached between Iran and the United States. Despite higher geopolitical tensions and volatility, market sentiment remained positive with robust earnings releases and sustained AI and tech demand globally. A softer U.S dollar boosted emerging market stocks. Over the past 12 months ended August 2026, the MSCI All-Country World Index has returned 22.8%, outperformed by the MSCI Emerging Markets Index which rose by 39.7%.

• United States equities delivered strong gains over the month, primarily driven by tech stocks as investment in AI infrastructure continued to translate into robust revenue and earnings growth. The S&P 500 and the Nasdaq rose by 2.6% and 3.9% respectively, outperforming the Dow Jones Index. Performance also broadened beyond large-cap tech companies, with small-caps and growth style stocks posting strong gains.

  
  

• Europe’s EURO STOXX 50 posted returns of 0.98% over the month, boosted by growth-style stocks amid renewed technology momentum but lagged their global developed counterparts. On the other hand, France’s CAC 40 and UK’s FTSE 100 declined by 2.1% and 0.4% respectively while Germany’s DAX rose by 2.5%.

  
  

• Japanese equities delivered positive performance with the Nikkei 225 rising 3.0%. This strong performance was supported by a weaker yen, stronger tech-related demand and a more expansionary fiscal backdrop as during July 2026, Japan’s government approved its economic and fiscal policy guidelines focused on a more expansionary, growth-oriented fiscal stance.

• Emerging market equities outperformed in August, with the MSCI Emerging Markets Index rising by 3.4%, driven primarily by Emerging Asia. Strong semi-conductor demand amid renewed AI hype was favourable for Taiwanese stocks with the MSCI Taiwan Index up by 4.4%. Chinese stocks lagged with the Hang Seng Index down 1.2% as August’s economic data highlights ongoing domestic weaknesses.

  
  

• In South Africa, equity markets ended the month higher by 4.3%, lifted by higher global gold prices alongside improving inflation data. The resources sector was the major contributor to this performance while the property sector lagged after outperforming in July.

  
  

Fixed income overview

On the fixed income front, the Bloomberg Global Aggregate Bond Index delivered positive returns of 0.5% over the month. US treasuries posted a modest positive return as the 30Y yield eased later in the month after the US Treasury announced plans to at least double the pace of longer-dated bond buybacks from September onwards. Shorter-term yields, on the other hand, rose as the Fed maintained a cautious stance on inflation and future monetary policy as the economy remains resilient.

Source: U.S department of the Treasury

Japan’s government bonds delivered negative returns over the month as the 10Y JGB yield rose to a multi-decade high of 2.95%. The latest domestic inflation reading of 1.8% nears the Central Bank’s target of 2.0%, increasing the likelihood of a rate hike to 1.25% in September 2026. These reflect the Central Bank’s growing caution about energy-driven inflation stemming from the US-Iran war and also persistent selling pressure on the yen, despite July’s Japan-US currency intervention to stabilize the yen’s value.

South African bond markets posted positive returns with the FTSE/JSE All Bond Index rising by 0.7% as inflation concerns eased, with headline inflation declining to 4.3% in July 2026 from 5.0% previously. Despite the declining inflation data, the Reserve Bank is likely to exert caution during its September meeting given inflation remains above the Central Bank’s target while it evaluates the potential impact of the ongoing Middle East conflict.

Commodities overview

• Commodity markets were driven primarily driven by renewed geopolitical risks and a softer US dollar. Brent crude oil rose approximately 1.3% to end the month near USD 85.8 as the Middle East backdrop remained tense. Sustained market concerns about global supply disruption kept oil prices hovering in the USD 80 – 90 range over the month as the conflict extended into its sixth month.

  
  

• Gold rose around 10.0% to approximately USD 4,448.9 over the month, driven by a weaker US dollar and falling longer-term UST yields. Renewed geopolitical tensions in the Middle East were also favorable for the bullion. Over the past 5 years, gold has delivered annualised returns of 19.7% while the MSCI All-Country World index and the Bloomberg Global Aggregate Bond index posted returns of 11.4% and -1.7% respectively. This underpins gold’s role as a strategic diversifier.

Conclusion

Looking ahead, resilient growth and solid earnings continue to provide a supportive backdrop for markets, although persistent inflation and geopolitical risks are likely to keep returns uneven. This environment favors a selective approach, focused on companies with sustainable earnings, high-quality bonds offering attractive income and gold as a portfolio diversifier. Central-bank decisions, energy prices and the durability of AI-related investment will remain key drivers of market direction.

31 Aug 2026		Performance
INDICES	Value at close	1M	YTD	1Y	3Y	5Y
MSCI AC World	2,749.88	2.7%	14.6%	22.8%	21.0%	11.4%
US
S&P 500	7,686.14	2.6%	12.3%	19.0%	19.5%	11.2%
DOW JONES	53,185.90	1.3%	10.7%	16.8%	15.3%	8.5%
NASDAQ	26,370.89	3.9%	13.5%	22.9%	23.4%	11.6%
EUROPE
CAC 40	8,334.50	-2.1%	2.3%	8.2%	4.4%	4.5%
FTSE 100	10,824.26	-0.4%	9.0%	17.8%	13.3%	8.7%
DAX	26,258.11	2.5%	7.2%	9.9%	18.1%	10.6%
ASIA
NIKKEI 225	66,311.93	3.0%	31.7%	55.2%	26.7%	18.7%
HANG SENG	25,566.99	-1.2%	-0.3%	2.0%	11.6%	-0.2%
SENSEX	76,957.27	-1.5%	-9.7%	-3.6%	5.9%	6.0%
Africa
South Africa	116,257.26	4.3%	0.4%	14.2%	15.8%	11.5%
FIXED INCOME
Bloomberg Global Aggregate Bond Index	499.81	0.5%	-0.3%	0.6%	3.6%	-1.7%
CURRENCIES
USDMUR	47.1595	0.3%	1.7%	2.4%	1.2%	2.1%
GBPMUR	63.5145	1.0%	2.6%	3.0%	3.2%	1.8%
EURMUR	54.365	0.9%	0.7%	2.0%	3.1%	1.8%
GBP/USD	1.3549	0.5%	0.5%	0.3%	2.3%	-0.3%
EUR/USD	1.1618	0.8%	-1.1%	-0.6%	2.3%	-0.3%
USD/ZAR	16.1413	-2.5%	-2.6%	-8.6%	-5.1%	2.2%
COMMODITIES
OIL (WTI)	85.76	1.3%	49.4%	34.1%	1.1%	4.7%
Gold	4,448.92	10.0%	3.1%	29.0%	31.8%	19.7%

Source: Morningstar, Investing.com & MAURITIUS COMMERCIAL BANK LTD

Disclaimer: Intrasia Wealth Ltd (IWL) does not warrant for the correctness and accuracy of the information herein contained which is provided for indicative purposes only. IWL shall not, in any circumstance whatsoever bear responsibility or be held liable for any error, or omission, or any loss which may arise as a result of your reliance upon the present data. Returns for periods greater than one year are annualised.