August 29, 2025 Global Stock Market Report: Inflation Data and AI Technology Stocks Adjustment Lead to a Mixed Ending

As of August 29, global stock markets ended August mixed, affected by the release of US inflation data and the adjustment of AI technology stocks. While the US market, which had been hitting record highs repeatedly, took a breather, Asian markets contrasted with the strength of China and declines in other regions.

[Major Index Overview]

The US market closed lower on August 29. The S&P 500 index rose 20.46 points (0.32%) to 6,501.86 points, but declined during the day. The Dow Jones Industrial Average rose 71.67 points (0.16%) to 45,636.90, while the Nasdaq Composite Index rose 115.02 points (0.53%) to 21,705.16.

[Inflation Data Release]

The PCE index, the Fed's preferred inflation measure, rose 2.6% year-over-year in July. This was the same level as in June and in line with market expectations. The core PCE index rose 2.9%, marking the largest increase since February.

Based on this data, the market is pricing in an 85% chance of a Fed rate cut in September, and Federal Reserve Governor Christopher Waller has stated his support for a 0.25 percentage point cut in September to support the job market.

[AI Tech Stock Adjustment]

AI-related stocks have fallen sharply. Dell Technologies' stock price plunged 10% after reporting disappointing quarterly results, while Nvidia, Broadcom, and Oracle each fell more than 3%.

The Nasdaq Composite Index fell 1% intraday, reflecting a correction in the AI sector.

[Major Index Update]

Asian markets showed mixed performances across regions on August 29. China's Shanghai Composite Index opened at 3,842.82 points, down 0.78 points (0.02%), but rose more than 10% over the month, posting its largest monthly gain in nearly a year.

Hong Kong's Hang Seng Index opened at 25,095.45 points, up 96.63 points (0.39%), while South Korea's KOSPI index opened at 3,208.80 points, up 12.48 points (0.39%).

Japan's Nikkei 225 opened at 42,774.29 points, down 54.50 points (0.13%), but rose 4% overall in August, extending its upward trend for the fifth consecutive month.

[China Market Strength]

The Chinese stock market performed exceptionally well in August. Expectations of an economic recovery, particularly in the technology sector, fueled the gains, with a monthly gain of over 10%.

However, the STAR 50 index fell 1.7%, and some technology stocks experienced a correction, including a plunge in Cambricon Technologies shares of over 6%.

[Major Indices]

The European market showed mixed performance as of August 28. The German DAX index fell 6.29 points (0.03%) to 24,039.92, while the UK's FTSE 100 index fell 38.68 points (0.42%) to 9,216.82.

The French CAC 40 index rose 18.67 points (0.24%) to 7,762.60, showing some recovery from political unrest.

[French Government Bond Spread Widens]

The 10-year government bond yield spread between France and Germany has widened to 78 basis points, continuing its upward trend over the past two weeks. This suggests that political uncertainty ahead of the September 8th confidence vote is still impacting the market.

[UK Bank Stocks Plummet]

The UK banking stock index plummeted 1.4%. This was in response to a British think tank proposing a tax on banks' reserves held by the Bank of England.

[Indian Rupee Plunges]

The Indian rupee hit a record low of 88 rupees against the US dollar on August 29. This reflects concerns about the negative impact of the US punitive tariffs on Indian goods on India's economic growth and external financial stability.

[Thailand Political Turmoil]

In Thailand, Prime Minister Paethongtan Shinawatra was removed from office by the Constitutional Court for ethics violations. The removal after just one year in office further jeopardizes Thailand and its fragile economy.

[Major Currency Trends]

The US dollar index continues its strong performance, with the Indian rupee hitting a new all-time low drawing particular attention. The Chinese yuan is also weakening from its 2025 peak, indicating the overall pressure on emerging market currencies.

The Japanese yen remains relatively stable, and European currencies are trading relatively stable despite political uncertainty.

[Trade Policy Changes]

The US tariff exemption for packages valued under $800 expired on August 29th. This has increased costs for e-commerce companies, small businesses utilizing online marketplaces, and consumers, and has disrupted supply chain operations.

The European Union has proposed eliminating tariffs on US manufactured goods, but has instead demanded US tariff reductions on European automobiles.

[US Treasury Bonds]

Treasury yields rose following the release of US inflation data. 10-year Treasury yields are under upward pressure, and the market remains concerned about the downside rigidity of inflation despite the Federal Reserve's September rate cut.

[Changes in Investment Trends]

A notable trend in August was the shift from expensive technology stocks to relatively undervalued small-cap stocks. Whether this rotation will continue will be a key point of interest in the market going forward.

[US Market]

The S&P 500 rose 2.6% in August, marking its fourth consecutive month of gains. The Dow Jones rose 3.4%, and the Nasdaq rose 2.8%.

[Asian Market]

Japan's Nikkei 225 rose 4%, extending its upward trend for the fifth consecutive month, while the Chinese market rose over 10%, marking its largest monthly gain in nearly a year.

[Short-Term Risk Factors]

- AI Bubble Concerns: Dell Technologies' disappointing earnings and the correction in technology stocks are raising questions about the sustainability of the AI boom. - Risk of Fed politicization: Trump's interference in the Fed and his attempt to fire Lisa Cook threaten the independence of monetary policy.

- Emerging market currency crisis: The impact of the Indian rupee's record low and the trade dispute on emerging markets as a whole must be closely monitored.

- European political instability: The French confidence vote and the widening of government bond spreads with Germany are ongoing risk factors.

[Investment Opportunities]

The Chinese market is expected to continue its strength, with the recovery in the technology sector attracting particular attention. In the US, a rotation from technology stocks to small-cap stocks could present new investment opportunities.

With expectations of a Fed rate cut in September still high, interest-rate sensitive sectors are expected to benefit, and inflation-hedged assets are also expected to attract attention.

In the commodities market, changes in tariff policies and supply chain restructuring are likely to emerge as new investment themes.