Global equities advanced in August, reversing July's rotation away from the AI trade, amid resilient growth and a strong earnings season, capped by another blockbuster Nvidia report. Composite PMIs stayed comfortably in expansion territory across major economies, keeping the broader tone risk-on despite renewed hostilities in the Middle East. The S&P 500 marked fresh records, while the Nasdaq outperformed as tech momentum resumed.

European equities lagged the broader advance but still posted a fifth straight monthly gain, albeit weaker than July's showing, as rising bund yields, driven by surging natural gas prices and renewed inflation fears, weighed on sentiment more than they did on the other side of the Atlantic. In the US, the yield curve flattened after a hawkish Fed Chair Warsh speech at Jackson Hole and an unexpected Treasury announcement to ramp up bond buybacks. Hong Kong lagged on profit-taking, weak Chinese data, and property weakness.

Commodities and gold reflected the month's underlying anxiety. Oil swung on Iran negotiations before renewed strikes pushed Brent back above $90, and agricultural prices surged on fears over the closure of the Strait of Hormuz. Gold added 10% as investors sought protection against inflation and the growing risk of financial repression. Materials led equity-sector performance, with energy also outperforming.

Source: Bloomberg as at 31 August 2026.

US equities rebounded strongly from July's malaise, helped by resilient data and a robust earnings season. The S&P 500 hit a fresh record early in the month, while the Nasdaq outperformed as confidence in AI leaders recovered. Renewed Middle East tensions and a sharp rise in long-dated Treasury yields to multi-year highs kept risk elevated but didn't derail the rally.

Earnings reinforced the AI trade, though July's concerns lingered. Nvidia's results underscored the scale of enterprise AI demand, and Microsoft was another key contributor to tech's strength. Storage names SanDisk and Seagate slipped on AI-infrastructure caution, and Marvell fell despite raising guidance, as investors focused on softer margins.

The 10-year Treasury yield reached 4.75%, its highest since early 2025, and the 30-year approached 5.3%, as growth, inflation and fiscal concerns pushed long yields higher. Fed Chair Warsh reinforced the pressure at Jackson Hole, with markets pricing roughly a two-thirds chance of a September hike. A surprise Treasury announcement to ramp up long-bond buybacks later pulled yields back, easing pressure on rate-sensitive equities.

Energy was August's best-performing sector as firmer oil lifted refiners to fresh highs; utilities sat at the other end, the clearest casualty of rising yields.

South African equities delivered a strong month in August, with the FTSE/JSE All Share Index climbing 4.6%, a headline gain carried almost entirely by a resurgent resources sector, even as the rest of the market traded considerably softer. Precious metals and mining shares lifted the resources sector to a robust 23.5% gain. The FTSE/JSE Precious Metals and Mining Total Return Index spiked as high as 38% intra-month, erasing what had been a roughly 20% year-to-date loss in a single month. Gold itself rose nearly 10% for the month, drawing fresh flows into the debasement trade after a surprise US Treasury intervention in the bond market stoked concerns over government debt, deficits and dollar weakness. Industrials and financials, meanwhile, told a different story, closing the month down 5.1% and 1.6% respectively.

Fixed income markets came under pressure. South Africa’s 10-year bond yield ended August at around 8.74%, its highest level since mid-month, as a firmer US dollar and hawkish remarks from US Federal Reserve Chair Kevin Warsh reinforced expectations that US rates would stay higher for longer; Warsh argued inflation had not slowed meaningfully even as he reaffirmed his commitment to the Fed’s target, while renewed Middle East tensions weighed on risk sentiment and pushed oil prices higher. Long-dated yields pulled back from their August highs after the US Treasury caught markets off guard by announcing a doubling of its buyback operations for longer-dated debt, though much of the move subsequently reversed.

Locally, headline inflation eased to 4.3% year-on-year in July from 5.0% in June, below consensus expectations of 4.5%, but still above the South African Reserve Bank’s 3% target. Most of July’s disinflation was fuel-driven, as fuel prices slowed, while core inflation edged up slightly to 4.2% from 4.1% the previous month.

The rand strengthened through most of August, trading in the 15.90s range against the US dollar, its strongest level since late February, as broad dollar weakness and rising gold prices (a tailwind for a major gold-producing economy) supported the currency, before Warsh’s hawkish Jackson Hole remarks introduced some late-month volatility.

Source: Bloomberg as at 31 August 2026.

Chinese equities delivered a modest positive return, with the MSCI China All Shares Index gaining c.1% in US dollar terms. The month’s performance reflected a renewed divergence between onshore and offshore markets: Hong Kong-listed shares ended weaker as the Apple-Qwen-driven rally in July lost momentum, while onshore markets were modestly positive.

Mainland markets continued to benefit from investor support for technology and AI-adjacent names, a theme that has supported mainland returns through the year. China’s push for tech self-sufficiency likewise remained a key structural support for onshore markets. Offshore equities, meanwhile, faced a more challenging environment. Following July’s sharp rally, driven by catalysts including Apple Intelligence’s approval of Alibaba’s Qwen model, Hong Kong-listed equities lacked a comparably powerful trigger in August and slipped into a period of consolidation.

Activity on factory floors picked up in August as output and new orders accelerated. The official manufacturing PMI rose to 49.8 from 49.2 in July, although it remained in contractionary territory. Soft domestic demand and prolonged weakness in the property sector continued to weigh on overall growth. Retail sales and industrial output both slowed in July, while growth in industrial profits also cooled. Exports have been one of the few pillars propping up growth this year, as the global boom in AI infrastructure spending lifts demand for Chinese-made high-tech goods. China’s exports rose 23.9% year-on-year in July, with high-tech demand a key driver.

Emerging market equities extended year-to-date gains as the AI and technology trade reasserted itself, helped by resilient global technology earnings. There was also considerable cross-regional dispersion as India and Latin America retreated, while North Asian semiconductor markets pared back July losses. Overall, the MSCI EM Index advanced 3.4% in US dollar terms.

North Asian markets, with their concentrated weight of semiconductor exporters, were the primary engine of performance following July’s outsized volatility. A robust month for the tech-heavy Nasdaq reinforced renewed AI optimism, lifting South Korea and Taiwan. Taiwan benefitted from continued confidence in TSMC’s earnings trajectory, while South Korean equities were supported by strong shareholder-return initiatives from the country’s chipmakers. China saw a sharp divergence between onshore and offshore markets, with the Shanghai Composite gaining 4.0% while the Hang Seng fell 1.0%.

Hong Kong-listed shares lagged as the Apple-Qwen-driven rally in July lost momentum, while onshore markets benefitted from continued investor support for technology and AI-adjacent names. India lagged the broader EM rally as elevated oil prices and a cautious US rate outlook weighed on sentiment, despite foreign investors adding to Indian equities for a second consecutive month. Latin America’s markets also ended weaker, with the region’s largest market, Brazil, struggling amid political and fiscal concerns ahead of the election cycle.

Europe’s Stoxx 600 notched a fifth straight monthly gain, though underlying performance underneath was sharply divergent by country. Germany’s DAX reached a fresh record, underpinned by its best factory expansion in more than four years, while French equities lagged amid the country’s fiscal and political overhang as PM Sébastien Lecornu's minority government prepared to negotiate the 2027 budget. Sector leadership stayed concentrated in AI-linked semiconductor names and European "AI adopter" industrials and banks.

UK equities lagged global peers, though there was considerable disparity within various cohorts. Without a rate decision from the Bank of England during August, markets traded on data and geopolitics. The FTSE 100’s heavy weighting in energy and miners meant the weakness in Brent crude tied to Iran-Oman talks over the Strait of Hormuz impacted the oil majors. The FTSE 250, which is far more domestically focused and has minimal energy exposure, was largely insulated from that swing and instead rode a genuine earnings momentum story, breaking above 24,000 for the first time since 2021.

US

US Treasury yields ended August marginally higher, though the small move masked considerable volatility. Long-dated bonds sold off through the first half of the month on concerns over the fiscal deficit and heavy Treasury issuance, with the 30-year yield touching its highest level in almost two decades, above 5.33%. The Treasury's decision to expand its long-bond buyback programme briefly steadied the long end, though relief was short-lived amid doubts it could offset the underlying supply backdrop. The sharpest repricing took place in shorter maturities after Fed Chair Warsh's hawkish Jackson Hole address, which reaffirmed the 2% inflation target and signalled more tightening may be needed; short-dated yields rose and markets priced in over 50% odds of a September rate hike. The curve flattened over the month as a result.

Europe

European sovereign yields rose through August to fresh multi-year highs, driven by persistently high oil prices and a hawkish ECB. The 10-year bund yield reached a post-2011 high near 3.32%, while French government bond (OAT) yields climbed to their highest level since 2008 amid political uncertainties ahead of France's April 2027 presidential election. European Central Bank Executive Board member Isabel Schnabel reinforced the hawkish tone mid-month, arguing "further tightening will be necessary"; markets ended the month pricing a September hike. Data offered little pushback: the composite euro area PMI rose to a nine-month high in August, underlining the region's resilience to the energy shock.

UK

UK gilt yields were broadly flat over August, with the 10-year closing the month at 5.06%, its highest close in over a decade. Higher oil prices and a July inflation print that rose to 2.9% kept investors focused on domestic price pressures. Long-dated gilt yields, meanwhile, remained elevated in line with long-dated yields elsewhere as fiscal deficit and issuance concerns spread; the 30-year traded close to its highest levels in nearly three decades. Markets responded by pricing in a rate hike by December. This was reinforced by Fed Chair Warsh's hawkish Jackson Hole address on the month’s final trading day, pushing yields to fresh multi-year highs heading into September.

Japan

Japanese government bond yields extended their climb through August, with the 10-year reaching a post-1996 high of around 2.97% mid-month before breaching 3% on the first day of September. The move reflected growing expectations of a Bank of Japan (BoJ) rate hike at the September meeting, reinforced by a broader global sell-off. Q2 GDP growth slowed sharply to 1.1% year-on-year, well below the 2.0% expected, as business investment fell and private consumption stagnated, though this did little to dent hike expectations given still-elevated inflation. The yen remained the standout story, weakening back towards 160 against the dollar by month-end, as the initial bounce from the coordinated Japanese-US intervention seen in late July faded.

Source: Bloomberg as at 31 August 2026.

Credit markets performed well in August even as government bond yields remained volatile. Long-dated sovereign yields reached multi-year highs mid-month, with the 30-year US Treasury yield touching 5.33%. Investors were spooked by concerns over the fiscal deficit and the Treasury’s subsequent policy response, combined with inflation risks tied to a delayed reopening of the Strait of Hormuz. Fed Chair Warsh struck a hawkish tone during his speech at Jackson Hole, driving a bear flattening of the yield curve (shorter-dated Treasuries rose more than the long end). Despite the volatility, credit spreads tightened across almost every segment, helped by the broad risk-on tone that supported positive total returns across most asset classes.

Floating-rate markets performed well over the month, with collateralised loan obligations (CLOs) and leveraged loans delivering gains as their floating-rate coupon structures protected against rising sovereign bond yields. Within CLOs, lower-rated tranches outperformed higher-rated tranches in both the US and Europe, given their higher carry. US loans outperformed their European counterparts as spreads tightened meaningfully, whereas European loan spreads widened modestly given rising energy prices.

US high yield spreads tightened sharply to its tightest level in a decade and outperformed European high yield, whose more modest gains reflected the larger rise in European sovereign yields. Bank capital bonds (AT1s) also continued to perform well, posting solid gains as spreads reached near decade lows.

Meanwhile, investment-grade (IG) credit lagged the broader market, held back by its longer duration profile amid the volatile backdrop for sovereign yields, while spreads were broadly unchanged. European IG corporates were the weakest performer, posting marginally negative returns due to the region's sharper swings in sovereign yields. US IG fared better than Europe, ending the month in positive territory, but lagged US high yield, as heavy bond supply from AI hyperscalers weighed on US IG spreads. US agency mortgage-backed securities (MBS) held up well, with spreads little changed.

The emerging market (EM) fixed income asset classes posted positive returns in August, helped by a broader risk-on tone, despite volatile developed market sovereign bond yields.

US Treasury yields experienced a broad bear flattening over the month despite the long-end reaching multi-year highs mid-month as concerns over the fiscal deficit and the Treasury’s subsequent policy response, combined with inflation risks tied to a delayed reopening of the Strait of Hormuz spooked investors. The bond buyback announcement weighed on the US dollar as well, which weakened for a second consecutive month. Towards the end of August, Fed Chair Warsh struck a hawkish tone in his speech at Jackson Hole, pushing shorter-dated Treasury yields higher and further flattening the curve. EMs were largely insulated from these moves, with growth, while moderating, remaining resilient and inflation prints continuing to surprise positively. This, coupled with some positive country-specific tailwinds, resulted in local, hard-currency and corporate EM debt markets performing well over August.

The local currency debt market (JPMorgan GBI-EM GD) gained 0.9% in US dollar terms over the month, led by EM FX, while local rates also contributed positively. The policy mix previously outlined weighed on the US dollar over the month, which combined with some country specific events, created a supportive backdrop for EMFX. Indonesia was a standout performer, with the currency benefitting from a central bank refocusing on domestic growth efforts and a broad rally in the bonds after being heavily sold down on institutional stability concerns. Turkish local bonds rallied as markets expected the central bank's signalled return to a 37% policy rate at its September meeting, down from the current 40% funding rate, front-running roughly 300bps of anticipated easing. Risk-sensitive currencies performed well as risk appetite improved, with the South African rand and Mexican peso among the index’s top performers.

The hard-currency sovereign debt market (JPMorgan EMBI GD) posted a positive return of 0.9% in August, as spreads tightened across both the high-yield and investment-grade segments. At the country level, Venezuela was the top performer over the month, rallying after a historic oil deal was reached with the US, estimated to generate over US$200bn in tax revenue.

The EM corporate debt market (JPMorgan CEMBI BD) returned 0.6% in August. Similar to the sovereign market, both investment-grade and high-yield segments gained as spreads tightened on the broader risk-on tone. All sectors and regions delivered positive returns, with real estate and oil and gas the standout sectors.

Source: Bloomberg as at 31 August 2026.

Gold moved up sharply after the US Treasury signalled plans to at least double its purchases of long-dated government debt, pushing yields and the US dollar lower. The precious metal ended August at US$4,437/oz, about 10% higher. Middle East tensions and persistent inflation added further support. The shares of gold producers outperformed gold, with the NYSE Arca Gold Miners index rising about 33%. Gold equities typically trade in the same direction as gold but with amplified moves. Silver was also strong, its price rising 15% to US$66/oz. Among industrial metals, copper hit a record high as the potential for US import tariffs fuelled demand from purchasers seeking to bring the metal into the country ahead of any additional charges. The metal ended August 4% higher at US$14,294/ton. Iron ore delivered a similar gain, supported by Chinese demand.

Oil was volatile, with the price of a barrel of Brent crude ranging from below US$80 to more than US$94, as hopes of an easing of tensions between the US and Iran waxed and waned. Brent ended August at US$90/barrel, little changed over the month. Crack spreads – the difference between the prices of crude oil and refined products such as gasoline and aviation fuel – remained unusually wide, a consequence of Ukrainian attacks on Russian refineries and continued disruption to refining in the Middle East. High temperatures (which drove electricity demand to power air conditioning) and tight global supply saw US natural gas prices rise 7%.

In agriculture, grain prices climbed on supply concerns, partly due to damage to Black Sea port infrastructure and disruption to regional shipping as a consequence of the Ukraine war. Corn and wheat saw double-digit price increases in August. The blockage of the Strait of Hormuz and low water levels in the Danube, both of which are hampering shipments of grain and crucial farm inputs like fertilisers, added to upward pressure on prices.

Source: Bloomberg as at 31 August 2026.