MARKETS IN A NUTSHELL — FOR AUGUST 2025

Global markets moved higher in August, though the undercurrents were far from calm. Wall Street rose again, propelled by solid corporate earnings and fading inflationary pressures. European equities outperformed those in the US as banking profits lent support to markets, but in France, politics weighed on sentiment. In Asia, Chinese equities extended their rally as Beijing repeated its growth pledges and the tariff truce with Washington held.

Washington supplied the month’s most disruptive news. President Donald Trump dismissed Federal Reserve Governor Lisa Cook in a direct challenge to the central bank’s independence. Cook’s legal battle has now become a test case for the Fed’s institutional integrity. Markets saw the firing as further evidence of White House pressure for looser policy — the dollar weakened to its lowest levels in months, while Treasuries rallied on expectations of imminent rate cuts.

 Commodities painted a mixed picture. Gold surged to fresh highs as investors sought cover from political risk. Oil drifted lower on signs of weaker demand despite new tariffs on imported fuels. Copper swung wildly after the White House unexpectedly spared raw ore from duties but taxed semi-finished products, prompting a sharp sell-off before prices stabilised. Broader commodity indices slipped, dragged by softer energy markets, even as precious metals stayed resilient.

South African investors fared well. The JSE’s resource-heavy bourses advanced, lifted by mining shares that benefitted from higher metals prices. Domestic bonds also rallied as inflation moderated and yield-hungry foreign investors returned. The rand recouped July’s losses against the greenback, defying fresh tariff threats, supported by buoyant export revenues and improved emerging-market sentiment.

 The Foord global funds continue to excel. The funds are up between 17% and 27% this year when measured in US dollars and track near the top of their respective peer groups. In South Africa, the Foord funds safely added good returns in the month, buoyed by offshore assets. We don’t share the market’s enthusiasm for the cyclical gold and platinum shares or very long-dated bonds that carry the most risk. The lower weightings to these sectors will be reflected in the relative returns this month.

 Looking forward, the backdrop is conflicted. Lower inflation and the prospect of lower US interest rates are tailwinds for risk assets. But political interference in monetary policy, renewed trade skirmishes, and softening US labour data all point to fragility. With valuations stretched in parts of the market, caution is warranted. Portfolios anchored in quality, diversified by region and sector, and mindful of valuation discipline should remain best placed to navigate both the opportunities and risks of this late-cycle environment.