Cleveden Park Wealth Monthly Markets Update: August 2026 Summary

Monthly Markets Update – August 2026

August proved to be a much stronger month for global equity markets, with US and European indices recovering from July’s weakness and pushing back towards record highs. Strong corporate earnings, particularly from major US technology companies, helped restore confidence, while Asian markets also rebounded sharply.

However, the wider picture remained mixed. Government bond yields stayed elevated, inflation concerns persisted and geopolitical risks increased again towards the end of the month. Gold was one of the standout performers, reflecting continued investor concern around debt levels, currencies and monetary policy.

Equities Recover Strongly

Global equities returned 3.51% during August, taking year-to-date gains to 13.87%. US equities rose 3.77% in sterling terms, while Asia ex-Japan was the strongest major region at 6.40% for the month. Emerging markets also performed well, gaining 5.01%, while Japan rose 3.93%.

UK markets were more subdued. UK Core Equities returned just 0.19% during the month, although UK Small Cap performed much better at 4.31%.

The main driver of the recovery was strong corporate earnings. In the US, S&P 500 companies beat expectations by 29%, the strongest earnings surprise in two years, while profit growth was the fastest since 1998. Microsoft, Amazon and Nvidia were among the companies helping to reignite enthusiasm around technology and artificial intelligence.

European markets also reached new highs in several countries, while South Korea’s Kospi moved from bear-market territory back into a bull market in a matter of weeks.

Bonds Remain Under Pressure

Government bond markets remained volatile throughout August.

US 10-year Treasury yields ended the month at 4.75%, while UK 10-year gilt yields finished at 5.06%. These headline figures were little changed from the start of the month, but longer-dated yields moved sharply higher at points, reaching multidecade highs.

In the UK, 30-year gilt yields approached 6% during the global bond selloff before easing later in the month. Falling oil prices helped reduce some inflation concerns, while expectations for the next Bank of England rate increase shifted further into 2027.

The US bond market also attracted significant attention after the Treasury unexpectedly announced that it would at least double buybacks of long-dated debt. The move pushed 30-year yields lower almost immediately and raised questions about whether policymakers were becoming more willing to manage pressure at the long end of the yield curve.

Gold and Commodities Stand Out

Gold and precious metals were among the strongest-performing assets in August, returning 12.40% during the month. Commodities also rose 5.72%, while private market managers rebounded by 7.07%.

Gold reached $4,597 per ounce, with investor demand supported by concerns around government debt, currency stability and monetary policy. Gold and Bitcoin funds attracted a record $7 billion over five days, while Bitcoin moved back above $80,000.

Energy and agricultural commodities were also volatile. Brent crude traded between the low $80s and low $90s per barrel, while copper extended its strong run and wheat and corn reached three-year highs.

Economic Growth Sends Mixed Signals

Economic data was mixed across the US and UK.

US GDP grew by 2.1% year-on-year in the second quarter, down from 2.7% in the first quarter. Household and business demand remained relatively solid, but the labour market showed signs of weakness.

July payrolls fell by 23,000 when economists had expected an increase of around 83,000. Previous months were also revised lower by a combined 103,000 jobs. Although unemployment fell to 4.1%, this was largely due to lower labour-force participation rather than stronger employment.

In the UK, GDP grew by 1.2% year-on-year in the second quarter, slightly ahead of expectations. Quarterly growth came in at 0.4%, while June itself grew by 0.3%, helped by World Cup-related spending and warmer weather.

The Bank of England, however, expects some of that momentum to fade as higher energy costs continue to put pressure on households.

Inflation Remains an Important Theme

US inflation eased slightly in July, with CPI rising 0.1% month-on-month and slowing to 3.4% year-on-year. Core CPI also eased to 2.5%, although the Federal Reserve’s preferred core PCE measure remained at 3.3%.

In the UK, inflation moved in the opposite direction. CPI rose to 2.9% in July, up from 2.6%, driven largely by the 13% increase in the Ofgem energy price cap. Gas prices alone rose 14.7% during the month.

Core inflation held at 2.6%, while services inflation eased to 3.4%. The overall picture remains one of gradually improving inflation in some areas, but with energy and other cost pressures still capable of pushing headline figures higher.

Interest Rate Expectations Shift Again

No major central bank met during August, but the tone from policymakers became more cautious.

Minutes from the Federal Reserve’s July meeting showed that many officials believed further rate rises could still be required. At Jackson Hole, Warsh reinforced that message, arguing that recent inflation readings did not yet prove that underlying inflation was improving.

That left markets increasingly pricing in the possibility of a September US rate hike.

Elsewhere, the Bank of Korea raised rates for a second consecutive meeting, expectations grew for a possible Bank of Japan increase in September, and the European Central Bank also signalled that further rate rises may be necessary.

Currency Markets Remain Volatile

Sterling rose 0.49% during August, ending the month at 1.3549 against the US dollar. The dollar weakened overall, while the Japanese yen remained under pressure despite official intervention.

The US and Japan intervened jointly in currency markets to support the yen, marking the first such coordinated action since 2011. Japan spent a record $96.4 billion during the month, but the intervention had limited lasting impact.

The weakness of the yen is partly linked to the wide gap between US and Japanese interest rates, which continues to encourage capital flows out of Japan and into the dollar.

Geopolitical Risks Return to the Fore

Geopolitical tensions increased again during August.

Diplomatic progress between Iran and other regional powers initially appeared encouraging, with proposals for an interim agreement and a new shipping route under discussion. However, the situation deteriorated sharply later in the month.

The UAE cut economic ties with Tehran, the US announced a plan aimed at further isolating Iran economically, and the month ended with renewed military strikes between the US and Iran.

Trade tensions also escalated. Talks between the US and Canada broke down, leading to 50% US tariffs on around $20 billion of Canadian goods, with Canada preparing retaliatory measures for September.

The US also announced new tariffs on imported drones and prepared additional duties on Chinese goods ahead of a planned Trump-Xi summit.

Meanwhile, Russia was reported to be preparing to escalate the war in Ukraine after concluding that peace talks had stalled, while weaker Chinese industrial output, consumption and investment data prompted Beijing to consider further fiscal support.

What Does This Mean for Investors?

August showed how quickly market sentiment can shift.

Equities recovered strongly, but the backdrop remains complex. Inflation is still above target in several major economies, interest-rate expectations remain uncertain, bond yields are elevated and geopolitical risks are increasing.

The report’s conclusion is that portfolios should continue to be built around a clear long-term strategic allocation aligned with an appropriate risk profile, while also recognising that changing market and economic conditions may create shorter-term risks that need to be managed.

For investors, this reinforces the value of diversification, regular portfolio reviews and maintaining a long-term perspective rather than reacting to individual headlines or short-term market movements.

Conclusion

This monthly markets update demonstrated a strong recovery in global equities, but the underlying environment remains uncertain. Inflation, interest rates, government debt, currency movements and geopolitical tensions are all likely to remain important drivers of markets in the months ahead.

For investors, maintaining a well-diversified portfolio aligned with long-term goals and an appropriate level of risk remains key. Regular reviews can help ensure that an investment strategy continues to reflect both changing market conditions and individual financial objectives.

Investments carry risk. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Past performance is not a reliable indicator of future performance.

Contact Us