Market Update: steady progress despite challenges
As we move into the autumn months, we’re pleased to share a snapshot of how global markets performed in August. Overall, the picture was positive, with both shares and bonds holding up well, even though some challenges remain.
Equity Markets Perform Well
Shares saw a modest rise of 0.3% during August, continuing the trend from the past year where stocks have risen by 13%. Japan was the stand-out performer, leading the way with a remarkable 4.8% increase. Small-cap stocks outperformed large companies, and we observed a shift where value stocks edged ahead of growth stocks, likely reflecting more cautious investor sentiment regarding advanced technologies like AI.
Positive Trends in Fixed Income
Bonds also delivered steady growth, with returns of 0.5%. Corporate bonds (issued by well-established companies) benefited from strong earnings and the growing possibility of interest rate cuts in the US. In contrast, UK government bonds (Gilts) faced pressure from higher inflation, which affected returns.
Currency and Commodities Movement
The pound strengthened against the US dollar, while the dollar remained stable against most other major currencies. Gold prices continued to climb, as investors sought out “safe haven” assets, but broader commodity markets slipped – mainly due to falling energy prices such as oil and gas.
Economic Insights
In the US, company profits exceeded expectations, helping market confidence. However, jobs data showed signs of a slowdown, which sparked speculation about possible interest rate cuts that could give markets an extra boost. Japan continues to see healthy economic growth, while Europe is contending with some political uncertainty, particularly in France.
Emerging Markets
China’s recent moves to strengthen trade and technology gave emerging markets some welcome support. That said, local reforms in countries such as South Korea and India created mixed results and short-term uncertainty.
Looking Ahead
Despite ongoing concerns around inflation and politics, markets proved resilient in August. With both shares and bonds delivering positive results, the outlook remains cautiously optimistic. A well-diversified approach continues to be the best way to take advantage of opportunities while managing risks.
As ever, this article is intended to inform you of market movements and factors effecting the portfolio. We have already factored this in to our long term assumptions in your financial plans, however should you have any questions, please contact your adviser.
About
Aled Phillips
: Aled is a Fellow of the PFS, a Chartered Financial Planner, and a Chartered Fellow of the CISI.
Call: 01633 851805
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The contents of this article do not constitute financial advice in any way; if you have any concerns about your finances you should talk to your financial adviser. The value of your investments can go down as well as up.
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