Market Update August 2026

For four weeks August looked like the month the war went quiet. The sixty-day window opened by the 17 June MOU expired on 17 August with no negotiations under way, and President Trump answered by calling on Iran to surrender and threatening to bomb Oman over the Hormuz corridor dispute. The shooting pause between Washington and Tehran held anyway, and risk assets ran with it: the S&P 500 gained 2.6% for its first monthly advance since May, and the Dow closed a fifth straight winning month. That ended on 30 August, when US forces struck rocket launchers on Iran’s Larak Island, Iran retaliated against American bases in Jordan and the UAE, and Brent went back above $90. Warsh had already used Jackson Hole on 28 August to sharpen his inflation warning, and the market spent the days after it pricing a September hike as the base case. The 30-year Treasury yield reached 5.34%, its highest since 2007. Gold rose 9.6%. Euro area inflation jumped to 3.3%, and Swiss inflation doubled to 0.8%.

Geopolitical Developments

The sixty-day negotiating window created by the 17 June memorandum ran out on 17 August with no talks in progress. Trump demanded that Iran “put up the white flag of surrender” and threatened to bomb Oman, whose alternative shipping corridor sat at the centre of the Article 5 dispute over the Strait of Hormuz. Iran had suspended its own commitments back in July. Nothing has replaced the framework that lapsed.

The two governments exchanged nothing directly for four weeks. Shipping was another matter. The bulk carrier Minoan Pioneer was hit on 3 August, an ADNOC tanker on 8 August and two more on 13 August, and the Greek-managed Minoan Dignity on 18 August, whose chief engineer was killed. Traffic through the strait slowed further as the month went on.

The pause ended on 30 August. US forces struck two rocket launchers on Iran’s Larak Island inside the strait, the first direct exchange in about a month. Iran answered early on 31 August, hitting the King Hussein and Al Azraq bases in Jordan and Al Menhad in the UAE, and Trump warned that Washington would “hit them hard”. Brent rose about 2.3% to $90.15 and equities gave back part of the month’s gains in the final session. Sanctions pressure widened alongside the strikes, including new designations on Hezbollah on 20 August.

Market Developments by Asset Class

Equities

The S&P 500 gained 2.6% in August to close on the 31st at 7,686.14, its first monthly advance since May. The Nasdaq Composite added 3.9% to 26,370.89 and the Dow rose 1.3% to 53,185.90, a fifth consecutive winning month. Breadth was thinner than those numbers suggest: the Magnificent Seven added 4.4% while the S&P Midcap 400 managed 0.1%. In Europe the STOXX 600 gained about 0.3%, its own fifth straight monthly rise, closing at 651.1 after falling 0.6% on the final day. The SMI slipped 0.4% to 14,286.43 and is up 7.7% for the year.

Sector leadership followed the energy and inflation trade. Energy led large caps with 7.0%, ahead of technology at 6.2%, materials at 5.9% and healthcare at 4.9%. Utilities fell 4.8% and industrials 2.6%, both weighed down by higher long yields. The same pattern held in small caps, where energy gained 8.2% and REITs lost 4.4%. Risk appetite ran wider than equities: silver rose 15.6% and bitcoin 25.4%, its best month since November 2024.

Switzerland spent August under a revised tariff arrangement with the US, the first full month of it. The flat 15% surcharge lapsed on 24 July and gave way to a variable additional tariff capped at 12.5% on general goods, while pharmaceuticals moved under Section 232 from 31 July at up to 15%, with exemptions at product and company level. Pharma still dragged on the SMI, with Roche and Novartis lower into month-end on reports of possible US intervention in generic drug pricing. EUR/CHF held a narrow range, failing twice at 0.9400 on 18 and 19 August before closing at 0.9376, and the KOF barometer at 106.7 pointed to firmer momentum.

Bonds

The long end did the work in August. The 10-year Treasury yield ended the month at 4.75%, its highest since January 2025, while the 30-year reached 5.34%, a level last seen in the summer of 2007. The 2-year sat at 4.34% in late August. The curve steepened, which points at term premium more than at the policy path.

There was no FOMC meeting in August, so Jackson Hole carried the message. On 28 August Warsh said “we’ve come to a hinge point in history” and that underlying inflation had not meaningfully improved. He put a number on it: 54% of the goods and services in the PCE basket were rising at more than 3%, against 32% in the two decades before the pandemic. Analysts read the speech as an endorsement of a September move, and fed funds futures now price a hike at the 15 to 16 September meeting as the base case. The August employment and inflation reports will settle it.

CPI ran at 3.4% year on year, core PCE at 3.3% and PPI at 4.7%, while July payrolls fell 23,000 and unemployment eased to 4.1%. Q2 GDP came in at 1.5% annualised, though the Atlanta Fed’s GDPNow model was tracking Q3 at 4.6% as of 26 August. In Europe, euro area inflation jumped to 3.3% in August from 2.9%, driven by a 14.3% rise in energy, while core eased to 2.4% and services to 3.0%. The account of the July ECB meeting, published 27 August, described that hold as a pause, and a hike to 2.50% on 10 September is now largely priced.

Real Estate (Switzerland)

The Swiss backdrop remains supportive. The SNB policy rate is still 0% and the next assessment is on 24 September. Swiss inflation doubled to 0.8% year on year in August, the highest reading since September 2024, though that is still deep inside the target band. Financing conditions stay attractive.

The composition of the August print matters for property investors: rising housing rentals were among the main contributors, alongside fuel and in-patient hospital care. Some of that increase is rent growth in its own right, which supports income on existing holdings. Swiss ten-year yields ended the month around 0.42%, barely changed even as US and euro area long rates climbed, so mortgage costs and valuations are undisturbed. Listed Swiss real estate has now recovered its Middle East crisis drawdown.

Commodities

Oil took a longer route this month. Brent eased through the fourth week, settling near $88 after a weekly fall of more than 4%, before the Larak Island strikes turned it around. Those strikes landed on a Sunday, so the reaction came in the final session of August: Brent rose about 2.3% to $90.15 and WTI about 2.5% to just under $85.50, leaving crude up 2.0% over the month as a whole. The premium is now held up by the absence of a framework, which outlasts any single attack.

European TTF gas stayed elevated on the same Hormuz risk that lifted euro area energy inflation 14.3% year on year. Industrial metals firmed alongside equities as the growth data held up. The dollar index slipped 0.5% over the month, giving commodity prices a further mechanical lift.

Gold was the standout. Prices rose 9.6% over August to close at $4,496.70 an ounce, with spot quoted above $4,600 during a sharp three-day run around 24 August before easing into month-end. Silver did better still at 15.6%. Last month’s mechanism has now inverted: rate expectations rose and gold rose with them, because the inflation driving those expectations is the same reason to hold the metal. Central bank demand and an unresolved Hormuz set the floor.

Everon Strategies and Portfolio Positioning

Income Strategies

Income CH 80 came through a falling Swiss dividend market ahead of its benchmark. The strategy returned -0.51% in August against -1.18% for the iShares Swiss Dividend ETF (CH), an active return of 67 basis points in a month when Swiss dividend payers were under pressure from the first week onward. Both sources of that gain were positive: allocation added 40 basis points, selection 26. The strategy finished ahead of the benchmark in four of the five weeks.

Financials did the heavy lifting. The sleeve returned 1.23% against -1.00% for benchmark financials, worth 84 basis points of the relative gain, with Vontobel, Julius Baer, UBS Group and Swiss Re among the largest single contributors. Sika and Geberit added on the materials and industrial side, and holding no utilities helped as well, since that part of the index fell 6.50% over the month. The portfolio also stays far better diversified than the ETF it is measured against, with the top fifteen positions at 76% of assets against 98% for the benchmark.

Multi Factor Strategies

The European sleeve had a strong month. MultiFactor EU Equities returned 2.31% in August against 1.33% for the iShares STOXX Europe 600 UCITS ETF (DE), 97 basis points of outperformance, and it held its lead on every trading day of the month. The wider MultiFactor 80 Global mandate returned 0.72% in Swiss francs, a positive result through a month that closed with fresh strikes in the Strait of Hormuz and a hawkish repricing of Fed policy.

Within the global book the factor mix already held the exposures August rewarded. The gold sleeve was the single largest contributor at 56 basis points and the broad commodity position added 13 more, while technology produced 57 basis points on a sector return of 3.40%, led by Palantir, NVIDIA, Arista and Microsoft. Energy contributed on a 2.58% sector return. Breadth stayed wide throughout, with the top fifteen holdings at 33% of the portfolio, so no single position decided the month. The mix owned the inflation and hard-asset themes before August made them obvious.

Outlook

The question going into September is whether the 30 August exchange was an isolated flare or the opening of another sustained round. There is no framework left to restore, since the MOU expired on 17 August and no talks are in progress. That makes the oil risk premium structural rather than event-driven, and it means every disruption in the strait now lands on an inflation print that is already uncomfortable in the US and rising in the euro area.

Three dates matter. The Fed decides on 16 September, and after Jackson Hole a hold would carry a credibility cost; the August employment and inflation reports released just before it will settle the odds. The ECB meets on 10 September with a rise to 2.50% largely priced. The SNB assesses on 24 September, where inflation at 0.8% argues for holding at 0%.

For Swiss investors the position is comfortable. EUR/CHF near 0.9376 keeps pressure off exporters, inflation at 0.8% is a rounding error next to the euro area’s 3.3%, and Swiss long yields at 0.42% have absorbed none of the global move. Our portfolios keep the tilt toward energy exposure and the rate-sensitive European names that worked in August. Position sizing is unchanged and we have added no duration.

Your Everon Investment Team