Global Market Review
Global stock markets have continued their recovery in August and into September, supported by resilient economic activity and generally strong corporate earnings. US equities performed particularly well, helped by another strong earnings update from Nvidia, which capped a robust second-quarter reporting season. Investor attention has also remained focused on inflation, interest rates and geopolitics. Tensions in the Middle East have continued to influence oil markets, with Brent crude remaining around the $100 per barrel level.
In the US, government bond yields moved closer together as expectations around interest-rate policy shifted following comments from Federal Reserve Chair Warsh at the annual Jackson Hole Symposium. The US Treasury (led by Scott Bessent) also surprised markets by announcing plans to increase purchases of longer-dated government bonds.
Stock market gains were widespread across both developed and emerging markets. Emerging-market shares performed slightly better in US dollar terms, helped in part by a weaker US dollar.
Corporate earnings remained encouraging across the major regions, with energy and technology companies among the strongest performers. Importantly, earnings growth appeared to be becoming broader rather than being driven by just a small group of companies. Expectations for global corporate earnings growth in 2026 have therefore continued to improve significantly.
The strength in equities through the last two months was accompanied by rising commodity prices. Gold and other precious metals moved higher, while industrial metals also benefited from improving demand expectations. Gold's rise was supported by renewed concerns about currency debasement following the US Treasury's announcement regarding longer-term bond purchases.
Energy markets were more mixed. Oil prices remained relatively stable up until a week ago, despite continued tensions involving the US and Iran. European natural gas prices, however, reached their highest level of the year as inventories remained relatively low and supply concerns persisted. Crude Oil prices were hovering once again around $110 per barrel.
United States
The US remained one of the strongest-performing major equity markets in August, with the S&P 500 continuing its upward trend.
Artificial intelligence remained a major investment theme, supported by substantial technology spending and strong earnings. However, performance within the technology sector was uneven. Some of the major semiconductor companies performed strongly, while others fell, highlighting the uncertainty around which companies will ultimately benefit most from the continued growth in AI.
The broader US economy also remained healthy, with business activity indicators showing continued expansion. However, the performance gap between the largest companies and the wider market persisted, with the equal-weighted S&P 500 lagging its traditional market-cap-weighted version.
Japan
Japan's stock market also delivered strong gains during August, while the yen weakened. Investment related to the expansion of AI data centers in the US, together with expectations of increased fiscal support in Japan, helped lift a broad range of Japanese companies and sectors.
Europe and UK
European equity markets also benefited from renewed interest in technology and growth companies, although overall gains were more modest than in the US and Japan.
In the UK, government bonds produced positive returns, while European government bonds generally struggled as yields moved higher. Markets continued to expect the European Central Bank to maintain a relatively firm stance on interest rates, while comments from ECB officials reinforced that view. German government bonds weakened, with longer-term yields reaching a new cycle high, while French bonds faced additional pressure as investors focused on upcoming budget negotiations.
Looking Ahead...
The recovery in global equities continued in August, supported by resilient economic conditions and healthy corporate earnings. The ongoing investment in AI infrastructure remains an important source of growth, particularly for technology companies.
At the same time, the differing performance of technology stocks shows why it may be too early to assume that all companies involved in the AI investment cycle will benefit equally. A selective approach across the AI supply chain therefore remains appropriate.
The broad-based strength across international markets also reinforces the importance of maintaining geographic diversification rather than relying too heavily on a single country or sector.
Diversification remains key to provide elements of downside protection if economic growth or technology investment momentum weakens.
Do You Hold US-situs Assets Outside of Misthos Group Management?
If you hold any US-situs assets outside of the investments currently managed by Misthos Group and are a non-US resident, you should be considering the potential estate tax exposure associated with US-situs assets.
US-situs assets can include:
- US stocks/shares
- US ETFs
- US listed securities
- Certain US bank or brokerage accounts
- Interests in US-based investments or businesses
- US real estate is also generally considered a US-situs asset and can have additional tax considerations.
For a non-US person, an executor may be required to file a US estate tax return (Form 706-NA) where the value of US-situs assets at death exceeds $60,000. The IRS states that you must wait 9 months before any next step can be completed, after filing a Form 706-NA. This means recovery of your assets by your beneficiaries will likely take at least a year.
In addition to the long wait time, in the absence of a comprehensive double taxation agreement between the US and the country of residence, US estate tax can potentially apply at rates of up to 40% on the balance above the $60,000 threshold.
If this may be you...
One way of addressing this exposure is through an offshore insurance structure, where eligible US assets are transferred into the insurance product and a Beneficiary Trust or Corporate Trust is assigned. This provides a fast and effective framework for estate planning and the eventual transfer of wealth to beneficiaries.
While transferring US assets into an insurance product would generally constitute a disposal for capital gains tax purposes, CGT is not typically applicable to non-US residents unless the assets are directly or indirectly related to US real property or connected with a trade or business in the US.
There can also be probate considerations. For example, an Isle of Man asset may require Isle of Man Probate on death. Linking the insurance product to a simple trust structure, such as a Beneficiary Trust, avoids the need for the deceased's estate to obtain Isle of Man Probate in order to access the value of the insurance product.
If you hold any US-situs assets outside of the investments currently managed by Misthos Group and are a non-US resident, please make me aware so that we can have an additional discussion about this.