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Please see the below article from Tatton Investment Management discussing cooling AI enthusiasm, softer US inflation, limited UK fiscal room, and rising government involvement in AI, received this morning – 20/07/2026

AI froth coming off

Chip stocks have swung from euphoria to despondency without any real bad news. Other than that, markets are in a lull, trading up and down over the same themes they have for months: war, interest rates, and the durability of the AI boom. Investors still don’t know what to make of them.

Oil prices went higher last week but not dramatically, despite the Strait of Hormuz closing again. Investors may be thinking that one or both sides will TACO (Trump or Tehran Always Chickens Out). The incentives would suggest that’s right: Trump has the midterms and Tehran needs the cash. But the war so far has been more like a game of chicken than a rational calculation. Things could still get worse, but at least games of chicken are usually short.

Softer US inflation data helped calm nerves too. Energy reprieve was expected to help lower June’s figures, but even core inflation eased, all but ruling out a Fed rate rise this month. Bond yields fell and equities rallied in response. The good mood faded somewhat once investors remembered the data predates the latest oil price bump, however.

The real story is in chips. TSMC and SK Hynix both sold off hard despite strong earnings, as doubts crept back in over how sustainable AI-driven growth really is. We’d call that a healthy sign rather than a warning sign: bubbles are built on exuberance, and it’s hard to argue investors are exuberant while valuations are falling.

Banks, meanwhile, are having a moment, with strong second-quarter profits on the back of a busy quarter for trading and dealmaking – prompting some to call them AI stocks by proxy. If that’s true, we suspect their turn in the spotlight won’t last: the AI theme has a habit of moving on just as quickly as it arrives.

Markets’ guardrails for Burnham

Reports this week suggested Shabana Mahmood could become Chancellor under Andy Burnham, and gilt yields duly fell. Some took this as gilt trader relief that the supposedly borrow-happy Ed Miliband won’t get the job, but as usual we would caution against political interpretations.

Yields fell mainly because US treasury yields fell first, after a succession of softer-than-expected US inflation data ruled out a July rate hike from the Federal Reserve. Gilts tend to follow US bonds especially closely, thanks to the UK’s heavier weighting towards long-dated and inflation-linked issuance.

But if gilt markets were worried about Miliband, why didn’t they react more to Mahmood reportedly getting the Treasury instead? We suspect that gilt traders were never as worried about internal Labour politics as the media narrative suggests.

Every recent UK government, Burnham’s included, has precious little room to loosen fiscal policy: any attempt at bigger gilt issuance would likely just push yields up enough to cancel out the extra borrowing. That reality was laid bare by Liz Truss’s 2022 “mini budget” crisis, which exposed gilts’ structural imbalance and put the UK at the mercy of foreign investors. It is why Rachel Reeves has focused on lowering interest costs rather than opening the spending taps – advice she all but repeated to her successor in her final Mansion House speech.

Some call the UK’s persistently higher yields a “moron premium”. We’d rather call it structural: a large stock of inflation-linked gilts means UK yields amplify global inflation swings, rising faster than most when sentiment turns – a “high beta”, in bond-trader speak. That’s why this week’s Strait of Hormuz tensions were awkwardly timed for the incoming government, even if the softer US inflation report balanced things out. Either way, we don’t expect Burnham’s government to shift the balance of UK borrowing by much.

National Artificial Intelligence

Governments want more control over AI development, but interventions – particularly Washington’s – have been erratic so far. The Trump administration ordered Anthropic to block non-US citizens from accessing its powerful Fable 5 model last month on national security ground. Anthropic pulled its newly released model entirely, before the White House finally cleared it. OpenAI was told to stagger ChatGPT 5.6’s release, giving a government-approved list early access first.

Some read Anthropic’s treatment as punishment for refusing to let Claude be used in weapons and surveillance, while OpenAI’s offer of a 5% stake to Washington ahead of its IPO looks like a bid for favourable treatment.

Security concerns are shared by policymakers and AI firms alike: Google DeepMind’s chief this week called for the same kind of US standards body Washington is reportedly building, and the ECB has told significant European institutions to plan for AI security risks.

The trickier question is over potential public ownership. If AI displaces workers while enriching shareholders, the public has some claim to the proceeds – but a US company returning profits earned in Europe to American citizens would not go down well with Europeans, and could invite more international restrictions.

Is government intervention a threat to AI stocks? Recent selling pressures might suggest so, but there’s still little sign that investors are overly worried. Over the long-term, though, government action could hurt the key things holding up AI companies’ high valuations: rapid technological development and profits.

A consistent regulatory framework wouldn’t be seen as a problem (AI leaders themselves are calling for it) but the chaotic approval or disapproval of models by Washington creates uncertainty. Even (part) public ownership need not be a problem for the AI companies; the government will take a slice whether through tax or earnings. The bigger problem is firms buying patronage with thinly-veiled share offers.

We will have to watch the government-AI overlap closely.

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Marcus Blenkinsop

20^th July 2026

Please see below the daily update article from Brooks Macdonald, received this morning – 17/07/2026:

What has happened?

Global markets moved onto a more defensive footing, led by a sharp reversal in the AI and semiconductor trade. US markets fell yesterday, with Nasdaq weakness more pronounced and Asian markets sold off heavily overnight, with chip-related names under pressure. The move came despite generally resilient US economic data, including lower jobless claims, steady retail sales and a strong Philly Fed manufacturing print. However, higher oil prices, renewed US-Iran escalation and more hawkish Fed commentary have revived concerns that inflation may prove stickier than hoped.

AI in focus

The standout theme is the market’s reassessment of AI-related expectations. TSMC’s results were strong, with upgraded revenue and capex guidance, but investors focused instead on elevated expectations, rising investment requirements and whether AI infrastructure spending can continue to justify valuations. Alphabet’s reported delay to Gemini 3.5 Pro and Netflix’s after-hours weakness added to the pressure on large-cap technology. At the same time, China’s Moonshot Kimi K3 model has sharpened the debate around lower-cost, open-source AI competition, reinforcing the idea that the AI story remains powerful but increasingly contested.

What does Brooks Macdonald think?

The latest moves look less like a broad macro shock and more like a valuation and positioning reset in the most crowded parts of the market. Encouragingly, US market breadth was positive, with many cyclicals, defensives and healthcare names outperforming even as mega-cap technology weighed on headline indices. That suggests risk appetite has not disappeared, but leadership is becoming more selective. For investors, the key question is whether strong growth data and AI-related capex can continue to offset higher oil prices, geopolitical uncertainty and a less dovish central bank backdrop. Near-term sentiment may remain fragile, but a broader rotation would be healthier than a market reliant on a narrow group of AI winners.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Andrew Lloyd

17/07/2026

Please see below the Brooks Macdonald Daily Investment Update, received this morning – 16/07/2026

What has happened?

Markets rallied yesterday after a softer-than-expected US producer price inflation (PPI) report reinforced expectations that the Federal Reserve is unlikely to raise interest rates at its upcoming meeting. The S&P 500 rose +0.38%, closing less than 0.5% below its record high, while strong corporate earnings provided additional support, with BlackRock gaining +6.6% after beating expectations. Oil prices also stabilised following their recent surge, with Brent crude rising just +0.26%. By contrast, European markets were more mixed. The STOXX 600 edged up +0.10%, but Germany’s DAX (-0.59%) and Italy’s FTSE-MIB (-0.85%) declined as bond yields moved higher amid lingering inflation concerns. Despite the pullback in oil prices, European natural gas futures climbed to a fresh three-month high of €54.35/MWh.

US PPI reinforces a disinflationary picture

June US PPI fell -0.3% m-o-m, compared with expectations for no change, while May’s reading was revised down sharply. As a result, annual producer price inflation slowed to 5.5%, below the 6.2% consensus forecast. Importantly for investors, there were also no obvious signs of inflation pressure from the components that feed into the Fed’s preferred PCE inflation measure. The data helped reinforce a dovish repricing across markets, with the probability of a Fed rate hike at the next meeting falling to around 10%, its lowest level since speculation about an imminent hike first emerged.

Political clarity boosts UK assets

The UK was a notable outperformer following reports that Shabana Mahmood is expected to become Chancellor under incoming Prime Minister Andy Burnham. The announcement was closely watched by investors and helped lift sterling 1.1% against the US dollar. Gilts also outperformed, with the 10-year yield falling 3.8bps to 4.94%, moving in the opposite direction to most continental European bond markets.

What does Brooks Macdonald think?

The latest US inflation data provides some reassurance that underlying price pressures remain more contained than headline energy moves alone would suggest. That said, investors should be careful not to draw too many conclusions from a single data point. Energy markets remain vulnerable to disruption. For now, however, markets appear increasingly comfortable with the view that policy rates will remain stable.

Bloomberg as at 16/07/2026.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Alexander James Roberts

16/07/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 14/07/2026.

Markets react to end of U.S.-Iran ceasefire

Tensions are again building in the Middle East as the U.S. has declared an end to its ceasefire with Iran.

Key highlights

• Oil prices rise amidst Middle East tensions: Iran and the U.S. ended their ceasefire as the U.S. struck 80 Iranian targets in retaliation for Iranian attacks on vessels in the Strait of Hormuz. As a result, the oil price rose but lacked serious momentum.
• The heat is on: Cooling appliances saw a huge sales boost in Europe as temperatures soared – while an estimated $17 billion in productivity was lost due to the World Cup and heat-induced capacity drops.
• Prime minister-in-waiting: Andy Burnham looks set to become prime minister around 20 July. Though some worry about what this will mean for gilts, Burnham has already walked back his more combative remarks and committed to the existing fiscal rules.

Semiconductor sector restabilises

Last week began with the market focusing its attention on the semiconductor industry, where a bout of volatility had erupted. Semiconductor and related stocks have been the market leaders over recent weeks, rising extremely sharply. They’ve become associated with speculative investment activity and it was inevitable that, at some stage, the increases would need to consolidate at the very least.

Despite some very supportive earnings news from Samsung, the sector fell as investors took profits, but towards the end of the week, stability seemed to have returned.

Oil prices rise as Iran-U.S. negotiations remain tenuous

It was the reverse story for the Strait of Hormuz, where the earlier sense of calm had disappeared by the end of the week.

Iran has continued to insist it would impose fees on vessels using the Strait of Hormuz once the 60-day negotiation window with the U.S. closes. In an early act of antagonism, Iran said China and friendly nations would receive special treatment.

On Saturday 4 July, eight ships turned back on the southern Omani route before flows resumed. By Tuesday last week, the mood had darkened sharply: an LNG carrier, the Al Rekayyat, was struck by Iranian projectiles near the Omani coast, with reports of at least one further vessel fired upon. Traffic through the Strait, which was already at a fraction of its pre-March level, looked precarious.

The U.S. responded in force. Last Wednesday, it struck some 80 sites in Iran and revoked a waiver permitting new sales of Iranian oil. Iran called both moves violations of the interim deal and vowed a decisive response. The dispute appears to turn on Tehran’s insistence that ships transit only through Iranian waters – a condition that was never obviously part of the agreement reached with Washington. Yet, strikingly, technical talks between the two sides were still reported to be continuing by last week’s end.

Source: Bloomberg

Markets took it all with remarkable composure. The oil price rose by around 8% from its lows but lacked any serious momentum. RBC’s Chief Commodity Analyst Helena Croft has stressed since the onset of the crisis that traffic is unlikely to ever fully return to February’s volumes.

Europe has been caught in an economic crossfire between the U.S. and Iran. A bank-led rally followed the onset of peace negotiations but partially reversed as the conflict resumed.

Hot summer nights create mixed results for Europe

Against this background, the combination of the historic heatwave across the UK and continental Europe and a North American World Cup broadcast schedule featuring late-night kick-off times will distort typical economic performance for short-term and structural reasons. Global workforce data from UKG projects up to a $17 billion drag on productivity from World Cup sleep deprivation and next-day absenteeism, while over 70% of UK workers report heat-induced capacity drops.

Six of the last eight teams in the World Cup were European, and while some South American countries seem to experience a market impact from World Cup wins, Bloomberg found little evidence of that in European markets.

Hospitality usually gets a boost from the World Cup but less so when games take place outside traditional hours. The sector also benefits from good weather, but the gains fall unevenly, and margins are squeezed by higher energy and labour costs. Data from Tenzo showed uncooled city-centre venues losing footfall, while outdoor and air-conditioned locations thrived.

Certain categories of household expenditure have soared, such as the 320% year-on-year surge in cooling appliance sales in the UK, with household air-conditioning penetration at around 20% across Europe.

The chart measures the Cooling Degree Days index, which shows how much and for how long the outside air temperature rose, or is expected to rise, above a specific baseline temperature.

Source: European Commission

If these extreme summers persist into a long-term trend, structural risks will intensify.

According to the United Nations, persistent heatwaves transition from seasonal inconveniences into structural drags on growth, with projected multi-billion-dollar gross domestic product (GDP) output losses across France and Germany due to permanent cross-border supply chain friction and road/rail infrastructure degradation.

We expect corporate capital expenditure to shift defensively towards climate adaptation and cooling infrastructure alongside productivity-enhancing innovations.

Prime minister-in-waiting

Andy Burnham looks set to become prime minister around 20 July, while Ed Miliband is considered the most likely candidate for chancellor. With both men positioned to the left of the current leadership, some observers worry about the implications for gilts.

We’d caution against overreacting. Politicians often soften in office, and Burnham has already walked back his more combative remarks and committed to the existing fiscal rules. The memory of the Liz Truss episode remains fresh, centrist Labour MPs act as a counterweight and Burnham has ruled out an early election.

Indebtedness is a genuine long-term concern, but the immediate political risk should probably be discounted.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

15/07/2026

Please see the below article from Tatton Investment Management discussing market resilience, the AI investment cycle and Europe’s banking challenges, received this morning – 13/07/2026.

Markets keep calm and carry on with business

Just as markets had downgraded Middle East risks, they flared up again – and once more the reaction was strikingly measured. Spot oil spiked 12% after Iran targeted ships in the Strait and US forces hit Iranian targets over two days. Iran’s response – up to 15 missiles and dozens of drones – was reportedly intercepted before impact, and with technical discussions between the two sides continuing, Brent has settled back, falling 5% from Tuesday’s $80.50 peak. Bond yields and equities followed the same pattern: a rise, then a retreat.

We observe that markets are increasingly focussed on company stories rather than geopolitics. The chip sell-off ran its near-term course, helping tech outperform, while SK Hynix’s ADR share sale in the US – the third-largest listing in global history – went well despite no discount, even as its diluted Korean share base fell another 10% (given the company’s market capitalisation size, a distortion worth remembering when reading current emerging market index performance).

M&A is coming up on the rails to challenge for investor attention. The battle to take easyJet private, with bids from Castlegate and Apollo, is one of several foreign bids for discounted UK companies: Segro, Schroders and UK Power Networks have all been picked up, mostly by private equity. After a poor 2025 and first half of 2026 for listed private equity (“SAASpocalypse” exposure), the step-up in M&A may signal improving liquidity – which would support stable-to-rising valuations and a broadening of equity performance. Less happily, the UK’s CMA approved the Hovis-Allied Bakeries merger only because both were loss-making; as a result, cheap bread is likely to be less cheap, and high interest costs mean debt holders in consumer-facing businesses may face write-downs.

Meanwhile, Japan’s finance minister Satsuki Katayama announced a multi-year budgeting framework, with pension funds “encouraged” to buy domestic assets – bond yields duly fell. Instructive, perhaps, for an incoming UK Chancellor, especially with Business Secretary Peter Kyle telling the Guardian he will consider mandating UK investment “because I’m in a rush”. Next week, US bank earnings kick off the second-quarter season – and the focus shifts further from geopolitics to corporates.

UK 1840s Railway Mania: teachable takeaways for today’s AI boom

Commentators usually compare the AI buildout to the dotcom bubble; we look further back, to Britain’s 1840s Railway Mania. Early lines were highly profitable and expansion was self-sustaining – building railways required materials that themselves needed rail transport. Investment poured in (Charles Darwin and John Stuart Mill included), until capital goods demand outran what the industrial base could provide, leading to inflation. This strong growth paired with loose financial conditions forced the Bank of England to raise rates in late 1845, and – as almost always – these rate hikes burst the bubble. By 1847 the most popular shares had fallen around 80% from the peak. Parliament had approved some 9,500 miles of new lines in 1846, with an estimated 8-12% of GDP invested; still, about a third were never built.

Yet the burst was not the end. Growth stayed strong, railway utilisation accelerated after 1850, a second boom followed in the 1860s, and the network laid the groundwork for a century of British industrial strength. Many bubbles are a sign of something genuinely valuable – early on, though, we just do not yet know how much of it we need.

The key warning sign for a mania ending in a bust is vast capital required before meaningful profits can be generated – true of the railways and of the TMT bubble. Today’s AI capex, by contrast, has mostly been funded by recycling profits from already hugely profitable businesses. At the moment big tech valuations are falling not because their share prices are dropping but because profits are outpacing them. As long as AI-driven expansion keeps profits strong – and monetary policy does not over-tighten liquidity – it is hard to see share prices substantially falling. And even a burst bubble would not stop AI being an economically and socially transformative force over the long term.

European banks – what European banks?

Italy’s UniCredit is on the cusp of controlling Germany’s Commerzbank, having acquired 47.6% of its shares after a surprisingly large take-up of its €44bn offer. Political obstacles remain – the German government has pushed back strongly, and BaFin is investigating following a criminal complaint from Commerzbank’s workers’ council – but few expect these, or the ECB approval process, to stop CEO Andrea Orcel getting his prize.

The real story is what the difficulty reveals: Europe’s fractured banking system. Basel III capital rules effectively prevent assets raised in one country funding loans in another via subsidiaries, limiting the scale benefits of a multinational bank (though the branch model, used successfully by Nordea, is an exception). The banking union’s third pillar – a European deposit insurance scheme – remains missing, so national regulators and voters fear a supranational bank misusing their deposits. That is why Europe has so few successful cross-border commercial banks beyond Santander and Nordea, and why newer cross-border players are digital upstarts like Revolut and N26.

The barrier is ultimately political: governments favour national champions, and the benefits of integration are intangible to voters. Progress on the Savings and Investment Union has been minimal, despite Europe’s need to put its abundant savings to work. If a true banking union comes, UniCredit will be well placed to benefit – but this deal should not be read as a sign that the union is any closer.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

13^th July 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 08/07/2026.

U.S. job market cools – what’s next?

We examine what a cooling jobs market could mean for interest rates as the Federal Reserve aims to get inflation back to 2%.

Key highlights

• U.S.-Iran ceasefire ends: The U.S. responded with strikes as Iran harassed ships along the Strait of Hormuz’s southern route, ending the ceasefire.
• How long can hyperscalers maintain AI investment momentum? As the market increasingly looks to AI as a bellwether, the question remains of how long hyperscalers will continue investing significant sums into their AI infrastructure.
• U.S. jobs growth stalls as AI drives layoffs: The U.S. only saw 52,000 new jobs created in June, while AI has been named the most common reason for layoffs throughout 2026.

U.S.-Iran ceasefire ends

The second quarter ended with a pretty good week for stocks, but plenty of drama remains.

Tension remains despite oil prices falling significantly since the likelihood increased that the Strait of Hormuz would reopen. Iran harassed ships taking the southern route, which goes through Omani waters, and the U.S. responded by revoking a waiver on Iranian oil sales and striking 80 targets within Iran.

The two parties reaching an agreement remains challenging. The oil price rose but remains well below its recent peak.

Cracks in the capex story – or healthy consolidation?

AI infrastructure has become the modern market bellwether. While questions remain over the efficacy of hyperscaler capital expenditure (capex), there seems to be less controversy about holding the beneficiaries of that capex – the semiconductors and memory chip producers and associated electrical suppliers.

The remaining controversy refers to how long hyperscalers will keep pumping significant, upfront capital investment into their AI infrastructure. The most recent niggle of doubt comes from leaks suggesting Meta could lease computing capacity. That might be welcome as a source of revenue, but when Mark Zuckerberg has discussed it previously, he has described it as a solution if Meta was to overbuild.

The leaks came after xAI agreed to lease computing capacity to Anthropic, and with token costs (the per unit pricing of AI models) having slipped nearly 20% from their May peak, it created some nervousness that the world might already have enough computing capacity, which would obviously imply lower future orders. However, that would seem difficult to square with the lengthening backlogs revealed by other hyperscalers.

While chip stocks have eased back from their peaks, they look more like a healthy consolidation after an outstanding performance than a reversal.

From a technical perspective, market breadth has been picking up. This is encouraging at a time when the market seemed to rally despite a weak economy.

One important aspect is that the resumption of oil flow in the Strait of Hormuz has led to an easing of inflation pressure. Data on U.S. real income and spending growth has shown how higher inflation has been eating into real incomes, causing them to shrink marginally relative to last year. This means that Americans have reduced their savings to a historically low level. It’s not yet unsustainable, and evidence seems to indicate that immediate future spending growth is likely to be maintained. But some relief through lower inflation needs to come for real spending to be maintained.

U.S. jobs growth stalls as AI drives layoffs

The latest U.S. non-farm payrolls report was downbeat, with just 57,000 new jobs created in June. The labour market doesn’t seem strong enough to generate significant wage demands, although a shrinking labour force means that it isn’t too slack either.

Source: LSEG Datastream

The best outcome for the economy would be wage growth without inflation through faster productivity. Is that happening? The fact that the Challenger jobs report cited AI as the most common reason for layoffs throughout 2026 suggests that it might be. The report only covers a small fraction of the total layoffs in a given month, but if it’s indicative of a broader trend then it would seem to indicate that companies are beginning to make efficiency savings through AI.

Source: Challenger, Gray & Christmas

Germany accepts pensions reform package

Pension spending is a growing fiscal challenge across the Eurozone, and it’s set to rise by around 1% of GDP by 2035 as populations age.

Germany faces a particular challenge: its working-age population is falling faster than that of most peers, yet its pension system is almost entirely pay-as-you-go and unfunded. Its retirement assets equate to less than 15% of GDP, compared to around 80% in the UK and 150% in the U.S., according to Capital Economics.

The Merz government initially made things worse by extending the suspension of Germany’s sustainability factor until 2031 and expanding mothers’ pension entitlements. The ‘sustainability factor’ refers to a mechanism within Germany’s pension system that limits the pension level if there are more retirees than active workers paying in. The moves are estimated by Capital Economics to add 0.4% of GDP to pension spending by 2035.

However, this week, Merz’s coalition government accepted a reform package from an independent commission that improves things. Its two most significant recommendations are a six-month increase in the state pension age and the creation of a compulsory Defined Contribution (DC) scheme (modelled on Sweden’s premium pension system). This is expected to channel around €30 billion per year into capital markets including equities, venture capital and private equity.

It will take decades to realise the benefits. But the long-run implications are significant: the DC scheme could structurally increase institutional demand for European equities and create new flows for asset managers and private equity. It’ll build up slowly, but the concept seems sound.

Andy Burnham’s Labour leadership speech

Reform was also in the air during Andy Burnham’s speech last week, which established his intention to succeed Sir Keir Starmer as prime minister.

This would have been a bigger deal a few weeks ago but Burnham’s critical conversion to backing existing fiscal rules – abandoning his previous scepticism of bond market constraints – has been the primary source of market reassurance.

With fiscal policy constrained, the attention has shifted to reforms that may come with immaterial costs, such as devolution. It’s true that the UK has become more centralised over the past 20 years. What’s less clear is whether devolution will improve growth.

Research suggests that the critical form of devolution that would improve performance would be the devolution of revenue raising, rather than simply spending larger grants from central government.

Procurement reform is the most immediate corporate sector implication. Burnham explicitly commits to ending “chasing cut-price deals around the world” and applying social value weighting to all eligible public contracts, including defence. This is a material positive for UK-based manufacturers and suppliers in steel, defence and energy and food – and a risk for international incumbents.

Utilities are a clear watch item. The commitment to greater public control of water, energy and transport – modelled on Greater Manchester’s bus franchising –  is a directional warning for private operators of listed infrastructure assets. Having seemingly accepted that they can’t be brought into public ownership, stricter regulation seems more likely.

Housing and construction represent the most concrete fiscal and sectoral opportunity. A large-scale council house building programme using public land, framed explicitly as a fix for what Burnham calls the “ruinous impact” of the housing crisis on public finances, would be a significant positive for the construction sector. However, house building has been promised by previous governments and not delivered.

The most positive thing from the UK perspective has been the lack of a negative reaction from the gilt market.

We expect that Burnham will feel constrained from radical policy by the fact that the mandate he’s inheriting was won based upon Starmer’s manifesto. He’ll need a significant bounce in the polls to be tempted to seek a mandate of his own. But the biggest single constraint on governments is the bond market’s reaction to any policies, which he’s managed to tame for now.

So, with significant tax benefits and a tailwind from the tentative reopening of the Strait of Hormuz, we continue to take advantage of high UK yields.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

09/07/2026

Please see below the daily update article from Brooks Macdonald, received this morning – 08/07/2026

What has happened?

Markets struggled yesterday as higher oil prices revived concerns about stagflationary. Government bonds bore the brunt of the move, with the US 10-year Treasury yield rising 8.2bps to 4.55%, while the S&P 500 fell -0.45%. The Philadelphia Semiconductor Index dropped -4.7%, leaving it -16% below its mid-June peak despite having just recorded its strongest quarter on record in Q2. Higher energy prices prompted a rotation towards defensive areas, with the energy (+3.0%) and healthcare (+1.6%) among the strongest performers. Despite the weakness in headline indices, market breadth was more resilient, with 283 S&P 500 constituents finishing higher. In Europe, rising oil prices also weighed on sentiment, pushing bond yields higher and leaving the STOXX 600 down -0.65%. French politics attracted some attention after Marine Le Pen confirmed her intention to run in the 2027 presidential election, although the immediate market reaction was limited.

Oil jumps as Middle East tensions escalate

Overnight, investors were confronted with a significant escalation in US-Iran tensions. American forces launched strikes against more than 80 targets in Iran, including air defence systems, command-and-control facilities and anti-ship missile capabilities, following attacks on commercial shipping in the Strait of Hormuz. The US Treasury also revoked a waiver that had permitted new Iranian oil sales, a move that risks undermining the interim peace agreement reached last month. Brent crude, which had already risen more than 5% yesterday, traded near $76 /bbl this morning after gaining a further 2% overnight. Iran has condemned the actions and vowed a response.

What does Brooks Macdonald think?

The latest escalation represents the most serious challenge yet to the ceasefire and a reminder that geopolitical risks can re-emerge quickly after fading from investors’ attention. Elsewhere, the NATO summit continues for a second day. President Trump reiterated that the US could withdraw military forces from Europe and repeated his desire for Greenland to come under US control, while reports suggest that more than $50bn of defence-related agreements have been announced around the summit. Together, these developments reinforce a broader theme that has become increasingly evident in recent years: geopolitical considerations are playing a larger role in shaping fiscal priorities and, ultimately, investment opportunities.

Bloomberg as at 08/07/2026

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Cherise Lancaster

08/07/2026

Please see below the weekly market update article from Brooks Macdonald, discussing record equity market highs, improving market breadth, easing inflation pressures, and interest rate expectations, received yesterday – 06/07/2026.

Record highs and broader participation

Last week saw equity markets extend their recent gains, with US equities rising +1.76% and European equities outperforming by gaining +2.66%. While headline indices remained supported by optimism around artificial intelligence and easing inflation pressures, a notable feature of the week was improving market breadth. In the US, the equal-weighted S&P 500 repeatedly reached fresh highs, suggesting investor appetite is beginning to broaden beyond the market’s largest technology companies. By contrast, semiconductor stocks struggled, with the Philadelphia Semiconductor Index suffering a second consecutive weekly decline, highlighting an increasing divergence beneath the surface of equity markets.

Softer data, easier rate expectations

Economic data broadly reinforced the view that growth is moderating without deteriorating sharply. US payrolls increased by 57,000 in June, below expectations, while revisions to prior months pointed to a gradual cooling in labour market momentum. Elsewhere, manufacturing surveys and private payroll data also suggested economic activity may be losing some steam. Importantly for investors, softer growth data was accompanied by easing inflation pressures, particularly in Europe where June inflation readings came in below expectations. Together, these developments encouraged markets to scale back expectations for further interest rate increases and strengthened hopes that economic growth can continue without a significant resurgence in inflation.

The week ahead

With markets increasingly focused on the outlook for interest rates, this week’s central bank communications could prove particularly important. The minutes from the latest Federal Reserve meeting will provide investors with a more detailed insight into policymakers’ thinking under the new chair Kevin Warsh, while the account of the ECB’s June meeting should help clarify the likelihood of further tightening. Any signs that central banks are becoming more comfortable with the disinflation trend would reinforce the recent easing in rate expectations, while more persistent inflation concerns could challenge the market’s increasingly optimistic outlook.

A healthier rally?

Another week of record highs for major equity indices, and the underlying market story may be becoming more balanced. Previously, returns were rather concentrated in a relatively small number of technology and AI-related companies. Recent weeks, however, have seen broader participation emerge across sectors and regions, even as some of the market’s previous leaders have paused for breath. If inflation continues to moderate and policy expectations move lower, a broader range of companies may be able to contribute to future market gains. While investors should always remain mindful of economic and geopolitical risks, the widening of market leadership could prove to be a constructive development for markets in the weeks ahead.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Alexander James Roberts

07/07/2026

Please see the below article from Tatton Investment Management discussing recent market performance, AI-related earnings and capex concerns, central bank policy signals, June asset returns, and ongoing challenges facing European carmakers, received this morning 06/07/2026.

Much appreciated slowing down
Global stocks bounced from the previous week’s sell-off, but they’re still roughly flat over the past month. The previous big winners were, again, under the most pressure. Some are worried this might be more than quarter-end profit-taking, but the simplest explanation is still investors cashing in before their summer break.

Valuations are falling, but only because AI-related earnings are outpacing (minimal) share price gains. That speaks against the AI valuation bubble narrative. Momentum has faded, with a rotation into US mid and small cap stocks – though notably not in Europe. This looks largely seasonal: trading always thins in the summer and investors rebalance at the half year point. Still, slightly weaker growth and AI earnings scepticism have some talking about a potential peak.

The earnings question is heavily tied to AI capex. Meta’s decision to sell its spare cloud computing capacity fed doubts about supposedly endless AI demand. But Meta shares jumped 9%, the decision being read as capex discipline rather than weak demand. We’ve seen false peaks in AI capex before – so we should watch this story but not fret just yet.

The earnings-valuation debate also hinges on interest rates. The ECB now looks unlikely to hike, given weak demand and falling oil prices, but the Kevin Warsh-led Fed looks increasingly hawkish. Warsh’s remarks last week at Sintra, along with his reported recruitment of Mervyn King, suggest a more assertive and less communicative style. For central banks, assertiveness typically means hawkishness. That pushed down US inflation expectations (without denting growth expectations) keeping bond yields under 4.5%.

We note finally that gilt investors shrugged off Ed Miliband becoming the favourite on betting platforms for next UK chancellor, suggesting markets see yields, not politics, as the real constraint.

None of this week’s stories are individually market-moving – but in a quiet summer, small stories can loom large.

June Asset Returns Review
Stocks edged up 0.7% and bonds 0.4% in sterling terms in June – a mild end to a strong quarter. The month’s big geopolitical story, the US-Iran deal to reopen the Strait of Hormuz, barely moved risk assets, which had already priced in an end to the war and (rightly or wrongly) moved on to other stories.

The deal did, however, move oil prices: Brent crude fell 18.7% in sterling terms, dropping below pre-war levels and flipping into ‘contango’ (current prices lower than futures pricing) for the first time since fighting began. Speculative oil positions – which grew dramatically during the war – unwound, dragging down gold and cryptos too, as punters had to find liquidity to close their speculative positions. Strangely therefore, falling oil didn’t lift stocks, as instead, the unwind of energy-linked positions triggered a broader sell-off.

SpaceX’s record-breaking IPO added to the volatility, surging on (expected) index-fund buying before sinking back once management lock-ups expired.

Quarter-end rebalancing from institutional investors compounded the pullback, hitting the previous best performers hardest: US tech fell 1.2% despite a stellar 20.8% quarterly gain, and semiconductor stocks – this quarter’s standout winners – eased off as investors banked profits. Emerging markets, heavily weighted to chipmakers TSMC, Samsung and SK Hynix, ended June nearly flat.

New Fed chair Kevin Warsh made his debut, signalling he’ll prioritise shrinking the balance sheet over rate cuts – a stance that added to liquidity pressure but oddly helped US small caps.

UK markets were barely phased by Keir Starmer’s resignation and (almost certainly) Andy Burnham’s ascension. UK stocks rose 1% even as others struggled. Gilts dipped further than global peers – hinting markets are cautiously optimistic about Burnham, despite his previous dismissive comments about bond markets.

After an excellent first half year driven by AI, some shine came off in June. But investors are already repositioning for gains. The second half of 2026 might be less spectacular, but the growth indicators still point up.

European cars still stalling
BMW issued its third profit warning in as many years, and Volkswagen reportedly plans to axe 100,000 jobs, as European carmakers undergo brutal cost-cutting to keep pace with Chinese competition. Weakness in autos is stark given the AI infrastructure-led strength in other manufacturing sectors. No longer are autos the beating heart of global manufacturing.

Two forces explain the malaise: energy and China. The Post-Ukraine energy price spikes hit production costs, while Chinese competition squeezed revenues. The US-Iran resolution has eased another energy shock, but not enough to shift sentiment.

The China challenge is really two separate challenges: Chinese carmakers are winning global market share at discount prices thanks to overproduction, while Chinese domestic demand itself remains weak. European sales to China are set to shrink dramatically as a share of BMW, Mercedes and Volkswagen’s profits. European demand isn’t picking up the slack either, still 12% below 2019 levels.

The EU has enacted several tariffs on Chinese EVs to support the sector, with little effect. The 2024 tariffs don’t affect plug-in hybrids, where most of the growth is coming from. The European Commission reportedly wants tariffs for plug-ins, but they would probably be better off improving EV infrastructure – given consumers’ usually cite lack of charging point availability as the main barrier.

The deeper issue is that the technology gap with Chinese rivals has all but disappeared, leaving price as the main differentiator. European R&D still leans towards mechanical engineering over digitalisation, and manufacturers prioritise durability over production speed, while Chinese firms move faster with less testing.

Significant restructuring and a technology re-orientation look unavoidable. Even before the EV revolution, the autos industry had overcapacity and arguably needed consolidation. Consolidation won’t happen at the sector level (Germany won’t let its stars get swallowed up) but cost-cutting will force a reset. If the reset forces innovation, European carmakers might yet get out of the rut.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

6^th July 2026

Please see the below article from Brewin Dolphin discussing the first-half 2026 equity market recap, highlighting broad market gains, strong earnings growth, the leadership of semiconductor and AI-related stocks, and the renewed strength of small- and mid-cap companies, received yesterday 02/07/2026.

With semiconductor stocks significantly outperforming and driving most of the S&P 500’s 10.2 percent total return in the first half of the year, it’s tempting to relegate this to just a narrow advance.

However, the rally actually was quite broad:

• Seven of 11 S&P 500 sectors delivered above-average gains, and five sectors outperformed the index in the first half
• The S&P 500 Equal Weight Index jumped 12.1 percent including dividends, outpacing the capitalisation-weighted, Technology-heavy S&P 500
• The S&P indexes of small-cap and midcap stocks surged 23.9 percent and 17.3 percent including dividends, respectively, far exceeding large-cap indexes

The U.S./Israel war with Iran, along with the related oil price spike and inflation, briefly jolted the market in March.

But the market quickly looked past those events as investors focused on very strong Q1 earnings growth and, importantly, meaningful upward revisions to profit estimates.

The S&P 500 consensus 2026 earnings growth forecast jumped from 13.6 percent at the beginning of the year to 23.3 percent by the end of June – a very unusual leap in such a short time, especially at this advanced stage of the economic cycle. The 2027 forecast currently calls for 16.1 percent growth.

Sturdy economic data and little-to-no tangible signs of economic deterioration on the horizon also supported stock prices. The consensus forecast of economists sees U.S. GDP growth at 2.1 percent for this year and next, roughly the long-term average level.

A new all-time high for the S&P 500 on strong earnings growth, overcoming the prior round of Middle East headwinds

Source – RBC Wealth Management, Bloomberg; data through 6/30/26

A small-cap and midcap renaissance

After years of underperformance, small-cap and midcap indexes surged in the first half for a few main reasons:

• These indexes include semiconductors and other stocks tied to the AI data centre buildout, which led the broader market
• Small-cap consensus earnings growth estimates started to improve and, importantly, 2027 estimates currently outstrip those for the S&P 500
• The relatively inexpensive valuations of small caps and midcaps compared to large-cap indexes were finally rewarded by investors

Strong returns for equity indexes with small caps well in the lead

First-half 2026 total returns of key indexes and styles (includes dividends)

* Dividend Growth based on S&P 500 Dividend Aristocrats Index.

Source – RBC Wealth Management, Bloomberg; data range 12/31/25–6/30/26

Going forward, if domestic economic growth remains sturdy, we think these areas of the market can benefit. Small caps, for example, tend to do well when manufacturing and job growth trends are strong, a pattern RBC economists expect to persist.

However, if interest rates start to rise later this year or next year either due to nagging inflation and/or upward wage pressures, this could constrain small-cap stocks. They tend to lag large caps when the U.S. Federal Reserve becomes hawkish.

Regardless of the near-term outlook, small-cap and midcap positions remain important components of equity portfolios, from our vantage point. Their recent outperformance illustrates the benefits of diversification.

Despite the recent rally, small-cap ownership among institutional investors is still much lower than normal, according to equity futures data. This provides room for such investors to add to positions over time.

“Semi-charmed” performance

Within the large-cap S&P 500, different stocks sat atop the leaderboard in the first half compared to recent years.

Performance previously had been dominated by the Magnificent 7 stocks – Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, NVIDIA and Tesla – some of which are AI hyperscalers.

While the top stocks in the first half of 2026 were still tied to the AI theme, the performance leadership mostly flipped from hyperscalers to so-called “picks and shovels” – semiconductors (including memory) and related tech stocks. Nine of the 12 biggest contributors to S&P 500 gains were semiconductor and memory stocks.

All but three of the top contributors to S&P 500 gains were semiconductor stocks

Percentage contribution to the S&P 500’s 10.2 percent total return in the first half of 2026

* Stocks listed from largest to smallest contribution.

Source – RBC Wealth Management, FactSet; total return data (includes dividends); data range 12/31/25–6/30/26

This is due to hundreds of billions of dollars being spent on building AI data centres, which are being equipped with advanced chips and other hardware. At the same time, there is limited supply of chips and memory worldwide, so prices of these and related component parts surged – and so did revenues, earnings and forward consensus estimates.

As a result, the widely followed SOX Index – the Philadelphia Semiconductor Index – rallied just over 100 percent in the first half, with leading memory firm Micron Technology surging an eye-watering 304 percent, chipmaker Advanced Micro Devices advancing 171 percent and U.S. government-tied Intel jumping 278 percent. These three stocks alone represented a combined 34 percent of S&P 500 gains in the first half.

While we think it’s too early to declare the semiconductor run over due to ongoing AI data centre demand amid a global chip shortage and high selling prices, volatility and pullbacks in these stocks should be expected in the months ahead, especially after such a lightning-fast run.

To manage risk, we think investors should be vigilant about single-stock and industry exposures in portfolios by bringing them back to reasonably sized positions if they’ve drifted well out of bounds.

Broadly speaking …

Despite the fact that semiconductor stocks absolutely dominated the S&P 500, performance wasn’t as narrow as it might seem:

• Nine of 11 sectors rose during the period, and a diverse group of five outperformed the S&P 500
• Industrials led the market
• Energy performed nearly on par with Technology due to a surge in profit growth and consensus estimates tied to the jump in oil prices because of the Middle East conflict
• 16 of 25 major industry groups (a level below sectors) rose
• 62 percent of S&P 500 stocks rose
• The average and median S&P 500 stock gains were 13.2 percent and 7.4 percent, respectively, including dividends

Five diverse sectors outperformed the S&P 500 in the first half of 2026

S&P 500 and sector total returns (including dividends)

• First-half 2026 total returns

Source – RBC Wealth Management, FactSet; data range 12/31/25–6/30/26

Utilities: +7.69%, +65.7%. Health Care: 3.45%, 39.0%. Communication Services: +0.80%, +192.8%. Consumer Discretionary: -0.77%, +79.4%. Financials: -1.18%, +94.0%

Equal opportunity

The outperformance of the S&P 500 Equal Weight (every stock impacts the movement of the index the same) compared to the capitalisation-weighted S&P 500 (the largest stocks impact the movement of the index more) was one of the main first-half surprises. The former rallied 12.1 percent, while the latter rose 10.2 percent.

The reason this occurred is because the 10 largest stocks in the S&P 500 by market cap underperformed significantly as a group. This list includes NVIDIA, Apple, Alphabet, Microsoft, Amazon.com, Broadcom, Meta Platforms, Tesla, Berkshire Hathaway and JPMorgan Chase.

• The 10 largest stocks rose only 1.14 percent, on average, including dividends
• Microsoft was the worst performer, dropping 22.5 percent
• Meta Platforms was next, declining 14.5 percent
• Tesla was third worst, pulling back 6.5 percent
• The best-performing stocks among the 10 largest were Alphabet A shares (+14.3 percent), then NVIDIA (+7.4 percent) and Apple (+6.6 percent)

In recent years, S&P 500 Equal Weight leadership has been fleeting. Its ability to sustain outperformance will likely be determined by whether the 10 largest stocks can bounce back and therefore push the S&P 500 in the lead again.

We think at least a couple of the hyperscalers have the potential to perform better in the near term given their valuations look reasonable and revenue and earnings growth prospects for the rest of this year and next still seem attractive.

Invested, but vigilant

Various market breadth indicators – data that measure the proportion of stocks advancing versus those declining – also confirm that first-half performance wasn’t a one-hit semiconductor wonder as they reached new highs recently.

This normally doesn’t happen when the market has already peaked for the cycle. This development leads us to believe the U.S. bull market, which began in Oct. 2022, has further to go – albeit with some bumps along the way.

While we wouldn’t be surprised if noise surrounding the U.S. midterm elections in November and/or jitters about Fed policy create some waves for the market during the second half of 2026, we suggest maintaining a Market Weight position in U.S. equities.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

3^rd July 2026