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The Week In Markets – 13th June – 19th June 2026

It seems the end may be near, not of the world, but of the US–Iran conflict, the effects of which have rippled across the globe. News of a breakthrough first emerged from the Pakistani delegation, before Donald Trump announced via his Truth Social platform that a deal had been reached. However, markets remained cautious and waited for Iran to confirm the development. The interim agreement reportedly includes an end to the US blockade of Iran and the reopening of the Strait of Hormuz.

A formal 14-point framework has been agreed between the two countries. The key elements of the plan include an immediate and permanent ceasefire, alongside a halt to Israel’s attacks on Lebanon. The agreement also provides for the reopening of the Strait of Hormuz with no toll imposed by Iran, the release of frozen Iranian assets and a commitment from Iran to cease the development of any nuclear weapons. Following the anticipated signing of the deal by both sides, oil markets have reacted sharply, with Brent crude falling 12% over the week to $76.00.

The impact of the conflict has been widespread and continues to be reflected in economic data. US retail sales for May rose by 0.9%, while the previous month’s figure was revised down to 0.4%. Receipts at gasoline stations remained the largest contributor, increasing by 3.4%, with motor vehicle sales also rising by 1.2%. The K shaped nature of the economy remains evident, as spending continues to be driven primarily by higher income consumers, while lower income households feel the greatest pressure from rising fuel costs. As tax refunds associated with President Trump’s One Big Beautiful Bill diminish, lower income households are likely to rely more heavily on credit to meet their expenses.

The US Federal Reserve met on Wednesday and held interest rates steady at 3.75%. This meeting marked the first under Governor Kevin Warsh, who indicated that reforms would be introduced at the central bank. The most significant change was his decision to refrain from providing forward guidance on the future path of rates, instead noting that “the good news is we will be meeting in six weeks”. This approach is intended to ensure that decisions are made on a meeting by meeting basis, grounded in the latest economic data, while also encouraging markets to focus less on decoding Fed commentary. Updated projections suggest that inflation will slow sharply next year, reducing the likelihood of President Trump securing the looser monetary policy he repeatedly called for under Warsh’s predecessor, Jerome Powell.

In the UK, CPI held steady at 2.8% for May. Markets had expected a rise to 3%, with the release coming ahead of the Bank of England’s meeting on Thursday and likely supporting the decision to hold interest rates unchanged. Lower food prices helped offset continued increases in airline fares and petrol costs. Core inflation, which excludes food and energy, edged higher from 2.5% to 2.6%.

The Bank of England did indeed hold interest rates at 3.75%, although two of the nine policymakers voted for a rate increase. Policymaker Catherine Greene joined Chief Economist Huw Pill in calling for a 25bps (0.25%) rate hike, citing the need to mitigate the risk of elevated energy prices feeding into broader inflation. Governor Andrew Bailey acknowledged that inflation remains elevated at 2.8% but indicated a willingness to tolerate this in the short term, while taking encouragement from falling oil prices following the easing of the US–Iran conflict. Markets continue to price in a 25bps (0.25%) rate increase by the end of the year.

On Thursday, Andy Burnham secured a decisive victory in the Makerfield by-election, bolstering his campaign to challenge Prime Minister Starmer. Burnham won a majority of 9,231 votes for the Labour Party over Reform UK and signalled his ambitions clearly, stating that this was the “final chance for change”. The result means Burnham will take his seat in Westminster next week, where he has already set out his position with a commitment to abide  by the government’s fiscal rules. While Labour has not experienced a formal leadership revolt, previous prime ministers have stepped aside in the face of sustained internal pressure, and there is growing speculation that further ministerial resignations could follow in the coming week. In response, Starmer stated this morning that, should a leadership contest arise, he intends to stand and will not step aside.

The Bank of Japan also met this week and, unlike its peers, opted not to pause, instead raising interest rates by 25bps (0.25%) to 1%. This marked its first-rate hike of the year and brought rates to their highest level in 31 years, as policymakers continue the process of policy normalisation. Governor Ueda was absent due to illness, but Deputy Governor Uchida indicated that the Bank would continue to raise rates if inflation persists. There were also indications that price pressures are feeding through into wage growth. Japanese equities reacted positively, with the Nikkei index rallying to a new record high and gaining 6% over the week.

While progress between the US and Iran is encouraging, renewed tensions in Lebanon this morning underline the still‑fragile and evolving nature of geopolitical risks. In this environment, maintaining a disciplined and diversified approach to portfolio construction remains essential. Ensuring exposure across a range of asset classes, regions and sources of return can help manage volatility and reduce reliance on any single outcome, supporting portfolio resilience as conditions continue to evolve.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 6th June – 12th June 2026

Against a more uncertain global backdrop, the European Central Bank (ECB) has become the first of the major central banks to adjust policy, raising rates by 25bps (0.25%) to 2.4%. President Lagarde described the decision as “pretty obvious”, with recent developments, including rising geopolitical tensions and the closure of the Strait of Hormuz, contributing to higher energy prices and prompting closer attention to potential spillovers into the wider economy.

The decision was taken unanimously, with policymakers mindful of the rise in consumer prices to 3.2% in May. Following the meeting, the ECB raised its inflation expectations to an average of 3% through to the end of the year, before easing to 2.3% in 2027. The ECB previously embarked on a steep rate hiking cycle between 2022 and 2023 to tackle inflation following Russia’s invasion of Ukraine. However, with eurozone growth declining by 0.2% in the first quarter, the central bank appears likely to adopt a more cautious approach to further tightening. Market expectations suggest that rates could increase by a further 25bps (0.25%) by the end of the year.

The Bank of Canada (BoC) also met this week, holding rates steady at 2.25%. This marked the fifth consecutive meeting without a change, as it seems policymakers are less concerned about inflation becoming broad based. As a net exporter of crude oil, Canada has benefited from higher revenues during the ongoing geopolitical tensions in the Middle East. Governor Macklem acknowledged the contraction in economic growth in the first quarter, noting that the economy appears weak rather than in a recession. Attention is also turning to the upcoming review of the United States–Mexico–Canada Agreement (USMCA), scheduled for early July, with officials increasingly concerned about the potential economic impact, particularly given the likelihood of stricter trade restrictions from the US.

UK GDP figures released this Friday morning for April showed the economy contracted by 0.1% month on month. The reversal in growth, following two consecutive months of expansion, reflects the impact of the US–Iran conflict. Services output, typically the UK’s primary driver of growth, declined by 0.2% over the month. At the same time, rising petrol prices appear to have weighed on consumer spending, contributing to a contraction in retail activity after growth in the previous month. The Bank of England is set to meet next week, although a rate hike appears unlikely as policymakers continue to exercise patience.

UK Chancellor Rachel Reeves commented following the weak data, maintaining that Labour’s economic plan had been working prior to the geopolitical conflict, pointing to strong growth at the start of the year and signs that inflation was moving towards the 2% target. She argued that the UK is in a strong position to absorb the economic impact of the conflict.

Elsewhere, this week in the Houses of Parliament, Defence Secretary John Healey became the latest minister to resign under Prime Minister Sir Keir Starmer, albeit for different reasons to many others. His departure follows a prolonged dispute over military spending, with Healey arguing that the Prime Minister had failed to commit sufficient resources to ensure national security. Starmer had previously pledged to increase defence spending to 3% of GDP; however, current plans suggest it will only reach 2.6% by 2030, highlighting the challenges the government faces in allocating additional resources.

We’ve managed to avoid talking about the US this long, but this week saw inflation rise at its fastest pace in over three years, reaching 4.2% in May. This highlights the impact of the ongoing conflict, with inflation having started the year at 2.4% and on a downward trajectory. The rising cost of living is also increasing pressure on President Trump and the Republican Party ahead of the midterm elections in November. Despite Trump’s 2024 pledge to bring inflation down, both markets and households appear increasingly reluctant to take his word at face value.

The conflict between the US and Iran remains unresolved. At the start of the week, Iran launched a missile attack on Israel. President Trump stated that he had instructed Israeli Prime Minister Netanyahu to refrain from retaliatory action; however, Israel responded the following day. A continued exchange of attacks between the US and Iran has further undermined any ceasefire that had been in place. Efforts by Pakistan and Qatar to mediate a resolution are ongoing, although progress appears limited. By the close of trading on Thursday, President Trump claimed that further attacks on Iran had been halted, with the final terms of a deal expected to be agreed in the coming days. Despite numerous false claims regarding a deal, markets did take Thursday’s announcements positively, with risk assets and precious metals rebounding strongly after weakness during the previous days.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 31st May – 5th June 2026

As we move into June, the sixth month of the year, named after Juno, the Roman goddess associated with protection and prosperity, it provides a natural moment to reflect and reset. This sense of renewal is helped by the start of the FIFA World Cup, where optimism always builds and every nation dares to believe.

While England fans will be hoping for World Cup triumph there was hope that a resolution between the US and Iran would finally be agreed, as they negotiated the reopening of the Strait of Hormuz. However, early on Monday, reports emerged of a series of strikes carried out by both sides, continuing to strain the ceasefire that had been agreed. Iranian forces struck Kuwait, hitting the airport and injuring dozens of people, while the US military conducted defensive strikes closer to the Strait of Hormuz. Trump later announced that he had to instruct Israeli president Netanyahu to refrain from further attacks on Hezbollah, which only added additional pressure to the already fragile ceasefire with Iran.

Midweek, the US House of Representatives passed a war powers resolution to block President Trump from carrying out any further strikes on Iran. The vote stood at 215–208, with a number of Republicans siding with Democrats in a congressional attempt to force an end to the conflict. The news flow from the US administration often does not reflect the reality on the ground, as earlier this week Iran made it clear it would be suspending any further negotiation talks. Despite this, President Trump continues to claim that negotiations are “going very well”.

The US Fed Beige Book is a report issued by the Federal Reserve that provides a regular snapshot of economic conditions across its 12 regional districts. It essentially offers a ground-level view of how the economy is performing. The latest report indicated that the US economy is expanding at a slight to moderate pace, with business activity increasing in ten of the twelve districts. Manufacturing has also been a key bright spot, expanding across nine districts, supported by defence spending and a significant buildout of data centre infrastructure. However, one area of concern is the impact of soaring energy costs, driven by the ongoing conflict, which are reshaping consumer behaviour, with lower- to middle-income households feeling the squeeze.

It is the first Friday of the month, so with that we receive the US Non-Farm payroll figures. For May, 172,000 jobs were created, signalling continued strength in the labour market, following the addition of 179,000 jobs in the previous month. The unemployment rate also remained steady at 4.3% for the third consecutive month. Against a backdrop of moderate economic growth, this data reinforces the view of a still-resilient labour market and is unlikely to prompt the Federal Reserve to shift away from its current holding of interest rates.

Eurozone inflation for May was released on Tuesday, showing further acceleration as headline inflation rose to 3.2%, the highest level since September 2023. At the start of the year, headline inflation stood at just 1.7% in January, highlighting the significant increase, largely driven by energy costs. Services inflation also picked up, rising to 3.5%. In response, markets have already begun to price in a 25 bps (0.25%) rate hike when the European Central Bank (ECB) meets next Thursday.

In the UK, political drama has continued to take centre stage following the publication of documents relating to Lord Mandelson’s appointment as British ambassador to the US. While over 1,000 pages were released, several key takeaways emerged, including critical remarks about Starmer and his government, suggesting a need for a complete overhaul. The documents also revealed Mandelson urged ministers to adopt a more “Trumpian,” risk-taking, and daredevil approach to counter mounting pressure from Reform, alongside highlighting significant vetting concerns only undertaken in an attempt to avoid potential issues with Washington. This episode remains a blemish for Prime Minister Starmer, who acknowledged that appointing Mandelson was a mistake, compounded by revelations that he uses auto-deleting messages.

The political pressure continues to mount, as Andy Burnham announced this week his intention to replace Starmer as Prime Minister, contingent on winning his by-election in a couple of weeks’ time. However, his path to the top is far from straightforward, with Burnham’s run as the Labour candidate in Makerfield being strongly contested by the Reform Party. It has also emerged that former Health Secretary Wes Streeting has launched a leadership bid, further intensifying the pressure within the party.

Away from politics we have seen continued focus on the artificial intelligence narrative within stock markets. We have witnessed meteoric rises in share prices, with the US technology sector rising over 40% over April and May, while the semiconductor sector rose a staggering 66%. Semiconductor companies are currently the main beneficiaries of the capex boom from the hyperscalers, and they have seen their earnings explode.

Narrow market leadership can present challenges for diversified approaches; however, we have been pleased that recent portfolio changes have increased exposure to the US technology sector. While we are mindful of the sector’s strong performance in recent weeks, we remain disciplined and are always open to taking profits following such moves.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Scaling new peaks

In this edition of Monthly Market Commentary, our European Strategist, Jeremy Batstone-Carr, examines the continued Persian Gulf conflict and its impact on energy supplies, price pressures, and how pessimism in the bond markets contrasts with optimism in the stock market.

The Week in Markets: 23rd May to 29th May 2026

We begin this week with the story that has driven markets all year: the war between the United States and Iran, and the fragile, on-again-off-again effort to reopen the Strait of Hormuz, the waterway through which around a fifth of the world’s seaborne oil normally passes. The week opened with optimism, after President Trump said on Saturday that an agreement to reopen the strait had been “largely negotiated” and would be announced shortly. By Monday that optimism had soured; US Central Command confirmed “self-defence” strikes on Iranian missile launch sites and vessels near the strait, and on Thursday Iran said it had attacked a US air base in retaliation, with the President describing Tehran as “negotiating on fumes”. Yet by Thursday evening Reuters reported that the two sides had agreed to extend the ceasefire and lift restrictions on shipping through the strait, though the agreement is yet to be confirmed by the US side. A ceasefire of sorts has held since 8th April, but the term is used loosely.

The oil market has responded to each shift in developments, often sharply. Brent crude fell to around $92.67 a barrel and US West Texas Intermediate to about $87.64 on Friday morning, leaving Brent down roughly 10.5% on the week and WTI down 9.2%, the steepest weekly declines since early April. That looks like a clean directional signal, but the path to it was anything but: crude fell on deal hopes, rose on military exchanges, and fell again on the late-Thursday ceasefire report. This matters well beyond the petrol pump. The energy shock from this conflict has been the single largest driver of inflation in 2026, and the unwind in prices is the most material market move of the week. It is also conditional on a deal that has not yet been signed.

That backdrop sets up the week’s most important data. In the US, the Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures (PCE) index, which strips out volatile food and energy prices, rose 3.3% in the year to April. The headline measure, which includes them, ran hotter at 3.8%, underlining how strongly energy costs have been feeding through to prices. The monthly figures, however, were softer than feared, suggesting the burst in prices from the energy shock is starting to ease. Elsewhere, the second estimate of first-quarter growth was revised down to an annualised 1.6%, from 2.0% first reported, reflecting softer investment and consumer spending. The American consumer also appears more cautious: the Conference Board’s measure of confidence dipped to 93.1 in May, with the present-situation component falling more sharply. Firmer prices, slower growth, and a more wary consumer make for an uncomfortable mix, and one we are watching closely.

Responsibility for navigating that mix now sits with a new Federal Reserve chair. Kevin Warsh, sworn in on 22 May as Jerome Powell’s successor, used his first speech to promise a “reform-oriented” central bank, arguing that inflation can be brought down without sacrificing growth. That stance may soon be tested. Other policymakers are leaning more hawkish: Governor Christopher Waller has called for removing the “easing bias” from the policy statement, while futures markets imply roughly an 11% chance of a rate rise in July, up from under 1% a month ago. Warsh’s first meeting as chair comes in June and will offer an early indication of how he balances above-target inflation against a clearly cooling economy.

Equity markets, for now, appear largely untroubled. The S&P 500 closed at a record 7,520 on Wednesday, while the Dow Jones Industrial Average and the Nasdaq Composite also reached fresh highs. The S&P has now risen for eight consecutive weeks, its longest run since 2023. Strength is not confined to the US. Japan’s Nikkei 225 pushed through 65,000 for the first time on Monday, led by companies exposed to artificial intelligence, and Asian markets surged again on Friday morning, with Tokyo, Seoul and Taipei all gaining more than 2% on the ceasefire-extension news. The striking feature is how little of the broader macro tension is reflected in index levels.

Closer to home, attention turns to the Makerfield by-election on 18 June, widely seen as a test of Prime Minister Sir Keir Starmer’s position. Greater Manchester mayor Sir Andy Burnham has been confirmed as the Labour candidate, with Reform UK’s Robert Kenyon the main challenger; an early Survation poll put Labour narrowly ahead at 43% to 40%, within the margin of error. Markets are sensitive to the outcome because gilts and sterling have moved on questions of fiscal discipline and political stability. With Iran-related risk easing on the latest reports, the 10-year gilt yield drifted down to around 4.85%, its lowest since late April, and investors trimmed their expectations for Bank of England rate rises this year.

Taken together, the picture is a familiar one. Equity markets sit at or near record highs, but on foundations that have been visibly shifting all week, with headlines from the Gulf pulling oil, bonds, and equities in opposite directions on consecutive days. The week ends on a more constructive note, with a ceasefire extension reportedly agreed and oil sharply lower, but in the absence of a signed framework, it would be premature to draw firm conclusions. The focus from here is on whether the deal is finalised, on the path of inflation, and on the June Federal Reserve meeting. We are positioning portfolios accordingly in what remains a volatile and delicately balanced environment.

Mark Wilson, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week in Markets: 16th May to 22nd May 2026

The dominant question for markets this week was whether the Iran conflict, which has driven Brent crude up roughly 50% since late February and rewired every major central bank’s reaction function, might be approaching an end. By Wednesday, President Donald Trump was describing negotiations as being in the “final stages”, Brent crude had fallen 5.6% in a single session to close at $105.02 per barrel, and reports indicated that three supertankers had transited the Strait of Hormuz for the first time in weeks. WTI fell below $100. Markets, having spent most of the year pricing for the war to drag on, began to permit themselves a degree of cautious optimism, although the broader repricing of central bank expectations has barely begun to unwind.

Beginning with the UK, the dominant domestic release was Tuesday’s headline inflation print for April, which came in materially below expectations. Headline CPI fell to 2.8% from 3.3% in March, and the mechanical driver was straightforward: the 7% cut to the Ofgem energy price cap that took effect on 1st April fed directly into household electricity bills, which are now lower than a year ago for the first time in some while. The underlying picture is messier. Motor fuel prices rose sharply as the conflict pushed pump prices up, while food inflation, in the Governor’s words on Wednesday, was “surprisingly benign”. The Bank of England has guided that inflation is likely to sit between 3% and 3.5% through the second and third quarters, so April may prove the trough rather than the new direction of travel.

Turning to the labour market, Monday’s data offered fewer comforts. UK unemployment rose to 5.0% in the three months to March, up from 4.5% a year earlier, and the more timely payrolled employee data showed a fall of around 100,000 in April alone. Vacancies dropped to their lowest level since early 2021. Wages are still growing faster than prices, just barely, leaving real pay growth close to flat. The labour market is cooling more quickly than the inflation data alone would suggest, and that matters for what the Monetary Policy Committee does next.

That tension was the central theme of Andrew Bailey’s appearance before the Treasury Select Committee on Wednesday afternoon. The Governor told MPs that, but for the Iran war, the Bank would probably have cut rates once or twice this year, and that inflation might have reached its 2% target last month. He described the conflict as the dominating change in the landscape for the British economy. In effect, Bailey argued, policy has been tightened by the simple act of removing the cuts the market had previously expected. He was careful not to commit either way ahead of the 18th June meeting.

In the US, the news was, if anything, more striking. The FOMC’s April 28th to 29th minutes, released on Wednesday evening, revealed the largest dissent at a single meeting since October 1992. The committee held the federal funds target range at 3.5% to 3.75% on an 8-4 vote. Three regional Fed presidents (Hammack, Kashkari and Logan) objected to retaining language that hinted at easing, while outgoing Governor Stephen Miran dissented in favour of a 25bps (0.25%) cut. Most participants flagged that some additional tightening would become appropriate if inflation continued to run persistently above target. Futures markets have responded by pricing the odds of a rate hike by December roughly level with a hold.

Linked to all of this, the meeting in question was Jerome Powell’s last as Chair. Kevin Warsh was confirmed as the new Federal Reserve Chair by a Senate vote of 54-45 on 13th May, the narrowest margin in the modern era, with Powell remaining on the Board as a Governor (an unusual arrangement; the last time a Fed Chair stayed on was nearly eighty years ago). Warsh, who has called for a different policy posture and a fresh approach to the Fed’s framework, chairs his first meeting on 16th to 17th June.

Away from the central banks, the most arresting story of the week was in long-dated government bonds. On Friday last week, Japan’s 30-year JGB yield broke 4% for the first time since the tenor began trading in 1999, with the 20-year at its highest since 1996 and the 40-year at a record. By Monday, the US 30-year Treasury yield was at its highest in nearly a year, the UK 30-year gilt yield at its highest since March 1998, and the German 10-year Bund at its highest since May 2011. The move reflects two related anxieties: that inflation will prove stickier than central banks had hoped, and that government finances around the world will need ever more long-duration paper to fund themselves.

In a similar vein, the People’s Bank of China kept its Loan Prime Rates unchanged on Wednesday, leaving the one-year rate at 3.0% and the five-year at 3.5% for a twelfth consecutive month. With Chinese first-quarter GDP coming in at 5.0%, at the top of Beijing’s target range, and energy-driven price pressures rising, the case for easing is weaker than it looked at the start of the year.

UK retail sales released this morning declined by 1.3% month-on-month, a worse outcome than expected. On top of weak retail sales UK public sector net borrowing was higher than anticipated. Typically, this may have led to a sell off in government bonds, however, positive comments from Andy Burnham around sticking to fiscal rules and acknowledging “there needs to be a plan to get debt down” has supported UK bonds, leading to falling yields.

Looking across the week as a whole, bond markets remain under pressure, with long-end yields in Japan, the UK, the US, and Germany all at levels not seen for years and, in several cases, decades. Headline inflation in the UK has eased, but the underlying picture remains tightly bound to the conflict and the oil price. Equity markets have held up better than the move in yields might suggest. The variable we continue to monitor most closely within portfolios is the duration and resolution of the Middle East conflict, which still sets the tone for everything else.

Mark Wilson, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 9th May – 15th May 2026

A fun fact to start the week: today, 15 May, marks the International Day of Families. First established by the United Nations in 1993, the day recognises families as the foundation of society and aims to raise awareness of the challenges they face. Elevated inflation is likely to be one of the top concerns on households’ minds at the moment.

Turning to inflation, US CPI data for April was released on Tuesday. Inflation rose to 3.8%, the highest level in three years and slightly above market expectations of 3.7%. Rising energy and gasoline prices, largely driven by the ongoing US-Iran conflict, once again made a significant contribution to the increase. Fertiliser shortages, also linked to the conflict, led to a 0.5% rise in food prices. By comparison, US CPI stood at 2.4% in February and had been trending towards the Federal Reserve’s 2% target. Against this backdrop, President Trump’s approval ratings have fallen to record lows ahead of the November midterms, with households bearing much of the economic strain.

US retail sales for April rose by 0.5% month on month, supported by increases in receipts at electronics and gasoline stores, which rose by 1.4% and 2.8% respectively. Larger tax refunds at the start of the year, alongside strong market gains, have helped support households in the face of rising inflation. However, this support is likely to be short lived, as lower income households are rapidly running down these funds while increasing both savings withdrawals and credit card usage. This trend will be closely monitored by the US Federal Reserve, as the combination of strong retail sales, rising inflation and resilient labour market data is likely to support a continued pause in interest rates at the next meeting.

Any resolution to the conflict between the US and Iran is on “life support”. Over the weekend, Iran submitted a new proposal, which President Trump stated he did not finish reading, later describing it as “unacceptable”. As a result, it is becoming increasingly difficult to identify a clear inflection point or common ground between the two countries. The main sticking point appears to centre on the duration of the suspension of Iran’s nuclear programme.

While markets remain focused on the prospect of a resolution to this conflict, it is easy to overlook the ongoing war in Ukraine. Russia has continued its offense, launching over 1,500 drone strikes in recent attacks on Kyiv, damaging critical infrastructure including water facilities.

Trump’s focus this week shifted towards China, as he travelled to Beijing to meet with President Xi. He was accompanied by several high-profile figures, including BlackRock’s Larry Fink, Nvidia’s Jensen Huang, Tesla’s Elon Musk, Apple’s Tim Cook and Boeing’s CEO Kelly Ortberg. The main objective of the visit was to stabilise and improve US-China trade and economic relations ahead of the one-year trade truce set to expire in October 2026. Concluding the two-day summit, Trump stated that key differences between the two countries had been resolved and described the relationship as a very strong one. He also noted that President Xi had expressed a willingness to assist in negotiating an end to the conflict with Iran.

Pressure has continued to build on UK Prime Minister Sir Keir Starmer following poor local election results last week. At the start of this week, Starmer pledged to be “bolder” in an attempt to reassure members of his party and voters, and to stave off a potential leadership contest. However, several ministerial aides have resigned, most recently Health Secretary Wes Streeting, signalling a loss of confidence in the Prime Minister. In addition, more than 70 Labour MPs have called for Starmer to set out a timeline for his departure and oversee an orderly transition of power.

It also appears that a potential path to a leadership challenge is emerging, with popular figure Andy Burnham reportedly being offered the opportunity to stand as a Labour candidate. The current political instability in the UK has fed into markets, with gilt yields rising. Notably, the 30-year gilt yield reached 5.81% on Tuesday, its highest level since 1998.

There was positive news out of the UK, but it was somewhat overshadowed by the political concerns. UK GDP rose by 0.6% in the first quarter and surprised markets by growing at 0.3% month on month, against an expected contraction of 0.1%. Growth was recorded across the services, construction and manufacturing sectors, indicating a solid start to the year. There is a growing view that the economic impact of the US-Iran conflict has yet to feed through into growth figures, suggesting that the current strength may prove short lived. Chancellor Reeves welcomed the data, stating that the rebound in economic activity reflected the success of her policies, and emphasised that political stability would be key to sustaining this momentum.

Despite what looks an uncertain UK backdrop, we have witnessed two bids for FTSE 250 listed companies this week. Spire Healthcare received a bid from its second largest shareholder, Toscafund Asset Management, which came at a 66% premium to the previous day’s closing price – the shares rallied over 45% on the news. On the same day news broke of a bid for Tate & Lyle from a American food firm Ingredion, with the shares bounding soaring by 40%. It’s clear that enterprises and private equity continue to see extreme value in UK assets.

At the Bank of Japan’s latest meeting, rates were held steady at 0.75%, although there was dissent from three policymakers. Recent developments suggest a potentially more hawkish shift, with BoJ board member Kazuyuki Masu indicating he may join the dissenters at the next meeting in June. He noted that, provided incoming data does not point to an economic downturn in the current geopolitical environment, it would be desirable to raise rates at the earliest opportunity. Such a move would take interest rates to 1%, a level considered neutral for the economy and would give the BoJ greater flexibility to respond to any future inflationary pressures. Markets have already begun to reflect this shift in sentiment, with a 70% probability of a rate hike now being priced in for the June meeting.

It has been an exceptionally busy week, both globally and domestically. Markets began the week on resilient footing, but concerns around rising inflation have since weighed on both bond and equity markets. In the UK, heightened political uncertainty has led to a further sell off in both currency and bond markets today. In this environment, we believe a broader toolkit is required beyond traditional bonds and equities to navigate inflationary pressures, which underpins our allocation to commodities and other alternative assets within portfolios.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 2nd May – 8th May 2026

We begin this week’s update with developments in the US–Iran conflict. As the week draws to a close, Iran is taking time to review a proposal from the US aimed at ending the conflict, lifting the blockade, and reopening the Strait of Hormuz. However, renewed attacks on Thursday evening have placed the ceasefire under further strain.

The new proposal has faced a number of challenges along the way. At the start of the week, the US launched missile strikes on six Iranian ships, while Iran set ablaze Fujairah, a major oil port in the United Arab Emirates (UAE). Brent crude rose 4% on the day to $115. The 1973 War Powers Resolution allows a US president to conduct military operations without Congressional approval for up to 60 days. After this period, the president must either seek approval from Congress or begin withdrawing forces. President Trump’s declaration that “hostilities have terminated” effectively allowed him to sidestep this deadline.

There was a period of relative calm in markets following reports of a “14-point proposal” that the US and Iran were seemingly close to agreeing. The deal offered little that was new, largely reflecting the key issues both sides have been negotiating, namely an end to hostilities, the reopening of the Strait of Hormuz, and the suspension of Iran’s nuclear enrichment. Equity markets responded positively to the news, with the S&P 500 and Nasdaq reaching new all-time highs on Wednesday, further supported by strong earnings from AI chipmakers. Japan’s Nikkei also benefitted, not only from the improved sentiment but from its high concentration of AI-related stocks, which helped drive the index past 62,500 to a fresh record high.

We received US Non-Farm Payrolls on the second Friday of the month, with 115,000 jobs created in April. This exceeded market forecasts of 62,000 and follows a strong March, where revisions show 185,000 jobs were created. The healthcare and transportation sectors saw the largest contributions, adding 37,000 and 30,000 jobs respectively, whilst federal government employment fell by 9,000. This continues to pose a challenge for the US Federal Reserve, who held rates steady at their last meeting as they assess risks stemming from the uncertain geopolitical backdrop. Stronger labour market data reinforces the view that the economy remains resilient, but policymakers are walking a fine line, keen to avoid signalling that further tightening is imminent. Unemployment remained steady at 4.3%.

Across the globe, Australia’s central bank raised interest rates for the third time this year, taking the cash rate to 4.35% and returning it to levels last seen in the period following the Covid pandemic. The board voted eight to one in favour of the hike, reflecting a more hawkish shift compared to the previous month’s narrow five-to-four split. Governor Michele Bullock noted after the meeting that inflation is likely to remain above target for a sustained period, with risks tilted to the upside, particularly given the potential for second-round effects in goods and services prices. Markets have priced in a pause at the next meeting, followed by a further rate hike in September; however, the board indicated it now feels better positioned to respond to evolving risks.

We highlighted Samsung’s stellar performance and record profit forecasts in early April. Buoyed by the ever-growing demand for AI chips, Samsung has now become the second Asian technology firm to join the $1 trillion club. The stock rose 16% on Wednesday, with its semiconductor division generating $55.6 billion in revenue, up 86% from the previous quarter. Samsung expects demand to remain strong into the second half of the year, with its HBM4 chip capacity already sold out. However, the surge in profitability has created some pressures, with employees now demanding higher compensation and bonuses, with the threat of an 18-day strike at the end of the month.

It was a big end to the week for the UK’s Labour government as a poor early showing in local elections piled the pressure onto Prime Minister Sir Kier Starmer, potentially paving the way for a leadership challenge. Although we expect the majority of votes to arrive this Friday afternoon, initial results have shown Labour could lose more than two-thirds of their council seats with Reform UK swiftly gaining seats. Sir Kier Starmer has spoken this Friday morning stating his plan to stay in power and face the challenges head on. He did acknowledge mistakes had been made, most recently the appointment of Mandelson as US ambassador but the unsuccessful welfare reforms and the disappointing autumn budget in 2024. The response from UK assets has been fairly muted, with much already in the price and no great shocks emerging from the early election results.

Despite an uncertain backdrop markets and portfolios have continued to recover from the end of March lows. Breadth within equity markets has narrowed, with AI related stocks, particularly within the semi-conductor space driving returns. Concentrated markets can be challenging for our diversified approach; however, recent portfolio changes have helped portfolios participate in the Artificial Intelligence rally.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Keep calm and carry on

In this edition of Monthly Market Commentary, our European Strategist, Jeremy Batstone-Carr, examines key economic and geopolitical points from the last few weeks, takes a look at recent stock market highs, plus grounds for cautious optimism.

The Week In Markets – 25th April – 1st May 2026

We enter the month of May, named after the Greek goddess Maia, who symbolised growth. That theme has echoed in equity markets, which continue to advance, despite elevated oil prices and geopolitical tensions.

The big four central banks met this week, and we begin with the Bank of Japan (BoJ). On Monday, the BoJ kept rates unchanged at 0.75%, in line with market expectations. However, the surprise came from the voting split, with three of the nine board members dissenting in favour of a 25bp rate hike to 1%. This marked the largest division within the board in almost a decade. The BoJ Governor acknowledged that the policy rate remains below neutral, but emphasised that the board stands ready to raise rates should the current geopolitical environment fuel broader-based inflation.

The US Federal Reserve met on Wednesday evening and continued its recent pattern of holding rates steady, leaving the policy rate unchanged at 3.75%. Officials cited three key concerns: persistently elevated inflation, a slowing labour market, and ongoing uncertainty in the Middle East, as justification for maintaining current policy settings. Fed Governor Miran once again dissented, voting in favour of a 25bps rate cut, while three policymakers supported the pause but disagreed with the Fed’s suggestion that rates could be cut later this year. This meeting also marked Fed Chair Jerome Powell’s final one at the helm, with Kevin Warsh set to assume the role. Warsh, appointed by President Trump, has been viewed by some as a potential pathway to lower interest rates; however, achieving that outcome will require broader support than Governor Miran alone. Powell will remain on the board as a policymaker.

The Bank of England kept interest rates unchanged on Thursday, with eight out of nine policymakers voting in favour of holding policy steady. The exception was Chief Economist Huw Pill, who voted for a 25bps rate hike to push the Bank Rate to 4%. The Bank of England outlined three potential scenarios stemming from the US-Iran conflict, each designed to help shape its future policy path. UK equities reacted favourably to the news of a pause, rising over 1% on Thursday.

In a clean sweep of pauses, the European Central Bank (ECB) also held rates steady, despite inflation rising in the Eurozone to 3%. The ECB acknowledged that geopolitical tensions and higher energy costs posed upside risks to inflation, however economic growth remains subdued and higher interest rates would act as a further headwind to growth.

Efforts to de‑escalate the conflict with Iran appear to have stalled, with President Trump voicing frustration over Iran’s limited willingness to reach a deal, citing a lack of clarity in leadership. Trump indicated that the US would maintain the naval blockade of the Strait of Hormuz until Iran agrees to a nuclear deal, and cancelled plans for senior US officials to attend peace talks in Islamabad, where Iranian Foreign Minister Araghchi was present. Brent crude oil rose to a wartime high of $126 on Thursday, as markets were spooked by reports that military action in the Gulf could restart, before retreating towards $113.

We saw a flurry of first quarter earnings reports this week from some of the largest US companies. OpenAI, the artificial intelligence company behind ChatGPT, missed several analysts’ expectations on both revenue and user growth, having fallen behind Anthropic in the AI race. This triggered a broader sell off across the sector, with Oracle, Broadcom, and AMD falling by 4%, 4%, and 3% respectively on the day. In Asia, SoftBank, one of OpenAI’s largest investors, dropped 10%. In contrast, Alphabet, Amazon, Meta, and Microsoft all beat earnings expectations, with results driven largely by continued strength in cloud computing. Shares in Alphabet, the parent company of Google, rose more than 7% on the day after Google Cloud revenues increased by 63%.

BP, the British oil and gas company, reported a surge in profits to the highest level seen in three years. The strong result marked a timely start for new chief executive Meg O’Neill, who took up the role exactly one month ago, as adjusted profits rose to $3.2bn for the first quarter of 2026, more than double the level recorded a year earlier. O’Neill highlighted her intention to work closely with the UK government to unlock further opportunities, including increased production in the North Sea.

Nathan Amaning, Investment Analyst

Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

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