Trading update : 15 August 2025

Markets continue to send mixed signals. While threats of a pullback loom, the S&P continues to trade near record highs, the dollar is strengthening and emerging markets also look appealing to investors. As always, there are big moves in tech, with more AI winners and losers emerging while geopolitics continues to impact growth outlooks.

Big Waller, shot caller

Developing nation currencies pared gains on reports that US Federal Reserve Governor Christopher Waller has emerged as a top Fed chair candidate to replace Jerome Powell, raising confidence over the independence of the institution and boosting the US dollar.

Green across the screen

Dollar strength didn’t derail risk appetite for emerging market assets, which were spurred by positive signals on global trade and steps toward a truce in Ukraine. The S&P 500 (VOO-NASQ) also advanced after confirmation of a Trump-Putin meeting in the near future added to positive sentiment.

Digital bull, human bear

Computer-guided traders are more bullish on stocks compared to human counterparts, according to Parag Thatte, a strategist at Deutsche Bank AG quoted by Bloomberg. Thatte says computer-guided traders haven’t been this bullish on stocks compared to their human counterparts since early 2020, before the depths of the Covid pandemic.

Chips down in China

The US Commerce Department has started issuing licenses to Nvidia Corp. (NVDA-NASQ) to export its H20 chips to China after President Trump met with the company’s CEO Jensen Huang, according to reports in The Financial Times. Nvidia Corp. and Advanced Micro Devices Inc. (AMD-NASQ) have agreed to pay 15% of their revenues from chip sales to China to the US government as part of a deal with the Trump administration to secure export licenses. China wants the US to ease export controls on chips critical for AI as part of a trade deal before a possible summit between Presidents Trump and Xi Jinping.

AI disruption theme

AI threatens to upend various industries, much like the internet did before it, with investors urged to sell off exposure to companies at most risk from the disruption. Bloomberg reports that investors are ditching shares in companies some strategists expect will see a drop-off in demand as AI applications become more widely adopted. Among them are software maker Adobe Inc. (ADBE-NASQ), web-development firms like Wix.com Ltd., and digital-image company Shutterstock Inc. The trio are part of a basket of 26 companies Bank of America strategists identified as most at risk from AI. The group has underperformed the S&P 500 Index (VOO-NASQ) by about 22 percentage points since mid-May, after more or less keeping pace with the market since ChatGPT’s debut in late 2022.

Pullback looming

With equity valuations stretched with the S&P 500 (VOO-NASQ) near all-time highs, lingering angst over the ever-changing tariff backdrop, and with momentum indicators on daily metrics remaining on sell, there is no reason to doubt that a pullback is in store. 

US jobs conundrum

Wall Street economists disagree on what’s behind a sharp slowdown in US job growth, highlighting a divide that is central to the broader outlook for the economy. According to Bloomberg, some argue the pullback in hiring mostly reflects a smaller supply of workers, thanks in part to President Trump’s immigration crackdown. Others say the slowdown is largely due to a more concerning retrenchment in demand.

A bite out of sales

Crocs (CROX-NASQ) shares slide as much as -29% – the most intraday since March 2020 – after the footwear maker projected worse-than-expected sales and profit pressure for Q3. Management didn’t provide a full-year outlook, citing “continued uncertainty from evolving global trade policy and related pressures around the consumer.”

Index shakeup

There was a shakeup to the iShares MSCI ACWI ETF (ACWI-NASQ) with 42 additions and 56 deletions from the index. Among the additions was Sibanye Stillwater Limited (SSW-JSE), which closed +3.8% higher on the day. Deletions included Aspen Pharmacare (APN-JSE), Kumba Iron Ore Limited (KIO-JSE), and Woolworths Holdings Limited (WHL-JSE).

SA Inc. selloff

Corporates with a dominant focus on the SA market, known collectively as SA Inc., are currently the “redhaired stepchild of emerging markets”, despite numerous supporting factors, like low valuations, high dividend yields, and solid corporate governance. However, low growth, which is particularly damaging as an emerging market, has local and offshore investors selling off these stocks. South Africa will need to create its own growth to regain its allure.

Unfashionable

The Foschini Group (TFG-JSE) fell as much as -6.9% to hit its lowest intraday level since April 9. The stock has few supporters in SA currently after management gave a cautious outlook on the local market, with H1 “expected to be particularly challenging given the slow June trade, inconsistent trends and a promotional winter in SA.” Australia is still going backwards while London looks to have hit an inflection point. While the UK economy remains under pressure, management is encouraged by the continued strong performance of White Stuff.

Paper and pulp popping

Sappi (SAP-JSE) shares popped +6.3% – the most in about nine months – despite the company reporting earnings per share that came in below estimates, and sales that were in line with estimates. The company said it faced a particularly challenging Q3, marked by ongoing global economic weakness and heightened uncertainty stemming from persistent trade and tariff tensions.