As August drew to a close, financial markets remained supported by resilient economic growth and exceptionally strong corporate earnings, despite rising long-term bond yields and ongoing geopolitical uncertainty in the Middle East. While higher energy prices and increased government borrowing pushed bond yields to levels not seen in years, investors generally viewed the move as an orderly repricing rather than a sign of financial stress. Economic activity in both the US and Eurozone remained robust, supported by healthy consumer spending, business investment and continued expansion of AI-related infrastructure. Corporate earnings for the second quarter exceeded expectations across most regions and sectors, reinforcing confidence in the outlook for equities. Against this backdrop of solid growth, resilient earnings and manageable inflation risks, we maintain our overweight position in equities while adjusting our sector allocation by reducing exposure to materials and adding energy.


Highlights this month:

• Rise in long-term bond yields remains orderly despite higher levels
• Robust earnings growth in second quarter
• Materials overweight replaced by energy in sector allocation