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17th September 2026
Cappuccino Commentary
August 2026 Review
Global stocks broadly rose in August on the back of stronger corporate earnings across regions. Notably, technology and Artificial Intelligence (AI) related stocks rallied after experiencing a sharp sell-off in July. Surging cloud revenues helped Microsoft and Amazon report better-than-expected growth, and chip giant Nivida posted record- breaking quarterly revenues of $96bn, more than double what they generated in the same period last year.
The tech sector experienced some meaningful swings as investors grapple over whether the large capital expenditure that has been poured into these businesses will ultimately pay off in terms of the revenue it is expected to generate. We are starting to see those hyperscalers move from being free cash flow positive to free cash flow negative – now going through more cash than they earn – because of continued and substantial investment in AI infrastructure. Now the ‘existential threat from superintelligent AI’ has finally entered the mainstream conversation, a “pause” by the leading US AI firms will have a big impact on their growth prospects and those integral to the AI supply chain. This was perhaps demonstrated by the falling share prices across the sector this week.
Most equity regions posted gains in August although it is interesting to note that UK and European small caps lead the charge over the month.
This small company growth appears to have been driven by a combination of factors. August coincided with a solid UK reporting season with many FTSE 250 and AIM companies delivering better than expected results. UK smaller companies had been trading at historically depressed valuations relative to large cap stocks and it appears that both domestic and international investors have been rotating ‘cheaper’, more domestically oriented stocks. Japan was also a strong performer benefitting from the data centre build-out as well as a looser domestic fiscal stance. Finally, Asian and Emerging Markets posted gains led largely by a recovery in some of the larger AI related stocks including Taiwan Semi-Conductor, Samsung and SK Hynix.
Bond markets were somewhat mixed in August although returns were generally muted. All eyes were focussed on Central Banks who are weighing up the impacts of higher inflation, uncertainty over fiscal policy as well as macro-economic growth. The Bank of England (BoE) kept interest rates unchanged at 3.75% however three of the nine members had voted to increase rates by 0.25% noting that inflation has remained above target for several years. On the other side of the Atlantic, the Fed also kept rates on hold. Looking forward, importantly for September’s decision, new Fed Chairman Warsh noted that inflation data has not meaningfully improved in his keynote Jackson Hole Symposium speech, perhaps suggesting change is in the air. Within alternatives, commodities had generated outsized returns over the month led by precious metals as well as energy indices. Gold was supported in August by dollar weakness and central bank purchases while energy commodities continued to advance as the Middle East backdrop remains tense.
Overall, equity markets continued to climb in August as investors focussed on positive corporate earnings and continued growth driven by AI buildout globally. That said, there remains significant uncertainties around geopolitical conflicts and the impact these will have on inflation and global growth. Similarly, the uncertainty around how AI will shape markets and economies going forward is growing at a rapid pace. In this environment, we believe maintaining a diversified portfolio that targets good fundamentals and valuation-based opportunities remains prudent.
Please note:
For regulated financial advisers and investment professionals only. Copia does not provide financial advice, and the contents of this document should not be taken as such. The value of investments can increase and decrease, past performance and historical data cannot guarantee future success, and any references to individual stocks or asset classes are made purely for illustrative purposes.
The performance of each asset class is represented by certain Exchange Traded Funds and Passive Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at last UK market close before the end of the calendar month. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.