Market insights,
August 2026
Investing
5 min read
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A full-blown trade war erupted between the US and Canada in the tail-end of August, following the breakdown of niggly negotiations that had rumbled on for months.
US tariffs worth $20 billion USD were applied with almost immediate effect to some Canadian exports, on top of existing levies. More tariffs were also touted for January, specifically regarding Canadian cars and automotive parts. In response, Canada unveiled counter-tariffs on US goods, matching the same rates as those imposed by its neighbour[1].
The bitter neighbourly fall-out once again showed the speed and scale at which Trump is prepared to use US trade policy as a stick for beating trade partners who won’t comply.
In parallel, the US announced punishing new sanctions on Iran and its trading partners[2]. With no sign of a peace deal in sight, the US turned to its financial armoury in an effort to force the hand of Tehran’s power brokers. The elephant in the room was China, which remains one of Iran’s key trading partners. Questions were immediately asked about whether the US is prepared to sanction its major trading rival as part of this Iranian-focused initiative. Especially given that the President, Xi Jinping, is scheduled to visit the States for key talks in September.
For long-term investors, the latest moves by US policy makers needn’t be a cause of concern. They do, however, add another layer of short-term friction to the global economy which is unhelpful.
Ahead of the US mid-term elections in November, the Trump administration will likely be keen to close out a number of costly and unresolved global issues.
Major market moves
In markets, a dramatic intervention by Scott Bessent, the Secretary of the US Treasury, was the major story of the month.
Faced with a sharp sell-off in 10-year and 30-year US government debt, and the soaring cost of servicing the $40 trillion USD mountain of US debt, Bessent pledged to buy large amounts of US Treasuries from September onwards[3].
Intended as a bold statement of intent to calm market jitters, the intervention won’t realistically be enough to solve the bigger underlying issues.
During the month, some investors migrated towards the perceived ‘safe-haven’ asset of gold, which at one stage hit a 3-month high[4].
Even Bitcoin, the notoriously speculative and unreliable asset, saw an uptick in inflows as some investors sought alternative sources of diversification[5].
Nvidia shines again
At a stock level, it was tech behemoth Nvidia that once again stole the headlines thanks to another set of strong performance numbers.
Towards the end of August, the firm – which is commonly considered a bellwether of the broader AI industry – reported revenues of $96.2 billion USD for the quarter ending July. It also forecasted a 70% rise in sales next year[6].
AI enthusiasts will have been buoyed by the news, potentially seeing Nvidia’s ongoing good fortune as a broader sign of things to come. Conversely, the sceptics continued to question the sustainability of this astronomical boom in technology that is still in its relative infancy.
As the final stages of 2026 close out, and given the sector’s vulnerability to speculation as well as the number of ‘unknowns’ associated with it, it would be logical for investors to expect more short-term volatility in related stocks.
Australasian angst
Meanwhile, in this part of the world, there were further signs that Aussies and Kiwis continue to put in some hard yards.
In August, the Reserve Bank of Australia voted to keep its cash rate target on hold at 4.35%, in recognition of stubborn inflation over-hanging the Australian economy[7].
The RBA’s post-meeting statement left little doubt about the cost pressures currently facing Australian households and businesses: “While the impact of the Middle East conflict on inflation has so far been less than expected, headline inflation is still too high. Trimmed mean inflation also remains elevated and is little changed from the March quarter. Oil and most related commodity prices remain higher than they were prior to the Middle East conflict. Some firms experiencing cost pressures are increasing the prices of their goods and services and others are looking to do so[8].”
Later in the month, a challenging data release increased the odds of a rate hike the next time the RBA meets in September. Despite annual inflation falling to +3.5% for the month of July, it came in above the consensus view of 3.3%[9].
In New Zealand, a drop in reported retail spending – the first in two years – was attributed to the price pressures stemming from the US war in Iran. Retail sales volumes for the June quarter fell 0.5%, coinciding with a 20% rise in petrol prices[10].
Meanwhile, at a stock level, one of the biggest losers of the month was Air New Zealand which reported an annual loss of $242 million. Amongst other things, the national carrier blamed rising fuel costs linked to the Iran conflict[11].
Shortly after this article has been published, we’ll know whether or not the Reserve Bank opted for a second consecutive OCR hike, or whether it decided against pulling the trigger.
The thin line between wanting to tame inflation and not stifling economic growth remains a key challenge for policymakers on both sides of the Tasman.
In conclusion
August was a reminder that financial markets continue to navigate a blustery mix of geopolitical tensions, policy uncertainty, and economic pressures.
Across the month, escalating trade disputes, ongoing conflict in the Middle East, and concerns over sovereign debt markets contributed to bouts of volatility and a flight to safety by nervous investors.
In many of the key economies, persistent inflation and slowing consumer activity underscore the difficult balancing act facing central banks. And yet, against this backdrop, equity markets remain in relatively good health this year, and global corporates have tolerated the turbulence relatively well.
As we move into the final months of 2026, investors are likely to face pockets of short-term uncertainty, especially in the AI space which remains vulnerable to speculation.
At Helm Wealth, we continue to maintain a disciplined, long-term perspective when managing money. If you have any questions, please do contact your Adviser who will be happy to help.
Sources and references
[1] Source: https://www.reuters.com/business/canada-announces-20-bln-retaliatory-tariffs-us-goods-unveils-support-measures-2026-08-25/
[2] Source: https://edition.cnn.com/2026/08/25/business/us-sanctions-iran-oil-china
[3] Source: https://www.reuters.com/business/treasurys-bessent-says-upsized-bond-buybacks-could-increase-further-2026-08-20/
[4] Source: https://www.reuters.com/business/gold-steadies-heads-third-straight-weekly-gain-2026-08-21/
[5] Source: https://www.bloomberg.com/news/articles/2026-08-27/bitcoin-retakes-80-000-amid-increasing-signs-of-fresh-demand
[6] Source: https://www.ft.com/content/72908915-5e4a-457c-8c3a-aee8917a664a?syn-25a6b1a6=1
[7] Source: https://www.rba.gov.au/
[8] Source: https://www.rba.gov.au/media-releases/2026/mr-26-19.html
[9] Source: https://www.reuters.com/world/asia-pacific/australia-inflation-tops-forecasts-july-adds-rate-risk-2026-08-26/
[10] Source: https://www.rnz.co.nz/news/business/1100999/us-iran-war-wounds-nz-consumer-spending
[11] Source: https://www.rnz.co.nz/news/business/1159418/air-new-zealand-plunges-to-242-million-loss-as-fuel-and-engine-costs-bite
Photo credit: Lian Tomtit for Unsplash