We generally recommend that you hold investments for the medium to long-term, which we would view as being for five years or more. The monthly market commentary provides an insight into the current factors that are affecting short-term global returns, but should not be viewed as a basis for making long-term investment decisions. You should consider your own investment goals and timeframes before making any such investment decisions. If you do have any concerns about where your money is invested, please contact your Origen adviser.
Introduction
Global equities broadly rose in August, supported by strong corporate earnings, moderating inflation and expectations of lower interest rates, particularly in the US. Markets did though endure periods of volatility, partly due to political developments in the US and France. There was divergence in fixed income performance, with gains in the US but there were losses in the UK.
Economic Overview
UK
Bank of England
The Bank of England (BoE) cut its interest rate by 0.25% to 4% after a close 5-4 vote, requiring two rounds of voting due to one policymaker initially preferring a bigger 0.5% reduction. Governor Andrew Bailey cautioned against rapid or large cuts and said the bank is prepared to adjust policy if inflation risks change. The BoE raised its peak inflation forecast from 3.7% to 4% for September and now expects inflation to hit the 2% target in Q2 2027, three months later than previously estimated.
Economic Growth
Preliminary data indicates the UK economy outperformed expectations in Q2, growing 0.3% quarter-on-quarter—above the Bank of England’s 0.1% forecast but slower than the previous 0.7%. Despite contractions in April and May, growth returned in June. Growth in the second quarter was driven by a 0.4% rise in services and 1.2% in construction, offsetting a 0.3% fall in production. Government spending increased by 1.2%, but business investment dropped 4%. Household spending rose by a modest 0.1%. Exports grew 1.6%, surpassing the 1.4% rise in imports. Year-on-year, the economy expanded 1.2%. In June alone, GDP rose 0.4%, rebounding from May’s decline, with all main sectors contributing to the gain, led by the 0.3% rise in services.
Unemployment & Labour Market Statistics
Labour data indicated a softer jobs market, though wage growth stayed strong. Unemployment held at 4.7% through June—its highest since Q2 2021—with the ONS continuing to urge careful interpretation. Job vacancies dropped by 44,000 to 718,000 in July, the lowest outside the pandemic since early 2015.
Regular pay grew 5% annually in the three months through June, still well above the 3% level views as consistent with the 2% inflation target; adjusted for inflation, it rose 1.5%. Private sector wages excluding bonuses, a measure closely watched by the Bank of England, edged down from 4.9% to 4.8%. Total pay growth, which includes bonuses, was 4.6%, down from 5%, whilst in real terms it rose 0.5%.
Inflation
UK annual inflation, measured by the Consumer Price Index, rose from 3.6% to 3.8% in July—its highest level in 18 months and above expectations. The increase was mainly due to higher transport costs, especially air fares, along with rises in food, soft drinks, electricity, petrol, and hotel prices. Food and non-alcoholic drink prices in particular saw their largest annual rise since February 2024 at 4.9%. Housing and household services eased, with inflation dropping from 6.7% to 6.2%.
Core inflation edged up from 3.7% to 3.8%, slightly surpassing forecasts. Services inflation, which the BoE views as a key measure of domestically-generated inflation, increased to 5%, and goods inflation rose to 2.7%.
US
Economic Growth
A revised estimate shows US economic growth in Q2 reached 3.3% annualised, surpassing the advance forecast of 3.1%, mainly due to much stronger business investment, notably in AI, jumping from 1.9% to 5.7%. Consumer spending rose by 1.6% instead of 1.4%, while government spending shifted to a 0.2% decline from the original estimate of 0.4% growth. Imports dropped 29.8% instead of 30.3%.
Inflation
US consumer prices edged up 0.2% in July, in line with forecasts and following a 0.3% increase in June. Gasoline prices applied the main downward pressure as they dropped 2.2%, food prices were flat, and grocery store food costs dipped 0.1%. Services and tariff-affected goods saw price gains. Over the year, CPI increased by 2.7%, matching June’s rise. Core CPI, excluding food and energy, rose 0.3% in July—the highest since January—and 3.1% over the past year, driven by rising service costs and higher prices for certain goods.
Europe
Economic Growth
Eurostat confirmed that the Eurozone economy grew 0.1% in Q2, down from 0.6% in Q1, which was strengthened by pre-tariff activity. Spain led with 0.7% growth, France rose 0.3%, while Germany and Italy both contracted by 0.1%. Annually, GDP increased 1.4%, matching earlier estimates but below Q1’s 1.5%.
Inflation
Eurozone annual inflation held steady at 2% in July, above expectations for a slight drop. Prices of food, alcohol & tobacco, and non-energy goods rose faster, while service inflation eased from 3.3% to 3.2% and energy prices continued to decline. Core inflation remained at 2.3%, as lower services inflation was balanced by higher goods prices.
Asia and Emerging Markets
Japan
Preliminary data showed Japan’s economy grew by an annualised 1% in the second quarter, surpassing the expected 0.4%, with first-quarter figures revised up to a 0.6% expansion from a previous contraction. Private consumption rose 0.2%, capital spending exceeded forecasts, and net external demand (exports less imports) contributed 0.3% to growth. Quarter-on-quarter, GDP increased by 0.3%, outpacing the 0.1% forecast.
Market Overview
CR = Capital return; LC = Local currency
Source: Lipper for Investment Management
Past performance is not a reliable indicator of future performance
There was mixed performance from UK equities in August, with the FTSE 100 finishing higher but the mid cap FTSE 250 suffered a loss. UK equities were supported by the Bank of England reducing its interest rate, whilst the gains in the FTSE 100 were led by the telecommunications, basic materials and energy sectors. However, the FTSE 250 suffered from underperformance by utilities and technology stocks, whilst sticky inflation remained a headwind.
US equities, as shown by the S&P 500, rose in August despite concerns over weaker than expected jobs data and persistent inflation. Instead, US equities were supported by optimism over an interest rate cut in September, easing trade tensions and robust corporate earnings. European markets, as demonstrated by the FTSE World Europe ex UK Index, finished with a small gain although there were regional differences. Economic data and positive earnings supported sentiment, with the periperhal markets outperforming whilst France suffered a loss amid concerns towards the end of the month over a collapse in the government. The Japanese Nikkei 225 Index outperformed as it posted a robust gain, supported by positive economic data and broadly resilient company results.
Asian markets rose, as shown by the performance of the MSCI Asia ex Japan Index. China was among the leading performers despite some weak economic data, with the market boosted by Beijing’s “anti-involution” campaign aimed at curbing intense price competion and to redcue overcapacity in certain sectors. Singapore and Taiwan also performed well, whilst India lagged amid the US raising the country’s tariff rate from 25% to 50%. The broad MSCI Emerging Markets Index also produced a positive return, with sentiment helped by a weaker US dollar and a general easing in trade tensions.
UK government bonds (FTSE Actuaries UK Conventional Gilts Index) ended August lower despite the Bank of England cutting its interest rate, with the vote much tighter than expected whilst sticky inflation and wage growth were a headwind. Investment grade bonds also declined, although they outperformed UK government bonds. However, short-dated US treasuries outperformed as they posted a positive return, helped by increasing optimism over US rate cut, whilst longer-dated bonds continue to be negatively impacted by concerns over fiscal spending levels.
This update is intended to be for information only and should not be taken as financial advice.
Origen Private Client Solutions is a trading name used by Origen Financial Services Limited which is authorised and regulated by the Financial Conduct Authority. Our FCA registration Number is 192666. Our Registered office is: Ascent 4, Gladiator Way, Farnborough, Hampshire GU14 6XN and registration number is: 03926629.
CA13116 Exp:09/2026
