The FTSE100 recorded multiple record highs in August as equity markets continued to rise, before a little wobble hit all equity markets at the very end of the month.
Trump’s ongoing row with the Fed caused some market turbulence as August drew to a close. The dismissal of Governor Lisa Cook, if upheld, would put the Fed under more pressure to accede to the President’s fervent desire for interest rate cuts, economists fear.
United States
Trump’s battle with the Fed rumbles on. The dismissal of Governor Lisa Cook is his latest, and possibly boldest, move in this war.
Now that President Rump’s ‘Big Beautiful Bill’ is now the One, Big, Beautiful Bill Act of 2025, US debt will increase significantly. Every interest rate cut to reduce the cost of that debt is vital to the Trump Administration.
If he succeeds in removing Cook, and appoints her replacement, it would mean he will have appointed the majority of the Fed board, and economists are concerned for its future independence.
However Cook is not going quietly, in fact she has not gone at all. The Federal Reserve Act allows the President to remove a Governor but it also explicitly requires a showing of ’cause’ for this to happen. She is suing the President and has remained in post whilst a court decides if her dismissal was lawful or not. Trump relied on allegations from one of his political allies that she falsified documents to obtain a mortgage as ’cause’ for the dismissal. Whilst it is unclear what the court decision will be, it could redefine the limits of Presidential powers.
Whilst Cook was one of the Governors who voted against a rate cut recently, the move by President Trump appeared particularly aggressive given the positive noise in August from the Fed. Fed chair Jerome Powell, raised hopes of a rate cut in his speech to central bankers in late August at Jackson Hole, Wyoming. Markets immediately priced in a rate cut for the Fed’s next decision making meeting on 17th September.
Despite the politics, equity markets roll on. All key US equity indices delivered positive returns over the month, making this latest political drama a blip in an otherwise good month. Amongst the strong results there were a few mixed performers.
There will be a continued focus on US economic indicators such as inflation and job growth over the forthcoming months, and Fed rate cut decisions have never been so exciting. However, the wobble at the end of August has not really taken the shine off US equities early in this second half of the year.
UK
On 7th August, the Bank of England cut its base rate by 25 basis points to 4%. This is the fifth cut since the election.
Inflation stayed persistently above target and remains a real concern. It is a threat to future interest rate cuts, and Chancellor Rachel Reeves needs positive news as she heads towards what could be another big Autumn Statement later in the year.
The date for the Autumn Statement has been confirmed as 26th November. It gives two more chances for a rate cut, as the Bank of England Monetary Policy Committee will meet on 18th September and 6th November.
The speculation between now and the announcement will be unrelenting. No doubt every conceivable tax will be rumoured for an increase, and every allowance rumoured for a cut. We will keep you informed as always but it is worth reminding you not to pay too much attention to the media hype which now accompanies an Autumn Statement.
UK equity markets flew high in August. The FTSE100 peaked mid-to-late August before correcting at the end of the month. The bond market has caused more concern with yields on 30-year gilts continuing to climb. The bond sell off means that the UK’s long-term borrowing costs have reached their highest level since 1998. Whilst Rachel Reeves is often the first to be blamed for such problems, some analysts have suggested that the market is more concerned that she might be replaced by a Chancellor less focused on fixing Britain’s fiscal hole.
It is worth remembering that as defined benefit schemes slowly wind down and deplete funds, there is a significantly reduced demand for gilts regardless of short term market reactions.
There were positive signs of growth in the services sector and Chris Giles argued in the Financial Timesat the start of September that the UK is in a better place than it would appear from all the economic negativity when compared to its peers. He said:
“The French government hangs by a thread because its parliament cannot agree a budget. Even with Donald Trump’s tariff revenues, US public finances show little sign of improvement and the borrowing forecast looks set to remain close to an unsustainable 6 per cent of GDP for the foreseeable future. Italian and Japanese general government net debt is 127 per cent and 134 per cent of GDP respectively this year.
Compared with others mired in a fiscal bunker, the UK’s public finances are objectively better placed. Net debt is still below 100 per cent of GDP.
Unlike other G7 governments, the deficit is on track to decrease by around 1 per cent of GDP this financial year and borrowing is only two-thirds of US levels. Despite this, UK politics and financial markets are consumed by fiscal concerns. Government long-term borrowing costs have hit the highest level since 1998 and the UK pays more to raise medium and long-term finance than any other country in the G7.
It takes a special sort of political, institutional and economic dysfunction to achieve these results.”
Giles points to the problems caused by the UK’s tight fiscal rules and the highly uncertain fiscal predictions that the Office for Budget Responsibility make as a key source of the dysfunction. Reeves may agree but she remains bound by them.
Spain was the best performer, followed by Italy, with Germany continuing the slow and France contracting.
France’s political problems cast a shadow again over its economic prospects. Another no confidence vote, an inability to sign off on a budget, and the realistic prospect of new legislative elections, has destabilised French bonds.
Whilst other Eurozone bond markets also have their problems, notably Belgium and Austria who are currently being reviewed by rating agencies, it does seem likely that France is the focal point for these problems, and political uncertainty is the immediate cause.
Inflation nudged up slightly to 2.1% in August and employment grew a little, with the European Central Bank expected to maintain interest rates at 2%. Core inflation was steady at 2.3%.
Far East
China’s manufacturing sector improved slightly in August from July but it is still not in growth territory. Its official purchasing managers’ index (PMI) showed a fifth month below the growth threshold of 50, sitting at 49.4 for August. A private PMI poll painted a much more positive picture with a figure of 50.5. Uncertainty around the US trade deal is the most likely cause of the problem and there is some hope that the extended trade war truce is now improving exports. The same private PMI showed China’s services sector as growing at its fastest pace in 15 months in August.
The appreciation of the yuan has also helped US trade tensions. It was widely expected that China would intentionally depreciated its currency against the dollar to keep its exports competitive. This hasn’t happened and it hit a yearly high in August. Some commentators believe this was a Chinese policy decision designed to appease the US.
Inflation in Japan, which has been a real concern, eased in August for year-on-year Core CPI, although it was still at 3% if food and energy are excluded. Services sector growth was offset slightly by manufacturing contraction, and the Japanese government remains concerned about the long term impact of US tariffs.
Despite these reservations the Nikkei 225 benefited from an Asian equity rally and hit new highs mid-August and still finished the month up after a modest fall from its peak.
Emerging Markets
Emerging markets as a whole have a positive long term outlook but political unrest and exposure to US tariffs will cause short term volatility to exposed countries.
Political unrest hit Indonesia, with riots resulting in a violent crackdown and two deaths. Bank Indonesia intervened to stabilise the currency and bond market but investor sentiment has been damaged. Indonesia has been seen historically as a relatively stable emerging markets economy and is South East Asia’s largest. There are some signs of recovery but it is unclear how long the unrest will last and how far it will spread.
A proposed 50% US trade tariff and some sluggish growth is posing questions about India’s future economic performance. The rupee has also plunged and India’s government is introducing measures to try and course correct but they may have a few more bumps in the road to come in 2025.
South Africa remains a mixed bag. Export orders are weakening due to tariff pressures but their PMI of 50.1 shows they remain just about in growth territory and a strengthening rand has eased cost pressures. Amidst the concern there is some reliance.
Conclusion
August is often regarded as a difficult month for equities so this particular August, with record highs hit in some regions mid-month, can be viewed as something of a success.
The underlying themes have not gone away. There is still concern about the longer term impact of tariffs, inflation and growth. In the UK specifically there is always the concern that we will foot the bill for a lack of growth through higher taxes. We already bear the burden of higher inflation.
It is inevitable that the press will feed these concerns as we approach the Autumn Statement on 26th November. As we have seen throughout 2025 so far, despite all the political turmoil and short term market movement, the patient investor who ignores the noise and sticks to the plan is usually rewarded.
And finally…
One country is almost entirely cashless…
Sweden is leading the global shift away from cash, with only about 1% of all transactions now made using physical currency.
Mobile payments and digital banking dominate daily life, making Sweden the closest economy in the world to becoming fully cashless. Even street vendors, churches and buskers accept digital payments, making physical cash rare in daily life.
If this blog has raised any questions why don't we have a quick chat?
Garry Hale MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.
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September Market Commentary
Introduction
The FTSE100 recorded multiple record highs in August as equity markets continued to rise, before a little wobble hit all equity markets at the very end of the month.
Trump’s ongoing row with the Fed caused some market turbulence as August drew to a close. The dismissal of Governor Lisa Cook, if upheld, would put the Fed under more pressure to accede to the President’s fervent desire for interest rate cuts, economists fear.
United States
Trump’s battle with the Fed rumbles on. The dismissal of Governor Lisa Cook is his latest, and possibly boldest, move in this war.
Now that President Rump’s ‘Big Beautiful Bill’ is now the One, Big, Beautiful Bill Act of 2025, US debt will increase significantly. Every interest rate cut to reduce the cost of that debt is vital to the Trump Administration.
If he succeeds in removing Cook, and appoints her replacement, it would mean he will have appointed the majority of the Fed board, and economists are concerned for its future independence.
However Cook is not going quietly, in fact she has not gone at all. The Federal Reserve Act allows the President to remove a Governor but it also explicitly requires a showing of ’cause’ for this to happen. She is suing the President and has remained in post whilst a court decides if her dismissal was lawful or not. Trump relied on allegations from one of his political allies that she falsified documents to obtain a mortgage as ’cause’ for the dismissal. Whilst it is unclear what the court decision will be, it could redefine the limits of Presidential powers.
Whilst Cook was one of the Governors who voted against a rate cut recently, the move by President Trump appeared particularly aggressive given the positive noise in August from the Fed. Fed chair Jerome Powell, raised hopes of a rate cut in his speech to central bankers in late August at Jackson Hole, Wyoming. Markets immediately priced in a rate cut for the Fed’s next decision making meeting on 17th September.
Despite the politics, equity markets roll on. All key US equity indices delivered positive returns over the month, making this latest political drama a blip in an otherwise good month. Amongst the strong results there were a few mixed performers.
Nvidia and Dell both announced results which underdelivered against analyst expectations and triggered a sell off. Nvidia’s future in China remains in some doubt amidst wrangling over export licensesand competition on a new AI chip from Chinese tech giant, Alibaba.
There will be a continued focus on US economic indicators such as inflation and job growth over the forthcoming months, and Fed rate cut decisions have never been so exciting. However, the wobble at the end of August has not really taken the shine off US equities early in this second half of the year.
UK
On 7th August, the Bank of England cut its base rate by 25 basis points to 4%. This is the fifth cut since the election.
Inflation stayed persistently above target and remains a real concern. It is a threat to future interest rate cuts, and Chancellor Rachel Reeves needs positive news as she heads towards what could be another big Autumn Statement later in the year.
The date for the Autumn Statement has been confirmed as 26th November. It gives two more chances for a rate cut, as the Bank of England Monetary Policy Committee will meet on 18th September and 6th November.
The speculation between now and the announcement will be unrelenting. No doubt every conceivable tax will be rumoured for an increase, and every allowance rumoured for a cut. We will keep you informed as always but it is worth reminding you not to pay too much attention to the media hype which now accompanies an Autumn Statement.
UK equity markets flew high in August. The FTSE100 peaked mid-to-late August before correcting at the end of the month. The bond market has caused more concern with yields on 30-year gilts continuing to climb. The bond sell off means that the UK’s long-term borrowing costs have reached their highest level since 1998. Whilst Rachel Reeves is often the first to be blamed for such problems, some analysts have suggested that the market is more concerned that she might be replaced by a Chancellor less focused on fixing Britain’s fiscal hole.
It is worth remembering that as defined benefit schemes slowly wind down and deplete funds, there is a significantly reduced demand for gilts regardless of short term market reactions.
There were positive signs of growth in the services sector and Chris Giles argued in the Financial Timesat the start of September that the UK is in a better place than it would appear from all the economic negativity when compared to its peers. He said:
“The French government hangs by a thread because its parliament cannot agree a budget. Even with Donald Trump’s tariff revenues, US public finances show little sign of improvement and the borrowing forecast looks set to remain close to an unsustainable 6 per cent of GDP for the foreseeable future. Italian and Japanese general government net debt is 127 per cent and 134 per cent of GDP respectively this year.
Compared with others mired in a fiscal bunker, the UK’s public finances are objectively better placed. Net debt is still below 100 per cent of GDP.
Unlike other G7 governments, the deficit is on track to decrease by around 1 per cent of GDP this financial year and borrowing is only two-thirds of US levels. Despite this, UK politics and financial markets are consumed by fiscal concerns. Government long-term borrowing costs have hit the highest level since 1998 and the UK pays more to raise medium and long-term finance than any other country in the G7.
It takes a special sort of political, institutional and economic dysfunction to achieve these results.”
Giles points to the problems caused by the UK’s tight fiscal rules and the highly uncertain fiscal predictions that the Office for Budget Responsibility make as a key source of the dysfunction. Reeves may agree but she remains bound by them.
Europe
Eurozone growth was sluggish in August with a weakening services sector offset by improved manufacturing output and new orders.
Spain was the best performer, followed by Italy, with Germany continuing the slow and France contracting.
France’s political problems cast a shadow again over its economic prospects. Another no confidence vote, an inability to sign off on a budget, and the realistic prospect of new legislative elections, has destabilised French bonds.
Whilst other Eurozone bond markets also have their problems, notably Belgium and Austria who are currently being reviewed by rating agencies, it does seem likely that France is the focal point for these problems, and political uncertainty is the immediate cause.
Inflation nudged up slightly to 2.1% in August and employment grew a little, with the European Central Bank expected to maintain interest rates at 2%. Core inflation was steady at 2.3%.
Far East
China’s manufacturing sector improved slightly in August from July but it is still not in growth territory. Its official purchasing managers’ index (PMI) showed a fifth month below the growth threshold of 50, sitting at 49.4 for August. A private PMI poll painted a much more positive picture with a figure of 50.5. Uncertainty around the US trade deal is the most likely cause of the problem and there is some hope that the extended trade war truce is now improving exports. The same private PMI showed China’s services sector as growing at its fastest pace in 15 months in August.
The appreciation of the yuan has also helped US trade tensions. It was widely expected that China would intentionally depreciated its currency against the dollar to keep its exports competitive. This hasn’t happened and it hit a yearly high in August. Some commentators believe this was a Chinese policy decision designed to appease the US.
Inflation in Japan, which has been a real concern, eased in August for year-on-year Core CPI, although it was still at 3% if food and energy are excluded. Services sector growth was offset slightly by manufacturing contraction, and the Japanese government remains concerned about the long term impact of US tariffs.
Despite these reservations the Nikkei 225 benefited from an Asian equity rally and hit new highs mid-August and still finished the month up after a modest fall from its peak.
Emerging Markets
Emerging markets as a whole have a positive long term outlook but political unrest and exposure to US tariffs will cause short term volatility to exposed countries.
Political unrest hit Indonesia, with riots resulting in a violent crackdown and two deaths. Bank Indonesia intervened to stabilise the currency and bond market but investor sentiment has been damaged. Indonesia has been seen historically as a relatively stable emerging markets economy and is South East Asia’s largest. There are some signs of recovery but it is unclear how long the unrest will last and how far it will spread.
A proposed 50% US trade tariff and some sluggish growth is posing questions about India’s future economic performance. The rupee has also plunged and India’s government is introducing measures to try and course correct but they may have a few more bumps in the road to come in 2025.
South Africa remains a mixed bag. Export orders are weakening due to tariff pressures but their PMI of 50.1 shows they remain just about in growth territory and a strengthening rand has eased cost pressures. Amidst the concern there is some reliance.
Conclusion
August is often regarded as a difficult month for equities so this particular August, with record highs hit in some regions mid-month, can be viewed as something of a success.
The underlying themes have not gone away. There is still concern about the longer term impact of tariffs, inflation and growth. In the UK specifically there is always the concern that we will foot the bill for a lack of growth through higher taxes. We already bear the burden of higher inflation.
It is inevitable that the press will feed these concerns as we approach the Autumn Statement on 26th November. As we have seen throughout 2025 so far, despite all the political turmoil and short term market movement, the patient investor who ignores the noise and sticks to the plan is usually rewarded.
And finally…
One country is almost entirely cashless…
Sweden is leading the global shift away from cash, with only about 1% of all transactions now made using physical currency.
Mobile payments and digital banking dominate daily life, making Sweden the closest economy in the world to becoming fully cashless. Even street vendors, churches and buskers accept digital payments, making physical cash rare in daily life.
If this blog has raised any questions why don't we have a quick chat?
MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.