ICM Monthly Outlook - August 2025

Financial markets experienced a significant upswing in July, driven by robust corporate earnings, particularly from large-cap and tech growth companies. This performance, coupled with increased clarity on fiscal and trade policies, contributed to a surge in investor optimism. The passage of the "One Big Beautiful Bill Act" (OBBB) and a series of trade agreements with Japan and the EU played a pivotal role in reducing political uncertainty and bolstering market confidence. 

Q2 earnings surprises further reinforced a "Goldilocks" scenario, characterised by solid growth fuelled by stimulus measures and AI innovation, while avoiding runaway inflation. Looking ahead, we anticipate that financial markets will maintain their strength throughout the second half of 2025 and potentially extend this robustness into the first half of 2026, or even longer. 

While periods of volatility are inevitable, potentially stemming from trade, inflation, or geopolitical concerns, we believe these challenges will be outweighed over time by a recovering business cycle and increasing global liquidity, driven by further monetary policy loosening worldwide.

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