MARKET UPDATE

If you were hoping for a quiet summer of unremarkable markets and predictable interest rates, we have some news. Pull up a chair. Possibly make a cup of tea. This one has everything: British and geopolitical drama, eye-watering IPO valuations, and the very real prospect that your petrol bill is about to test your feelings about public transport.

The equity market has been remarkably resilient, markets delivered a broadly positive few months, with the S&P 500, European indices, and emerging markets all posting gains, with emerging markets leading the way. Diversified portfolios behaved as they should, the more growth oriented investors participated more fully in the upside, while cautious investors saw steadier, more modest returns. That is rather the point of diversification, and it is pleasing when it works as advertised.

The picture heading into the second half of 2026 is, nonetheless, one of cautious optimism. Corporate earnings remain solid, and AI-related investment continues to underpin technology sector valuations. However, with several major IPOs on the horizon (more on those shortly), markets face an unusual bout of supply pressure. When three of the world’s most valuable private companies arrive at the stock exchange simultaneously, even the most 08 enthusiastic investors begin doing arithmetic.

With regards to Bonds, the good news is that yields are attractive again, and UK gilts in particular are offering genuinely competitive income for those prepared to accept the trade-off. The less good news: inflation remains sticky, and the Bank of England’s anticipated rate cuts are looking increasingly unlikely, with rate hikes a small possibility. Following the resignation of Keir Starmer, we await confirmation of our new Prime Minister. A new Prime Minister is highly likely to result in a new Chancellor, and we wait with interest to see the shift in fiscal policy this will bring.

The AI trade has also arrived in the bond market, with hundreds of billions in new debt expected from large technology borrowers funding data centre construction. This is both a sign of corporate confidence and a reminder that even the most exciting industry in living memory requires a lot of very ordinary bricks and electricity.

The biggest story dominating the spring months is Iran, oil, and the impact on inflation. In late February the US and Israel launched military strikes against Iran, triggering retaliatory attacks across the Middle East and a swift and unpleasant response from global energy markets. Oil prices crossed £75 a barrel for the first time since 2022, and petrol prices at UK forecourts jumped from around 131p per litre in February to nearly 149p, with diesel hitting 175p. None of this was in the budget - yours or the Chancellor’s.

The OECD has warned that the UK faces the largest economic hit of any G20 nation from the conflict, with 2026 growth forecasts cut from 1.2% to just 0.7% and inflation now projected to average 4% this year, this is far above the Bank of England’s 2% target. The National Institute of Economic and Social Research suggests UK inflation could reach anywhere between 3% and 5% by late summer, depending on how the conflict develops. With regards inflation, the energy price cap adjustment in July will be the moment this really lands on household bills and possibly on client conversations about cash flow planning.

It is going to be a busy summer. As opposed to bird watching, why not try your hand at IPO watch! Ones to watch out for are SpaceX, OpenAI & Anthropic. If geopolitics is the anxiety of 2026, the IPO pipeline is its excitement. SpaceX has formally launched its public offering on the Nasdaq, targeting a valuation of approximately £1.3 trillion and raising around £56 billion making it the largest IPO in history and, by a considerable margin, the most expensive way to buy a piece of Elon Musk’s ambitions.

Hot on its heels, Anthropic (makers of Claude, the AI assistant) is targeting a UK-friendly public listing as early as October at a reported £670 billion valuation, while OpenAI is expected to follow in Q4. Together, these three companies could raise close to £149 billion, more than the total raised in all US listings combined since 2022. These are real businesses with real revenues, which is more than could be said for some companies that floated during the dot-com era. Whether the growth expectations baked into the valuations are equally real is the question that will define portfolios for years to come.

We are watching closely, and will be discussing implications for client portfolios as these listings progress. As ever, if any of this prompts questions about your own financial plan or simply the urge to discuss the geopolitical situation over a coffee, our door is open. That is, after all, what we are here for.

The following information is accurate as at the date of writing on 10 July 2026.

The content of this article is for information purposes only and does not constitute individual advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. Past performance is not a reliable indicator of future returns.