Devon Funds Morning Note - 1 September 2025

Monday 1st September 2025

August Fizzles Out

Global

Global equity markets finished out August with a negative day, capping a month that was otherwise one of steady gains amid persistent caution about rates and stretched valuations. On Friday, the S&P 500 dropped 0.6% to close at 6,460.26, pulling back from Thursday’s record and snapping its four-month rally with a day of broad-based selling across megacap tech, cyclicals, and small caps alike. The Nasdaq fared worse, slumping 1.2% to 21,455.55 as profits were taken aggressively in the likes of Nvidia—snapping that giant’s run of consecutive monthly gains—and as Dell and Marvell Technologies sank 8% and 18% respectively after both companies missed earnings expectations and provided cautious outlooks for the rest of the year. The Dow proved slightly more resilient, down 0.2%, while the Russell 2000 gave up 0.5%, highlighting a modest risk-off tone to end the month. While the week turned out to be marginally negative across indices, the S&P 500 finished August higher by 1.9%, the Dow by 2.2%, and the Nasdaq by 1.6%, with all three locking in their best run of monthly gains in more than a year.

Beneath the index level, bond yields were mixed after the latest PCE inflation print showed prices remain sticky but not accelerating, offering the Fed some breathing room while dashing any hopes of rate cuts in September. In commodities, the price of gold surged to a fresh record high, closing at $3,473.70 an ounce as investors rotated into perceived safe havens following weaker tech sentiment. US markets will be closed Monday for the Labor Day holiday, adding to the subdued volumes seen into the weekend.

Looking through the overnight headlines, corporate results continued to drive outsized moves in individual names. While Nvidia’s retreat stole the show, other tech names fared better, with interest staying strong in software and cloud after Salesforce posted upbeat guidance mid-week. The energy and healthcare spaces finished mixed as investors repositioned ahead of the next round of central bank meetings and European inflation data later in the week.

New Zealand

The NZX 50 extended its upward bias to close at 12,931 on Friday, adding 0.21% in a session dominated by strength in utilities, infrastructure, and select blue-chip names. New Zealand’s benchmark eked out a 0.8% gain for August—its fourth straight monthly rise—but nonetheless slipped 0.9% over the week, snapping its short-term winning streak. The month’s performance still leaves the index nearly 4% higher year-on-year, reflecting the region’s resilience in the face of global uncertainty and patchy domestic economic data.

Friday’s activity was led by defensive plays, as utility heavyweights including Meridian Energy (+1.8%), Contact Energy (+1.2%), Mercury NZ (+0.9%), and Vector (+2.0%) were all bid up. Spark NZ gained 1.2% on the day, Port of Tauranga jumped 2.2%, and major property and healthcare names—among them Fletcher Building (+1.9%), Ryman Healthcare (+0.8%), and Summerset (+3.2%)—saw steady institutional buying. These safe names have provided a ballast while local corporate earnings season winds down and macro themes remain in focus.

Investors now turn their attention to a cluster of key data releases in the week ahead, including GDT auction results and data on building permits. Longer-term, New Zealand’s equity market continues to provide relative stability for investors seeking yield, as evidenced by strong recent flows into infrastructure and power sector ETFs.

Also of interest, is ASB’s Housing Confidence survey, which shows 26% of Kiwis now think it is a good time to by a home. This is material improvement on the last few years.

Australia

It was a similar story in Australia, with the ASX 200 drifting 0.07% lower to 8,973.1 as investors locked in another month of gains. The local benchmark advanced 2.6% in August—its fifth straight monthly increase and a rise of more than a quarter from its early April lows—before running into some mild profit-taking on Friday. The tone was set by banks and real estate stocks: Commonwealth Bank dropped 1.2%, Westpac lost 1.1%, and real estate leader Stockland shed 1.4%. While these heavyweight laggards pulled the index into the red, the overall market continued to show impressive stability and resilience with gains in tech, energy, and select consumer names.

NextDC was a clear standout, surging 17.4% after flagging a more capital-efficient growth plan that took the pressure off looming equity raise expectations. Harvey Norman also leapt nearly 11% thanks to a better-than-expected 39% lift in annual profits, giving a much-needed boost to consumer discretionary sentiment. Austal was another bright spot, rallying 15.1% after landing a new defence contract and booking a record vessel order book. The big energy and mining names closed mixed, with BHP holding steady and Boss Energy up 7.7% as it posted its first full-year positive cash flow. By contrast, some mid-cap tech names, like PEXA, fell around 9% after softer guidance, and Mesoblast tumbled nearly 10% as its losses widened.

Despite modest weekly gains, August capped a powerful run for the ASX 200, leaving the market firmly in “pause and assess” mode as economic and earnings news thins out in early September. Institutional focus is pivoting toward guidance from next week’s central bank meetings and local GDP data, with many investors balancing optimism about earnings momentum against nagging concerns about China’s growth outlook and the durability of the global consumer.

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