Monthly Market Note – August 2025

Overview

August was broadly supportive for investors, with most major asset classes delivering positive returns. Global equities rose 2.5% while global bonds gained 1.5%. Corporate earnings surprised on the upside, although enthusiasm around artificial intelligence cooled slightly after Nvidia missed data centre revenue expectations.

Macro & Policy Developments

In the US, a weaker July labour market report shifted the Federal Reserve’s tone. At the Jackson Hole symposium, Chair Jerome Powell acknowledged that risks to growth had increased, opening the door to a 25bps rate cut in September. Politics added uncertainty: President Trump dismissed the head of the Bureau of Labour Statistics and attempted to remove Fed Governor Lisa Cook, raising concerns over central bank independence.

In Europe, French politics weighed on sentiment. Prime Minister Attal called a no-confidence vote, due 8 September, after failing to gather support for fiscal cuts. French assets underperformed as a result, though broader eurozone data showed encouraging signs of growth. In the UK, inflation surprised to the upside once more, forcing the Bank of England into a cautious stance despite a 25bps rate cut. Long-dated Gilts sold off heavily, pushing the 30-year yield to its highest level since 1998.

Asia painted a more positive picture. Japan’s economy delivered stronger-than-expected growth, while supportive trade developments boosted equity markets. In China, authorities announced ambitious semiconductor expansion plans, alongside a trade truce extension with the US, providing support for technology shares.

Asset Class Performance

• Equities: Developed markets rose 2.6%, led by Japan. The US gained nearly 2.0%, supported by earnings beats and resilient PMI surveys. European equities rose modestly (+1.2%), but France dragged on performance. UK equities returned 0.6%, lagging global peers. Emerging markets gained 1.5%, led by China. Small caps and value stocks outperformed growth, as investors reassessed the outlook for AI-related earnings.

  
  

• Fixed Income: US Treasuries gained 0.9% as markets priced in Fed easing. Investment grade credit rallied, supported by earnings strength. European sovereign bonds were mixed, with French debt underperforming amid political noise. UK Gilts weakened further on fiscal and inflation concerns. Japanese government bonds sold off modestly, reflecting firmer inflation expectations.

  
  

• Commodities & Alternatives: Oil and natural gas prices fell, while gold extended its gains, reflecting demand for diversification amid political risks.

  
  

Looking Ahead

Markets remain underpinned by resilient activity and easing inflation, but optimism is well-reflected in valuations, particularly in the US. With political uncertainty building in the US, France, and the UK, alongside ongoing trade frictions, we expect volatility to remain elevated. A diversified approach across asset classes and regions remains key to navigating the coming months.

Source: Investing.com and 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.