Bankers Investment Trust PLC

Global equities posted strong gains in August, driven by robust corporate earnings and continued enthusiasm for artificial intelligence (AI). Lower oil prices early in the month and weaker-than-expected US jobs data reduced the likelihood of a near-term Federal Reserve interest-rate hike and supported the rise in share prices.

Sentiment became more volatile in the second half of the month as Middle East peace efforts remained stalled, oil prices rebounded and government bond yields rose (prices fell). Expectations of an interest-rate hike from the Fed in September also increased after Fed Chairman Kevin Warsh warned that inflation had not slowed sufficiently. Annual inflation cooled to 3.4% in July from 3.5% in June, which was in line with economists' consensus forecasts and well above the Fed's 2% target. Interest-rate hikes are also expected in September from both the European Central Bank (ECB) and Bank of Japan (BoJ).

By sector, basic materials was the strongest performer, followed by information technology (IT) and energy. Materials shares did well as some commodity prices rose, particularly gold given investors' anxiety about US government borrowing and inflation. Shares in the IT sector were generally supported by optimism about artificial intelligence (AI), despite swings in sentiment, and strong corporate results, notably from chipmaker NVIDIA. Energy shares were supported by oil price increases. Utilities and real estate were weakest due to rising government bond yields.

By region, emerging markets outperformed, led by the AI-focused markets of Taiwan and South Korea. Japan was also ahead of the index, with AI enthusiasm and a weak yen helping offset the impact of rising bond yields and expectations that the BoJ may raise interest rates in September.