Markets appeared calm on the surface but experienced sharp swings as shifting expectations for Fed policy, weaker US data and speculation about a more dovish new Fed chair collided with rising doubts over the sustainability and valuation of the AI boom. Speculative AI names, semiconductors, defence stocks, crypto and China all saw setbacks, in contrast to resilient gold and a stimulus-driven but yen-weak Japan, while the UK’s leak-prone budget soothed near-term fiscal worries without resolving longer-term concerns. The episode highlights how vulnerable richly valued, highly concentrated parts of the market are to changing narratives, reinforcing the case for diversification, careful stock selection and an agile approach to risk, while remaining constructive on the medium-term outlook and prepared to add risk during bouts of volatility.

* August 2025
** September 2025
*** July 2025