Investors remained focused on the outlook for interest rates, inflation and economic growth, while also assessing the sustainability of strong corporate earnings that have been delivered by many large technology and AI-related companies.

 Geopolitical developments, particularly in the Middle East, continued to contribute to periods of market volatility.  

Global equity markets generally moved higher during the month, supported by the resilient corporate earnings and ongoing investment in AI infrastructure. Technology stocks were once again among the strongest contributors to returns, although markets became more cautious towards month-end as investors reassessed the possibility that interest rates could remain elevated for longer.  

US share markets in particular recorded solid gains, driven by stronger than expected earnings results, and continued optimism around AI-related spending. Investor sentiment was supported by evidence of ongoing economic resilience, although comments from central bank officials later in the month led markets to further set back any expectations of near-term interest rate cuts.  

European markets also delivered positive returns, benefiting from improved economic sentiment and broad-based sector strength. Energy companies were supported by firmer commodity prices, while Financials benefited from the prospect of interest rates remaining higher than previously expected.  

Fixed interest markets faced headwinds as government bond yields rose. Investors increasingly questioned central bank monetary policy and the path of bond yields, particularly in the longer duration. This ultimately led to some weakness in bond prices and performance for many bond sectors. Higher yields are largely reflective of ongoing inflation concerns and uncertainty around the future path of interest rates.