The Pinnacle: August 2025
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Navigating August's Market Mosaic: Resilience Amid Rising Risks
Markets ended August on a resilient note despite a noisy macro backdrop. Equities in the U.S. notched fresh records before a late month pause, Europe’s activity gauges continued to firm, and gold rallied as investors priced a greater chance of near-term policy easing. Oil softened on demand concerns and the prospect of higher OPEC+ supply, underscoring a still two-way, data-dependent environment into September.
US Markets
In August, the stock market soared with new highs, notably the S&P 500 has advanced 2% in August, notching several record highs in the process while the Dow rose 3.2% and the Nasdaq added 1.6%. Powell’s dovish tone at the Jackson Hole symposium further lifted sentiment, pushing the S&P 500 to fresh records despite ongoing inflation and political uncertainty. July’s economic data reflected mixed signals: non-farm payrolls increased by 73,000, unemployment edged up to 4.2%, jobless claims reached 1.97 million, and core PCE inflation remained at 2.9%, influenced by tariff-related price pressures. This blend of a moderating labour market and steady inflation contributed to rising expectations for a potential rate cut in September.
UK Markets
In early August, the Bank of England lowered its main interest rate by 25 basis points to 4%, the fifth cut over the past year. Though a sharply divided vote (5–4) necessitated two rounds of voting, underscoring internal disagreement amid elevated inflation. Sterling responded with a modest gain, and two-year gilt yields ticked up. Despite gaining 0.9%, the UK’s FTSE All-Share underperformed in August, with Britain’s domestic backdrop looking challenging. Meanwhile, UK business sentiment remained resilient: the Lloyds Business Barometer rose to 54%, supported by trading prospects at their strongest since 2014, even as broader economic optimism edged down to 44%.
Eurozone
Eurozone markets posted modest gains, buoyed by resilient business activity and improving sentiment. The MSCI Europe ex-UK index rose approximately 1.2%, helped by a flash composite PMI of 51.1, the strongest in 15 months—and a rebound in manufacturing, which expanded for the first time since early 2022. Inflation edged up to 2.1%, just above the ECB’s target, while core inflation held steady at 2.3%, reinforcing the case for policy stability. French government bonds underperformed amid fiscal uncertainty, though the broader region continues to show encouraging signs of underlying resilience.
Asia Emerging Markets
Asia’s emerging markets delivered a nuanced performance. India’s benchmarks retreated, with the Sensex and Nifty 50 losing 1.7% and 1.4% respectively. Indian equities traded against tariff headwinds, but easing inflation and plans to reduce goods and services taxes helped to pare some losses. Chinese equities surged in August, with the MSCI China Index reaching a four-year high, driven by optimism around a potential US-China trade deal and strong earnings from domestically focused firms. The extension of the US-China trade truce until 10 November provided further support, especially for export-oriented companies. The Chinese government announced it would aim to triple China’s chip supply in 2026, boosting Chinese tech names. This momentum helped lift the MSCI Emerging Markets Index by 1.5% for the month, underscoring China’s outsized influence on broader EM performance.
Commodities
Commodity markets held firm, up 1.9% with gold leading performance. Oil and natural gas prices fell, and the gold price continued to rise. The World Gold Council reported a significant rebound in gold prices at the end of August, reaching $3,429 per ounce, marking a 4% increase for the month. By the end of August, gold had risen 31% for the year. Geopolitical uncertainty and expectations of US rate cuts added to gold’s appeal, reinforcing its role as a stabiliser in diversified portfolios.
Oil prices eased at the end of August as markets looked ahead to softer demand and rising supply. Brent crude slipped to about $68 per barrel, with traders anticipating slower U.S. consumption after the summer driving season and fresh output increases from OPEC+. Despite this pullback, underlying demand remains supported by steady U.S. crude draws, suggesting the market is more balanced than headlines imply.
Tariffs in Motion: August 2025 Trade Shifts Across Key Markets
Global trade faced a series of important adjustments in August as tariff policies evolved across multiple regions. While challenges remain, several economies are already repositioning supply chains and trade relationships in ways that may foster longer-term resilience.
India
The U.S. raised tariffs on a wide range of Indian goods to 50%, up from 25%, covering sectors such as textiles, gems, footwear, and chemicals. The measures apply to roughly half of India’s $87 billion in annual exports to the U.S. and are expected to weigh on near-term shipments. The U.S. dollar strengthened by around 1.5% against the Indian currency in late August, reflecting investor concern over the tariff shock.
Canada
The U.S. raised tariffs to 35% on many Canadian exports, while Canada moved to ease tensions by removing most of its retaliatory tariffs, keeping duties only on sensitive sectors such as autos, steel, and aluminium. Ottawa’s decision was positioned as a step toward restarting dialogue and stabilising trade flows.
China
Beijing introduced tariffs of up to 78.2% on certain U.S. single-mode optical fibre imports, including products from Corning and OFS-Fitel, effective through April 2028. The move followed an anti-dumping investigation and highlights Beijing’s continued use of targeted measures rather than broad-based escalation.
Brazil
The U.S. announced new 50% tariffs on Brazilian exports across categories including coffee, beef, and textiles. In response, Brazil’s finance ministry confirmed it may challenge the measures under its reciprocity law and in U.S. courts. Policymakers emphasised that Brazil’s diversified export base and strong agricultural competitiveness should help cushion the impact.
Taiwan
Washington imposed a 20% tariff on a range of Taiwanese goods, described by Taipei as temporary while negotiations continue. Officials stressed Taiwan’s resilient position in global supply chains, particularly in semiconductors, where demand remains robust despite the new levies.
Developments in Ukraine Peace Talks
Diplomatic momentum picked up in August as international partners worked to chart a path toward ending the war in Ukraine. Ukrainian officials, including President Zelenskiy’s chief of staff, met with mediators in Riyadh before continuing discussions in Switzerland and New York. The talks were designed to explore frameworks for a ceasefire and eventual settlement, with backing from the U.S. and European allies. While no breakthrough was reached, the outcome reinforced two key points: Ukraine’s direct participation remains essential, and the priority for many partners is securing a durable ceasefire that does not force Kyiv into territorial concessions. This careful balance highlights both the urgency and complexity of moving from dialogue to meaningful peace progress.