US markets took a tumble on August 1 as a result of poor US job data. Not only did the non-farm payrolls come in lower than expected but numbers were also revised down sharply for May and June by more than 250,000 jobs than was initially reported. The significantly revised numbers caused Trump to fire the commissioner of the Bureau of Labor Statistics.

Despite this poor start of the month, US shares gained in August in anticipation of a long-awaited interest rate cut by the Federal Reserve. This cut is now practically certain, despite US inflation steadily climbing, as FED chair Jerome Powell all but confirmed it during the annual Jackson Hole Speech, Powell's last as FED chair.

While a US appeals court declared the Trump Administration’s reciprocal tariffs illegal, it delayed enforcing its ruling until 14 October to give the Administration time to appeal to the US Supreme Court.

The Dow Jones index gained 3,20%, the S&P500 1,91% and the Nasdaq Composite 1,58%. The dollar however lost 2,40% against the Euro, essentially erasing the US stock gains in Euro terms. The tech-heavy Nasdaq underperformed the others as AI-related stocks faced more selling pressure on valuation concerns after a report from the Massachusetts Institute of Technology that found 95% of corporate generative AI pilot projects failed to deliver a measurable financial return. Also Sam Altman, the CEO of OpenAI and developer of chatbot ChatGPT, suggested there is an AI bubble.

European stock markets were mixed. Despite the German DAX index losing 0,68% and French CAC index losing 0,88%, the overall Eurostoxx 50 index gained 0,60%. French shares fell late in the month on concerns the government will collapse. French Prime Minister François Bayrou called a confidence vote for 8 September after his plans to tackle the country’s widening deficit faced strong opposition in parliament.

After a massive rally since the beginning of the year, Slovenia's SBI index this time took a small step back, dropping 1,43% to 2414,19. However part of the drop was also due to dividend payouts.

In the UK, the FTSE index gained 0,60% while the Pound Sterling remained unchanged against the Euro.

The Bank of England cut interest rates by 25 basis points to 4,0%. However, the Monetary Policy Committee was split with four members voting for no change. Inflation rose more than expected to 3,8% in July, casting doubt on the likelihood of further cuts.

The Japanese equity market extended its multi-month rally with the Nikkei 225 index up 3,05%. Japanese Q2 GDP returned to growth and inflation data confirmed a continuing shift toward moderate inflation. The Yen however continued its devaluation.

Gold continued to reach new highs amid expectations of an imminent US interest rate cut and concerns over political pressure on the Fed. Gold gained 4,88% to close august at $3512 per ounce while silver gained 10,76%. Oil on the other hand slumped 7,65% to $63,96 per barrel after the International Energy Agency lowered its forecast for demand in 2025 and US stockpiles grew.

Rudy Marchant
Fund manager Primorski skladi

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