Month in the Markets: August 2025

Any month we find ourselves saying “hi” to all-time highs is generally a good month — and September was no different.

In fact, stock markets actually defied the September Effect, which has traditionally seen it be the weakest month of the year for returns.

So, who do we have to thank for bucking the trend?

In a nutshell, AI and rate cuts.

Much to the (further) delight of investors, this was bolstered by the Federal Reserve's first interest rate cut since December 2024 — with hints of more to come before the end of the year.

At the time of writing, there’s been a fair bit of talk about a potential tech bubble and market correction. While we’ll have a clearer picture of how things might play out by October’s Month in the Markets, keep your eyes peeled for a dedicated blog about this.

Across the pond with our Emerging Markets and Asia-Pacific funds, gains were driven by Chinese stocks, bets on its AI sector, and fresh government stimulus aimed at boosting the country’s economy.

Closer to home, UK markets also reached record highs, with European ones providing more of a mixed bag; Germany, for example, produced some good returns, whereas France showed some weakness due to political uncertainty.

And, even though markets appeared to shrug off the US government’s shutdown towards the end of the month, it was a reminder about the effects geopolitical issues can have on investments.

Coupled with mounting trade tariff concerns and a higher-for-longer interest rate outlook creating a potential risk-averse environment, we will be keeping a particularly close eye on economic data and inflation, going forward.