Market insight - global monthly outlook - August 2026
Global Outlook
US equities fell in July, weighed down by weakness in technology and large growth stocks as investors reassessed Artificial Intelligence (AI)-related expectations and higher bond yields pressured valuations.
European equities were broadly flat in July but outperformed other global markets.
Asian equities declined in July, led lower by weakness in technology, semiconductor and AI-related stocks in Taiwan and South Korea.
| Index | July (%) | YTD (%) |
|---|---|---|
MSCI World |
USD 0.5 |
10.5 |
S&P 500 |
USD -0.1 |
10.1 |
MSCI Europe |
EUR 1.0 |
12.4 |
MSCI Asia Pac ex Japan |
USD -2.3 |
21.3 |
Hong Kong Hang Seng |
HKD 13.5 |
3.0 |
Hang Seng China Enterprises |
HKD 14.5 |
-1.6 |
Topix |
JPY 0.2 |
18.8 |
Source: Thomson Reuters Datastream, total returns in local currency unless otherwise stated. Data as of July 31, 2026. YTD refers to year-to-date.
United States
- US equities fell modestly in July, as weakness in technology and mega-cap growth offset strong gains in energy and financials, while higher bond yields, Federal Reserve (Fed) caution and geopolitical uncertainty weighed on sentiment.
- The US inflation rate fell more than expected in June, easing from 4.2% to 3.5% as lower energy prices reduced price pressures.
Europe (including UK)
- European equities were broadly flat in July, outperforming other global regions despite a rise in volatility. Second quarter earnings season provides support for European Equities.
- Energy stocks buoyant as oil prices rise sharply while technology sector underperforms.
Asia Pacific (ex Hong Kong ex China ex Japan)
- Asia Pacific equities declined in July, with weakness concentrated in the region's technology-heavy markets. South Korea and Taiwan were the principal detractors as semiconductor and Artificial Intelligence (AI)-related stocks corrected despite robust earnings and continued demand linked to AI infrastructure.
- India and Australia generated positive returns, providing a partial offset.
Hong Kong and Mainland China (H-shares)
- Market performance benefited from resilient exports, expectations of further policy support and growing investor interest in China's AI ecosystem.
- While economic growth moderated in the second quarter, investors increasingly focused on signs of stabilisation in manufacturing activity and China's competitive position in areas such as electric vehicles and AI hardware.
Japan
- Japan proved more resilient than many regional peers, as strength in industrial, infrastructure and automation-related businesses helped offset weakness in semiconductor and AI-related stocks.
- Supportive domestic economic conditions and a weaker yen also underpinned sentiment. The Bank of Japan maintained a cautious policy stance, keeping interest rates unchanged following its July meeting.
Fixed Income
- Bond markets faced headwinds in July as a sharp rise in oil prices, triggered by renewed tensions between the US and Iran, reignited concerns over inflation and the outlook for monetary policy. US treasuries, German bunds and UK gilts returned -1.20%, -1.66% and -1.73%, respectively.
- Yield curves steepen with long-dated yields rising notably.
Emerging Markets
- Emerging market equities declined during July, with returns largely driven by developments in Asia. ASEAN markets delivered mixed returns as investors favoured domestically resilient economies.
- Latin American equities advanced, supported by higher commodity prices.
From the perspective of Hong Kong pension investing. All data are sourced from Invesco dated August 20, 2026, unless otherwise stated.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations), and investors may not get back the full amount invested.
