Investment Market Update: August 2026

August was a month of resilience despite renewed geopolitical tension. Markets absorbed a flare-up in the Middle East, including confirmed US strikes on Iranian positions in the final week, without derailing the broader trend, though it added some late-month volatility.

UK markets

The FTSE 100 spent much of August near record territory before drifting slightly lower in the final two weeks, ending the month broadly unchanged versus July's close. Mining stocks, Antofagasta, Anglo American, Fresnillo, helped cushion the fall as metals prices firmed.

US markets

The S&P 500 touched a fresh all-time high during the month before easing back to close August at 7,686, still up over the month, supported by strong Q2 corporate earnings (86% of S&P 500 companies beat earnings per share EPS estimates) and continued enthusiasm around AI-related stocks, led by Nvidia.

Inflation

The most recent UK inflation reading (July, the latest available) showed CPI rising to 2.9%, up from 2.6% in June, the first increase in four months, driven largely by a 13% jump in the Ofgem energy price cap feeding through into gas and electricity costs. August's official figure isn't published until 16 September.

Interest rates

The Bank of England held the base rate at 3.75% at its 30 July meeting (a 6–3 vote, with three members pushing for a hike). Its next decision lands on 17 September. In the US, the Federal Reserve held rates at 3.50–3.75% for a fifth consecutive meeting.

What this means for your portfolio

Short-term volatility driven by geopolitical events is a normal, recurring feature of markets, August is a reminder that headlines rarely derail a well-diversified, long-term plan. The inflation uptick is worth watching, but it's one data point, not a trend reversal, and the Bank's next move on rates (17 September) is the more significant date to watch this month.

Investments can fall as well as rise in value, and you may get back less than you invest.