INSIGHT WEEKLY: August 31, 2025
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🌐 Markets Overview
📈 Markets are positive year to date - is 2025 going to be another year of good returns?
At the end of August, stock markets are in positive territory, encouraged by dovish signs from Chair Powell of the Federal Reserve, despite geopolitical tensions and concerns about tariffs affecting global trade. As always, US markets influence sentiment across most markets.
Germany’s DAX tops the list with a 20% gain.
📊 U.S. Stock Markets fell slightly during the week going into the Labor Day holiday weekend.
The bellwether S&P 500 is up nearly 10% year to date, despite a large decline in April after “Liberation Day”.
Small cap stocks have performed well over the last few weeks, with the Russell 2000 outperforming the S&P 500 in recent weeks.
🇪🇺🇬🇧 Eurozone and UK
In France, political uncertainty drove sharp declines. The CAC 40 fell more than 2% on August 26, as investors digested news that opposition parties had unified around a no-confidence vote scheduled for September 8. Major French banks dropped over 6% on the day amid fears of a potential government collapse and abrupt shifts in fiscal direction.
Germany added pressure to eurozone sentiment. Preliminary inflation data released August 29 showed a surprise uptick to 2.1%, with core inflation holding at 2.7% and unemployment surpassing 3 million for the first time in nearly a decade.
Still, the DAX remained the region’s best performer, up 20.1% year-to-date.
Across Europe, bond market tensions flared. Sovereign debt auctions in France, Germany, and the U.S. pushed 10-year yields to their highest levels in over a year, weighing on equities.
In the UK, the FTSE 100 climbed 12.4% YTD, supported by strong earnings in consumer staples and energy. However, the retail sector underperformance and persistent food inflation capped further gains.
The FTSE 250, more exposed to domestic demand, is up just 1.1% YTD, reflecting weak sentiment among UK-focused investors.
Asian Markets
Japan’s Nikkei 225 added to this year’s impressive run, posting a 12.9% YTD gain. Despite weak factory output in July (–1.6%) and modest retail figures, investors remain bullish on corporate earnings.
India’s Nifty 50 slid 2.5% during the week, trimming its YTD performance to 3.3%, after the U.S. finalized 50% tariffs on key Indian exports. Sectors exposed to trade, notably textiles and machinery, led the retreat. However, a strong Q2 GDP helped limit broader losses.
China’s CSI 300 rebounded in August, gaining 8.8% YTD, fueled by a surge in global risk appetite and expectations of looser Fed policy.
Tech stocks
Nearly all semiconductor stocks gained due to AI demand:
Micron gained over 41% year to date due to surging demand for its high bandwidth memory (HBM) chips, which are critical for AI models and also used by Nvidia.
Intel gained over 21% year to date, rebounding after its poor performance in 2024, and responding to the US government taking a stake in the company. The company received $5.7 billion under the CHIPS Act, and a further $3.2 billion Secure Enclave program (from the Department of Defence). So in exchange for a total of $8.9 billion, Intel issued shares to the US government, which is 9.9% of the total shares.
Softbank has also invested $2bn, and Intel issued new stock to Softbank in return.
Both deals will dilute the ownership of existing shareholders.
Nvidia continues its outstanding performance with a nearly 30% gain in the year to date.
It was revealed that two of its customers (unnamed) made up 39% of its revenue.
It is estimated that over 70% of its employees are millionaires, and 3 are billionaires.
Among the Magnificent 7, Nvidia, Meta, and Microsoft are pulling ahead of the rest of the field, while Apple (-7%) and Tesla (-17%) languish.
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Macro Watch: This Week’s Economic Developments
Global markets responded to signs of softer inflation and dovish signals from the U.S. Federal Reserve, especially following Chair Jerome Powell’s recent tone suggesting a September rate cut. This sparked renewed optimism across equities and fueled interest in AI and tech sectors, though concerns linger over the underlying strength of global economies.
🇺🇸 U.S. Economic Sentiment worsened, and Fed Independence is under question
Fed Chair Jerome Powell struck a more dovish tone at Jackson Hole, acknowledging that the labor market slack is growing even as inflation remains above target. Markets took this as confirmation that a rate cut is likely at the Fed’s September meeting, helping push equities higher and the dollar lower.
But Powell’s message competed with a growing institutional rift. President Trump’s surprise move to fire Fed Governor Lisa Cook triggered immediate legal action. Cook filed a lawsuit on August 28, arguing that governors cannot be dismissed without cause.
In parallel, a U.S. appeals court ruled on August 29 that most Trump-era tariffs, imposed under emergency powers, were unlawful. While the decision is stayed until October 14 pending possible Supreme Court review, it undermines the legal foundation of a key trade strategy.
🇪🇺🇬🇧 Eurozone and UK
A new U.S.–EU trade deal imposed a 15% tariff on most EU exports, disappointing markets despite being lower than feared.
Eurozone GDP grew 0.1% in Q2, narrowly avoiding contraction, while headline inflation held at 2.0%, in line with the ECB target. Core inflation stayed slightly elevated at 2.3%.
Unemployment across the eurozone remained relatively low at 6.2%, though Germany stood out with a post-pandemic high of 6.3%.
Sentiment improved in July, especially in services.
In the UK, the FTSE 100 dipped 0.57%, cushioned by a weaker pound. The housing market showed signs of recovery, with house prices up 0.6% and stronger mortgage approvals.
Asia (Japan, China, India)
Asia offered a mixed picture this week, with Japan under pressure, India caught in tariff crossfire, and China facing industrial weakness despite a market rebound.
In Japan, July factory output fell 1.6%, led by a steep drop in car production. Retail sales disappointed, and while unemployment held steady, core inflation remained elevated at 2.5%. Price pressures, particularly in food, continue to complicate the Bank of Japan’s path forward.
India posted stronger-than-expected Q2 growth, but U.S. tariffs, now reaching 50% on key goods, have disrupted over half of its exports. In response, India accelerated regional diplomacy: Tokyo pledged to boost private investment, while a rare summit in China signaled easing tensions and new economic cooperation.
In China, industrial profits shrank again as weak domestic demand and falling prices squeezed margins. Bank earnings also showed pressure, yet markets rallied nearly 10% this month - driven more by global Fed expectations than local fundamentals.
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🌐 Artificial Intelligence and Tech
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Ambani, Google, and Meta Partner to Build India’s AI Backbone
Mukesh Ambani has teamed up with Google and Meta to create a national AI infrastructure for India. The partnership aims to develop localized large language models, compute capacity, and AI tools optimized for India’s scale and languages. Analysts view this as a strategic hedge amid rising geopolitical and regulatory uncertainty.
Agentic AI in Southeast Asia: Promise and Pushback
Southeast Asian governments and tech firms are cautiously exploring “agentic” AI systems that can set and pursue goals with minimal human input. While the potential benefits in logistics, education, and language localization are clear, concerns about alignment, ethics, and regulatory lag persist. The region may become a testbed for balancing innovation and constraint.
Google Cloud’s New AI Security Push
Google Cloud has expanded its portfolio of AI-driven cybersecurity offerings in response to rising threats. The company now positions its Vertex AI platform not only as a productivity tool but also as a frontline defense system capable of detecting novel exploits and attack patterns in real time. This move is part of a broader trend toward embedding AI directly into enterprise security infrastructure.
Tencent’s AI Adds Realistic Sound to Synthetic Video
Tencent has introduced Hunyuan Video-Foley, an AI tool that generates human-like sound effects to match synthetic or generated video. The system can replicate footsteps, ambient noise, and subtle audio cues in sync with visuals, significantly enhancing realism in AI-generated content.
Elon Musk’s xAI and X Sue Apple and OpenAI
Elon Musk’s companies xAI and X (formerly Twitter) have filed a lawsuit alleging Apple and OpenAI are colluding to monopolize the foundation model ecosystem. The suit claims that Apple’s tight integration of ChatGPT with iOS 18, without offering user choice, constitutes anti-competitive behavior.
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🌐 Crypto Corner
Top 10 cryptos:
XRP’s strong YTD performance reflects the resolution of Ripple’s SEC case, removing regulatory uncertainty and reopening institutional access. The announcement of CME’s upcoming XRP futures further legitimized the asset, while RippleNet’s role in cross-border payments continues to support long-term confidence.
Ethereum has gained steadily this year on rising institutional demand, increased staking, and its dominance in stablecoins and DeFi infrastructure. Momentum has been supported by optimism around Layer 2 scaling and the token’s growing use in real-world asset issuance.
Binance Coin’s rise has been supported by record activity on BNB Chain, where BNB is used to pay transaction fees (gas) for transfers, token launches, and app usage. Despite regulatory pressure, steady demand from within the ecosystem has kept fundamentals intact.
Bitcoin’s gains reflect institutional accumulation, reduced exchange supply, and macro support from expected Fed rate cuts.
Solana has posted moderate gains, underpinned by high on-chain activity and strong developer engagement. Institutional pilots and TradFi integrations have helped, though inflation and increased competition from modular chains have limited further upside.
Polkadot has underperformed sharply amid low parachain usage - meaning few apps and projects are actively using its network - along with weak user growth and limited developer traction. Despite governance upgrades, investors remain unconvinced by DOT’s progress compared to faster-moving alternatives.
See the previous spotlight on Bitcoin halving
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Stay tuned for more insights and updates each week.