Policy Tailwinds

Rate cut expectations and trade progress drive global markets higher

Published: 02 September 2025
Updated: 02 September 2025
6 minute read


Table of contents

 

Quick Take

Global rally extends as sentiment improves: Equities rose again in August, with the S&P 500 up 2.03%, the Nasdaq up 1.65%, the Russell 2000 up 7.14%, the STOXX 600 up 0.96% and the ASX 200 up 3.10%. Gains were underpinned by dovish central bank commentary, progress on trade negotiations and steady economic conditions, while gold surged above US$3,500/oz and oil prices eased after geopolitical volatility.

Fed tilt and trade developments support markets: A softer July labour report and dovish remarks at the Jackson Hole Economic Policy Symposium reinforced expectations for multiple 0.25% rate cuts in 2025 and 2026. Shorter-dated US Treasury yields declined, and the US Dollar weakened 2.2% against major peers. Trade policy also remained in focus as tariffs were reinstated on some countries, China measures were postponed and bilateral deals with the EU and Japan advanced.

Europe and Australia benefit from policy moves: The ECB held steady while the Bank of England narrowly cut its benchmark rate by 0.25% to 4.0% in a 5-4 vote after a rare second ballot, as European indices reached multi-month highs despite political tensions in France. In Australia, the RBA lowered the cash rate by 0.25% to 3.60%, citing progress on inflation and resilient employment, helping extend the ASX 200’s winning streak to a fifth month.

 



Snapshot

Global equity markets extended their gains in August, supported by dovish central bank commentary, easing trade tensions and steady economic signals. While concerns around tariffs and political risks remained, investor sentiment improved as the likelihood of rate cuts in major economies drew closer. US and European indices reached new highs, while Australian equities continued their strong run, with the ASX 200 crossing 9,000 points for the first time, before consolidating slightly into month-end. Commodities were mixed, with gold surging above US$3,500/oz and oil retreating after a volatile month of geopolitical headlines.

In the US, equities delivered another strong performance. The S&P 500 gained 2.03% in August, marking its fourth consecutive monthly rise and notching new record highs. The Nasdaq advanced 1.65% for a fifth straight monthly gain, while the Russell 2000 small-cap index surged 7.14%, its best month since late 2024. Market momentum was supported by robust earnings growth, consumer resilience and growing conviction that the Federal Reserve will cut rates before year-end. A weaker-than-expected July labour report, coupled with dovish commentary at the Jackson Hole Economic Policy Symposium, reinforced expectations for multiple 0.25% cuts in 2025 and 2026. Treasury yields fell for shorter dated bonds, and the US Dollar was 2.2% weaker against a basket of major currencies. Trade policy also remained in focus. After the 1 August deadline, the US reinstated tariffs on several countries but postponed additional measures on China for another 90 days. Progress was also made on bilateral agreements, particularly with the European Union and Japan, which provided some relief to markets despite continued headline risks.

European markets advanced as reduced trade uncertainty and resilient macro data supported confidence. The STOXX 600 rose 0.96% in August, reaching a five-month peak, while the FTSE 100 gained 1.23% to a record high. The European Central Bank left policy unchanged and suggested no immediate need for cuts given steadier growth signals, while the Bank of England narrowly voted to cut its benchmark rate by 0.25% to 4.00%. The decision came after an unusual second ballot, with the measure passing 5-4 following a deadlock in the first round. Political developments created some volatility, particularly in France where austerity measures faced parliamentary opposition, however, the broader market impact was contained. The announcement of a US-EU trade framework, which included reduced tariffs on autos and industrial goods, helped underpin sentiment and offered clarity after months of uncertainty. Although European earnings growth lagged the US, investors were encouraged by signs of stabilisation in business activity and a modest rebound in manufacturing.

In Australia, equities rose for a fifth consecutive month, with the ASX 200 adding 3.10% in August. The index reached a series of record highs, briefly pushing through 9,000 points, before easing late in the month. Investor sentiment was buoyed by the Reserve Bank of Australia’s decision to cut the cash rate by 0.25% to 3.60%, alongside resilient domestic data. July CPI rose to 2.8% year-on-year, reflecting higher energy costs, while underlying inflation measures remained contained. Employment data were supportive, with a gain in full-time roles and the unemployment rate edging down to 4.2%. The Australian Dollar strengthened 1.7% to $0.65 against the US Dollar, broadly in line with weakness seen elsewhere against other major currencies.

Overall, August was marked by improving sentiment and a continuation of the global equity rally. Markets drew support from the prospect of monetary easing, progress on trade frictions and steady economic conditions. While uncertainties remain around tariffs, political developments in Europe and the durability of global growth, we are optimistic that supportive policy and resilient fundamentals will help sustain momentum into the final months of the year.

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Key Stocks

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Life 360

Cutcher & Neale Australian Shares Model

Cutcher & Neale Positive Impact Model

Life360 is the world’s largest family-focused social network application, with nearly 90 million monthly active users. Security-conscious families use the app to track each other’s whereabouts, along with the location of their pets and personal belongings.

We have communicated our excitement about the Life360 story before, having added the stock to both our Cutcher & Neale Australian Shares Model and Cutcher & Neale Positive Impact Model last year. Our core investment thesis remains centred around structurally strong user growth, improving retention and paid conversion as international cohorts converge toward its core US market’s performance.

More recently, Life360’s 2Q 2025 result was better-than-expected, leading management to raise their full year revenue and earnings guidance. Strong subscription growth, accelerating advertising revenue and improved operating leverage outweighed higher marketing investment. The result reinforced share price momentum seen since the company's inclusion in the ASX 100 in March this year. Additionally, we learnt Founder Chris Hulls has transitioned to Executive Chair, with Lauren Antonoff appointed CEO, an evolution that maintains strategic continuity while freeing Hulls to focus on product and partnerships.

 

CRH logo 2

CRH

Cutcher & Neale International Shares Model
 

CRH is a global building materials leader and the largest roadbuilder in North America, operating a vertically integrated model from upstream aggregates and cement into asphalt, ready-mixed concrete and paving services. The portfolio is deliberately skewed to “moat-heavy” upstream activities, where permitting barriers and transport economics create regional scale and pricing power.

CRH has reshaped itself over the past decade via disciplined M&A and divestments. The company continues to push into lower-carbon solutions with the agreed acquisition of Eco Material Technologies to reduce clinker intensity and support premium products.

We added CRH to the Cutcher & Neale International Shares Model on the thesis that it is a core beneficiary of a multi-year infrastructure cycle and reindustrialisation effort in the US. We like the company’s durable pricing power, strong operational execution even with its M&A activity, and the low carbon product expansion.

 

360 logo

Life 360

Cutcher & Neale Australian Shares Model

Cutcher & Neale Positive Impact Model

Life360 is the world’s largest family-focused social network application, with nearly 90 million monthly active users. Security-conscious families use the app to track each other’s whereabouts, along with the location of their pets and personal belongings.

We have communicated our excitement about the Life360 story before, having added the stock to both our Cutcher & Neale Australian Shares Model and Cutcher & Neale Positive Impact Model last year. Our core investment thesis remains centred around structurally strong user growth, improving retention and paid conversion as international cohorts converge toward its core US market’s performance.

More recently, Life360’s 2Q 2025 result was better-than-expected, leading management to raise their full year revenue and earnings guidance. Strong subscription growth, accelerating advertising revenue and improved operating leverage outweighed higher marketing investment. The result reinforced share price momentum seen since the company's inclusion in the ASX 100 in March this year. Additionally, we learnt Founder Chris Hulls has transitioned to Executive Chair, with Lauren Antonoff appointed CEO, an evolution that maintains strategic continuity while freeing Hulls to focus on product and partnerships.

 

CRH logo 2

CRH

Cutcher & Neale International Shares Model
 

CRH is a global building materials leader and the largest roadbuilder in North America, operating a vertically integrated model from upstream aggregates and cement into asphalt, ready-mixed concrete and paving services. The portfolio is deliberately skewed to “moat-heavy” upstream activities, where permitting barriers and transport economics create regional scale and pricing power.

CRH has reshaped itself over the past decade via disciplined M&A and divestments. The company continues to push into lower-carbon solutions with the agreed acquisition of Eco Material Technologies to reduce clinker intensity and support premium products.

We added CRH to the Cutcher & Neale International Shares Model on the thesis that it is a core beneficiary of a multi-year infrastructure cycle and reindustrialisation effort in the US. We like the company’s durable pricing power, strong operational execution even with its M&A activity, and the low carbon product expansion.

 

 

About The Author
Ryan joined Cutcher & Neale as a Portfolio Manager in January 2023, with over 15 years' experience managing multi-asset investment portfolios, specialising in fundamental equity analysis. Ryan holds the Chartered Financial Analyst (CFA) designation and is Chairperson of the Cutcher & Neale Investment Committee, which oversees clients' Australian Share, International Share, Fixed Income and Cash exposures.
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