The Pinnacle: August 2026
August 2 0 2 6 • I S S U E 66
Global markets steadied in August. Company earnings were strong, and both developed and emerging market stocks rose broadly, even as central banks sounded more cautious and tensions stayed high in the Middle East. Investors largely shook off these worries, and several major markets reached new highs during the month.
US Markets
US stocks rose broadly in August. The S&P 500 gained 2.7% and the Nasdaq-100 gained 4.2%, the best August for both since 2021. A strong earnings report from a major chipmaker capped off a good quarter for company results, while a closely watched survey of business activity hit its highest level in more than four years. The Dow Jones Industrial Average also rose, adding roughly 1%. Gains were spread more evenly across sectors than in recent months: software stocks did better than chipmakers, smaller companies outperformed, and energy stocks led the market, up around 7% as tension near the Strait of Hormuz supported oil-linked shares. Sentiment cooled slightly toward month-end after Federal Reserve Chair Kevin Warsh struck a hawkish tone at the Jackson Hole conference, and fresh clashes between the US and Iran raised the chance of a rate hike in September.
Eurozone
European stocks kept up their strong run in 2026. The STOXX Europe 600 hit a new record high in early August and was up around 10% for the year as of 5 August. Growth and technology stocks led the gains, though the index still lagged other markets over the month. Bonds had a harder time: prices fell as yields rose across the region, with German 10-year yields hitting a fresh high for the cycle at 3.32%, and French bonds underperforming as budget talks for 2027 loomed. Markets began pricing in a possible European Central Bank rate hike in September, as several ECB officials struck a more hawkish tone.
UK Markets
The UK market had a bumpier August than most, ending the month around 0.5% lower and breaking a four-month streak of gains. As of 25 August it was still up roughly 9.5% for the year, and close to its February record high, before slipping further by month-end. Performance varied by sector: mining stocks fell sharply in mid-August, while financial and utility stocks did well in the final days of the month, and defence stocks lagged. UK government bonds held up better than those elsewhere in Europe, and markets have not yet seen any major policy moves from new Prime Minister Andy Burnham.
Asia & Emerging Markets
Asian and emerging markets did well in August. The MSCI EM Asia Index rose 3.4% in dollar terms, helped by a weaker US dollar. Japan's TOPIX rose 3.9%, supported by a weaker yen and continued optimism about AI-related spending benefiting Japanese suppliers, even as 10-year Japanese government bond yields hit a multi-decade high on growing bets that the Bank of Japan will raise rates as soon as September. Taiwan's AI-heavy stock market was the standout performer among emerging markets, while Korea lagged even though its major chipmakers announced plans to return more cash to shareholders. In China, the picture was more mixed: official data pointed to weak domestic demand, but mainland stocks kept rising anyway, with the Shanghai Composite posting a solid gain over the month. Onshore IPO activity linked to AI also picked up sharply. Hong Kong's Hang Seng Index rose for a fourth month in a row.
Commodities
Commodities rallied broadly in August. Gold stood out, rising by roughly a tenth over the month to a fresh three-month high, as a surprise move by the US Treasury to buy back more long-dated bonds revived talk of a so-called ‘debasement trade’ and coincided with a weaker dollar. Industrial metals rose too, and so did farm goods, especially wheat, on reports that Russia might escalate its war in Ukraine and on a building El Niño weather pattern, both of which raised the risk of supply problems. Energy prices were more mixed: oil stayed steady despite ongoing clashes between the US and Iran near the Strait of Hormuz, with Brent around US$90 a barrel and WTI near US$86 by month-end. European natural gas prices hit a year-to-date high as supplies stayed thin and refineries across Russia and the Middle East kept coming under attack.
The Month Ahead - What We're Watching in September 2026
Looking ahead to September, markets are likely to focus on several themes carried over from August.
Central banks converge on a hawkish September: Federal Reserve Chair Kevin Warsh struck a hawkish tone at the Jackson Hole conference, making markets more alert to a possible rate move in September. The European Central Bank faced similar pressure, as several officials sounded hawkish through August and markets began pricing in a possible September hike. In Japan, bets on a Bank of Japan rate rise were brought forward to September after 10-year bond yields hit a multi-decade high.
Whether the Strait of Hormuz disruption eases or persists: Shipping data suggested tanker traffic through the Strait was still around 95% below pre-war levels between mid-July and late August, and that Gulf oil exports were down roughly 47% from 2025 levels. Even so, Brent crude held around US$90 a barrel rather than spiking further. Reports in mid-August noted that price rises had stayed contained despite failed US-Iran talks, while the IMF warned in July that the ways markets were absorbing the shock — rerouted pipelines, weaker demand, and falling inventories — would not last forever. Whether the disruption eases or drags on into September is a key two-sided risk for energy markets.
Testing the AI earnings story: A leading AI chipmaker's results for the quarter to July, reported on 26 August, showed revenue of US$96.2 billion, up 106% from a year earlier, along with guidance for the current quarter of US$108 billion. The company also said profit margins would narrow slightly, from 75% to 74%, which it linked to rising memory chip costs tied to the broader AI boom. With more technology earnings due and AI-related spending still rising, September should show whether these higher costs start to weigh on the AI investment story, or whether demand keeps growing fast enough to outpace them.
Europe's fiscal calendar comes into focus: French government bonds did worse than other European bonds in August as talks over the 2027 budget loomed, while German 10-year yields hit a fresh high for the cycle. With the European Central Bank also weighing a possible September rate hike, European bond markets face both political and monetary risks in the month ahead.
Conclusion
August continued a pattern seen through much of 2026: strong company earnings and solid economic data kept stock markets in good shape, even as bond markets and central banks turned more cautious. With the Fed's next move now less certain after Chair Warsh's Jackson Hole speech, and tensions around the Strait of Hormuz still unresolved, investors enter September with some open questions — but also a generally positive backdrop of strong earnings and gains spread across regions. Staying diversified across regions and asset types remains a sensible approach in what has been an unusually eventful year for markets.
Sources
● J.P. Morgan Asset Management — “Review of markets over August 2026” (1 September 2026): am.jpmorgan.com/gb/en/asset-management/per/insights/market-insights/market-updates/monthly-market-review/
● CNBC — “Dow tumbles 370 points after U.S. strikes Iran, but index posts fifth straight winning month” (30 August 2026): cnbc.com/2026/08/30/stock-market-today-live-updates.html
● CNBC — “Hormuz deadlock: Where oil prices could head next as prospects for an imminent deal fade” (11 August 2026): cnbc.com/2026/08/11/hormuz-oil-prices-us-iran.html
● Nasdaq — “August 2026 Review and Outlook”: nasdaq.com/articles/august-2026-review-and-outlook
● Trading Economics — UK Stock Market news stream, 28 August 2026: tradingeconomics.com/united-kingdom/stock-market/news/579213
● Trading Economics — “FTSE 100 Falls on Thursday” (13 August 2026): tradingeconomics.com/united-kingdom/stock-market/news/575159
● Investing.com UK — “FTSE 100: Record High Comes Into Focus as Index Gains 9.5%” (25 August 2026): uk.investing.com/analysis/ftse-100-record-high-comes-into-focus-as-index-gains-95-200627501
● The Standard (Hong Kong) — “Hong Kong shares rebound Hang Seng gains for fourth month”: thestandard.com.hk/market/article/310289
● Yahoo Finance — “Stock market today: Dow, S&P 500, Nasdaq slip but cap winning month for stocks” (31 August 2026): finance.yahoo.com/markets/live/stock-market-today-monday-august-31
● Al Jazeera — “How a 95 percent drop in Hormuz traffic changed global shipping” (27 August 2026): aljazeera.com/news/2026/8/27/how-a-95-percent-drop-in-hormuz-traffic-changed-global-shipping
● IMF Blog — “The Oil Market Absorbed the War Shock, but Buffers Are Running Low” (15 July 2026): imf.org/en/blogs/articles/2026/07/15/the-oil-market-absorbed-the-war-shock-but-buffers-are-running-low