Issue No. 72

North American markets moved higher in August, supported by strong corporate earnings and renewed confidence in artificial intelligence (A.I.) spending, even as investors navigated a more challenging macroeconomic backdrop. Canada-U.S. trade tensions intensified after negotiations broke down and new U.S. tariffs took effect August 22nd, raising investor concerns about the outlook for economic growth, inflation and business investment in Canada. Meanwhile, continued tensions between the U.S. and Iran kept the Strait of Hormuz and global energy supplies in focus, contributing to volatility in oil markets. Strong earnings from major technology companies helped ease concerns that A.I. investment was losing momentum. Ultimately, August demonstrated the resilience of equity markets despite persistent trade uncertainty, geopolitical risks and shifting expectations around the durability of A.I.-driven growth.

Here are some of August’s most notable events:

U.S.-Iran tensions keep energy markets in focus. Hopes for progress between the U.S. and Iran repeatedly surfaced during August as negotiations continued over reopening the Strait of Hormuz. However, talks failed to produce a lasting agreement and tensions intensified later in the month. The U.S. expanded economic sanctions against Iran and its trading partners, while Iran continued to threaten energy flows through the region. By month-end, the two countries had exchanged further military attacks, contributing to volatile oil prices and keeping global energy supply and inflation risks elevated.

Strong earnings and A.I. demand support U.S. equities. Strong corporate earnings supported U.S. equities in August, with a large majority of S&P 500 companies reporting second-quarter results above analysts’ expectations. Technology remained an important driver as continued investment in artificial intelligence helped offset concerns surrounding trade tensions, higher bond yields and geopolitical uncertainty. Late in the month, NVIDIA forecast sales growth of roughly 70% for its next fiscal year, well above expectations, helping ease concerns that A.I. investment was losing momentum.

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