News

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 08/09/2026.

Are U.S. interest rates set to rise?

What will be the deciding factor for the Federal Reserve – the jobs market or consumer price inflation?

Key highlights

• The hawks take wing: Major central banks will announce their interest rate decisions over the next couple of weeks. The Federal Reserve and European Central Bank are expected to raise rates, while the Bank of England is expected to hold.
• U.S. hike: The implied odds of a U.S. rate hike moved from possible to probable as consumer price inflation, rather than an overheating jobs market, is pressing the Federal Reserve into action.
• Europe’s gas problem returns: European bond yields rose last week as gas futures climbed on fears of supply shortages due to continued tension in the Middle East.

The hawks take wing

As summer draws to a close, the heat remains for the world’s major central banks. This month, all of them set rates and for once, the outlook points in different directions.

The U.S. attempted to set the tone a couple of weeks ago, when Federal Reserve (the Fed) Chair Kevin Warsh spoke at the Jackson Hole Economic Policy Symposium. His message was uncompromising: the inflation target isn’t up for negotiation and rates may need to rise.

The market reaction was striking, with the dollar rallying and gold and bonds easing. Having talked tough on inflation before without following through, with his own credibility already under scrutiny, any hint of softness should have been unthinkable. The implied odds of a U.S. rate hike moved from possible to probable.

It’s consumer price inflation rather than an overheating jobs market that’s pressing the Fed into action. This message was underscored by a full week of U.S. labour market data, which suggested lower staff turnover as staff feel less confident about being able to move to higher-paying jobs. Meanwhile, surveys suggested staff demand remains healthy.

That culminated in a stronger-than-expected jobs report showing 167,000 new jobs created in August, and a small upgrade to last month’s surprisingly weak report. It’s likely enough to spur the Fed into action even though wage growth remained modest, and the unemployment rate was unchanged, with labour force participation increasing.

Source: LSEG Datastream

A different kind of U.S. policy shift occurred in relation to the Iran war. Having announced a shift from military to economic pressure, the U.S. has been drawn back into hot conflict, putting further upward pressure on consumer prices.

Europe’s gas problem returns

European bond yields pushed higher over the week as gas futures climbed on fears of supply shortages. Inventories have been low for the season, as buyers held off in the hope that peace in the Middle East would bring prices down. With the regional conflict dragging on, those hopes have been dashed.

It’s been easier for crude tankers to navigate the Strait of Hormuz, but shipping of liquefied natural gas (LNG) remains severely impaired given the danger of a potential strike on an LNG carrier (a specialised ship designed to transport liquefied natural gas).

Benchmark Dutch gas futures are now more than double their pre-war levels. For Europe, energy costs continue to drive the inflation story and help explain why the European Central Bank (ECB) is expected to raise rates next week.

The U.S. decision, which will be made in a couple of weeks, is tough to predict, but the central bank is expected to raise its federal funds rate. Meanwhile, the UK’s Bank of England (BoE) is likely to remain on hold. That’s despite last week’s British Retail Consortium shop price index showing the second-round effects of earlier energy price increases continuing.

However, retail activity remains subdued and house prices have softened. Even the business surveys show momentum is fading and with UK interest rates being amongst the highest of developed markets, the BoE perceives them as restrictive.

Source: Bloomberg

Leaning into gold

Our European Investment Committee met last week and made one change: we’ve raised our gold weighting, funded by trimming absolute return. This reverses a move from a few months ago and reflects the shift in gold’s own fortunes.

Gold had been weighed down by negative momentum and worries over central banks drawing down reserves during the U.S.-Iran conflict. That has given way to renewed interest in the debasement trade, the idea that persistent fiscal pressures erode the value of paper money over time. Warsh’s hawkish speech knocked gold temporarily and fresh hostilities with Iran added a further headwind by slowing reserve accumulation.

Debasement can come through Fed inaction; but the greater concerns are around the Fed’s independence being undermined. In the absence of something transformative happening to the national debt, debasement will remain the path of least resistance and we’re happy to let the gold weighting float higher.

Correspondingly, we remain underweight in bonds. Long-term yields have been rising due to uncertainty about the future path of interest rates and inflation. A credible Fed, one that convincingly anchors inflation, would be helpful in restraining yields in time – that probably starts with a September hike.

On equities, valuation remains the perennial worry. U.S. cyclically adjusted valuations sit close to prior peaks, though they’ve been higher in other markets before. Look beneath the surface and the picture is more balanced: just over half of S&P 500 companies trade on lower price-to-earnings ratios than their five-year average.

The aggregate multiple has crept up largely because a few high-priced names, Tesla among them, now carry more weight, but some of the biggest and best performing stocks have become significantly cheaper because their prices haven’t risen with their earnings. This shows that investors are questioning whether this extraordinary run of earnings can be sustained.

The past two quarters have beaten even year-ahead forecasts, something usually seen only coming out of a shock. This sets a demanding bar for next year’s comparisons but also suggests that analysts have been expecting a cyclical slowdown during what’s so far been a period of secular growth.

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

09/09/2026

Please see the below article from Brooks Macdonald detailing their discussions on global markets. Received this morning 08/09/2026.

What has happened?

With US markets closed for Labor Day, trading was relatively quiet, leaving investors focused on oil prices and developments in Germany. Brent crude rose +0.75%, helping push the German 10-year Bund yield up +4.8bps to 3.39%, its highest level since 2011. Despite higher energy prices and rising rate expectations, European equities proved resilient. The STOXX 600 was little changed, with gains in France’s CAC 40 (+0.33%) offsetting declines in the FTSE 100 (-0.08%) and Germany’s DAX (-0.15%). Economic data was mixed, with Eurozone Q2 GDP revised up to 0.6% from 0.4%, while German industrial production fell -1.1% m-o-m, missing expectations.

Energy Markets Revive Energy Concerns

Geopolitical tensions in the Middle East continued to support energy prices. Following recent tanker attacks and reports of an attack on Saudi oil infrastructure, Brent crude rose to a six-week high of $97/bbl, while European natural gas futures gained +1.93% to €73.34/MWh. The move has rekindled inflation concerns across Europe. The one-year euro inflation swap rose 10.6bps to 3.37%, its highest level since May, while bond yields moved higher as investors reassessed how long central banks may need to keep policy restrictive.

Germany faces a difficult political balancing act

German politics also remained in focus after the AfD won 43.8% of the vote in Saxony-Anhalt’s state election, finishing just short of an outright majority. Chancellor Merz reaffirmed his commitment to the government’s reform agenda, ruling out any change in direction. Attention now turns to coalition maths. Neither the AfD nor the centrist parties can secure a majority alone, leaving the populist BSW in a potentially pivotal position. The most likely outcomes are either an AfD-backed minority government or a period of political stalemate that could ultimately lead to fresh elections.

What does Brooks Macdonald think?

With US markets reopening today, investors will have a fuller opportunity to react to the recent rise in energy prices and bond yields. So far, equity markets have remained relatively resilient, suggesting investors are still comfortable with the broader growth backdrop despite renewed inflation concerns. One area maybe worth watching is commodities. Copper reached a fresh record high on the London Metal Exchange yesterday, supported by supply concerns and the prospect of potential US tariffs. Alongside higher oil prices, this is a reminder that inflation risks have not disappeared entirely.

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

Alex Clare

08/09/2026

Please see the below article from Tatton Investment Management discussing resilient markets, rising bond yields and why bond weakness is not solely inflation-driven, received this morning – 07/09/2026.

Pretty good, considering

We ended last week with global stocks a little higher and bond prices a little lower, as government bond yields keep grinding up. Higher yields usually make investors nervous, but equity markets have stayed remarkably calm even with oil risk and rate rises thrown into the mix.

That calm persists despite hawkish central banks. Fed Chair Kevin Warsh, the ECB and the Bank of Japan all struck a hawkish tone at last week’s Jackson Hole conference, and markets now expect all three to hike at their next meetings. The BoE’s Andrew Bailey was the dovish exception, but markets still expect a UK hike before year-end. Their hawkishness is about credibility. They have managed inflation expectations by talking tough during the Strait of Hormuz crisis; they may now need to back talk with action, even if it hurts growth.

Stock markets seem relaxed regardless. Maybe that’s because investors think hikes are ‘one and done’, maybe it’s because AI spending looks unhindered by interest costs, or maybe they just think 5% bond yields will tempt buyers – as they have before.

Governments are less relaxed. The US Treasury’s debt buyback plan betrayed real unease about long yields, while in the UK, Andy Burnham’s spending comments have rattled gilts and reportedly cost £14bn of fiscal headroom. It’s a reminder of how the structurally imbalanced gilt market makes the UK more vulnerable to debt spirals than most.

Bond fears were allayed by corporate earnings growth last month, but the Q2 reporting season is now over. Meanwhile, US-Iran strikes have resumed, Brent Crude is edging back towards $100, and Russia’s war on Ukraine looks increasingly desperate. Higher energy costs are feeding into food prices too. Still, corporate profits remain unequivocally strong. For now, we think investors are taking the good with the bad. It’s a rocky path up, but markets aren’t out of breath yet.

August asset returns review

Given the backdrop of Middle East escalation and rising government bond yields, August was decent for investors. Global stocks climbed 1.9% in sterling terms, while bonds edged up 0.1%. July’s market anxieties about peak AI earnings growth faded, helped by strong Q2 earnings reports. US tech stocks led the way with a 3.2% gain, while EM equities climbed 2.6%, thanks to the presence of large chipmakers in the index. Japan’s market also gained 2.6%, buoyed by AI positivity and ongoing structural improvements. That’s impressive, considering the yen slid again through August, following July’s US-Japan intervention.

China underperformed yet again (-0.7%) and the UK (+0.2%) and Europe (+0.9%) were in the middle. British and European markets were helped by their tech stock underrepresentation in July, but it was a drag last month – despite solid corporate earnings growth.

US-Iran tensions pushed Brent Crude 2.1% higher and broader commodities gained 5.3%, led by gold and silver. Gold’s gain was more about the ‘yen-tervention’ liquidity injection than a safe haven move, evidenced by Bitcoin’s 24.6% rally. If the intervention was supposed to devalue the dollar, it hasn’t worked out that way.

It didn’t help bonds either, with yields rising to decade highs on a confluence of factors: AI capital demand, risk perceptions around long bonds and central bank policy. At Jackson Hole’s central banking symposium, Fed chair Warsh dialled up his hawkish rhetoric, as did the ECB. BoE Governor Bailey went against the grain with some dovish remarks, but markets moved to price in higher interest rates for all three banks. UK bonds underperformed, partly down to structural imbalances, but not helped by Andy Burnham’s spending comments. Bond index returns were still positive – as yields are now high enough to compensate for price volatility. Higher bond yields also didn’t hurt equities, which were focussed on corporate earnings.

Bonds aren’t all about inflation

Bond yields are at multi-decade highs and commentators put it down to oil shock inflation, or central banks’ response. The story makes sense: ‘risk free’ government yields are supposed to reflect long-term growth and inflation expectations, and higher oil prices are inflationary. But bonds themselves say different. It’s growth-sensitive real yields that have spiked – not inflation expectations.

Neither the growth nor inflation explanations match the data. Core inflation has behaved despite the oil shock, and growth is slowing mildly. Even the rate hike explanation is complicated. While higher rates raise short-term yields, they should theoretically decrease longer-term yields by compressing growth and inflation.

We suspect it’s more about high overall capital demand and bond risk perceptions. Vast AI borrowing eats up bond demand, exacerbated by historically high government debts. It’s not so much that governments are fiscally irresponsible, but that higher debt servicing costs could force a ‘doom loop’ of borrowing to cover borrowing.

Historically high long yields aren’t tempting buyers yet – perhaps because investors are scarred by recent bond price volatility (volatility-adjusted returns are weak compared to equities, even if yields are attractive). Many think bonds are a bargain; they just think they might be a bigger bargain tomorrow.

Higher yields should eventually tempt investors, but the timing depends on central banks. They are currently hawkish, which is a slightly odd response to what should be a short-term supply shock – but is probably more about re-establishing credibility after the post-pandemic ‘transitory’ debacle. If the oil crisis continues and central bankers are serious about 2% inflation, the only logical conclusion is to deliberately weaken growth. So far, they’ve managed inflation expectations with words, which now need to be backed by action.

Bond struggles are less about inflation itself and more about the response to it – from policymakers and the economy.

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

Marcus Blenkinsop

7^th September 2026

Please see below the article from Brewin Dolphin detailing their discussions on some of the factors driving market movement currently. Received yesterday 02/09/2026.

Last week saw Nvidia reporting earnings, which effectively lowers the curtain on the second-quarter earnings season. That means fewer obvious catalysts for uplifts until October, when third-quarter numbers begin to arrive. So, while the flow of corporate news ebbs, the controversies that remain are over what appear to be objectively high valuations and unproven business models.

For some time, market milestones have invited comparisons with valuations of the past. Over the summer, the Financial Times observed that U.S. equity valuations now sit higher than in September 1929, surpassed only by the peak of the dot-com bubble. It’s a comparison that demands respect, and we take the underlying caution seriously. But context matters.

The metric being cited is the analytically useful, cyclically adjusted price/earnings (CAPE) ratio, which measures the real price over the 10-year average adjusted earnings (with both price and earnings adjusted for inflation). While U.S. valuations have only reached today’s levels once before, during the tech bubble, there’s still a further 26% upside to the peak they eventually reached. Look beyond the U.S., though, and valuations are far less stretched. Global equity valuations are dragged down by their weighting towards other regions.

Anchoring to the tech bubble valuation peak is also unhelpful because the peak for equity valuations was neither in the U.S. nor in 1999, it was in 1989 Japan, when valuations reached multiples of the highest levels.

The deeper point is that valuations are just numbers that need to be reconciled against the pace of profits growth, not just their level. In early 2000, the market’s largest company, Microsoft, briefly touched earnings growth near 80%. Today’s largest, Nvidia, has now enjoyed multiple years growing much faster than that. Its valuation seems high looking backwards, as CAPE does, but less than 20 times 2027 earnings doesn’t seem demanding.

Its results, announced last Wednesday night, were strong, with quarterly revenue close to doubling year-on-year and a first-ever full-year forward guidance of 70% growth, which is only that modest due to supply constraints.

Is the AI trade resting on shaky foundations?

Source: OpenRouter

The more interesting debate is subtler. The performance gap between the frontier AI labs – OpenAI, Anthropic – and cheaper open-weight models has narrowed sharply, from perhaps 12–18 months to as little as three to six. That threatens the labs’ pricing power and they’ve made vast spending commitments to the hyperscalers (large cloud providers) who host them. Microsoft alone carries roughly $281 billion of contracted backlog tied to OpenAI, part of a group total near $700 billion.

So, it does make sense to wonder: what would the impact be if OpenAI and Anthropic found they couldn’t charge premium prices for their premium product? How does this affect the hyperscalers? Our read is measured.

Microsoft’s Azure platform is deliberately model agnostic. With over 11,000 models available, its economics are driven by total utilisation rather than any single customer. If OpenAI stumbled, that capacity would be redistributed to the enterprise demand queuing behind it, after a digestion period. Reduced demand from the AI labs, or reduced demand because of gains in model efficiency, would enable hyperscalers to slow their capital expenditure (capex).

So, does the real risk lie with the recipients of that capex? Back to the likes of Nvidia, which may also be at risk from greater efficiency in custom silicon as well? It’s a risk, but historical examples of this kind of technology show that efficiency gains tend to unleash more demand than they destroy.

Jevons’ paradox noted that as steam engines became more efficient, rather than reducing coal demand, they increased it because steam became a much more accessible technology. So far, that pattern seems to be holding for AI too. For Nvidia, cheaper open-weight models running on its highly flexible platform are a tailwind, not a threat.

Restoring credibility

It’s an open secret that public officials don’t always end up keeping their promises, but it feels like recent years have seen an unusual amount of policy flexibility. The UK’s debate over what increased taxes might mean for working people contributed to the change of its government. The U.S. plan to end military interventions has seen it mired in war in the Middle East.

Central bankers are assumed to be immune from the political pressures that lead to policy flexibility, but they can’t escape the financial pressures. So, inflation remaining persistently above target and governments delivering persistent budget deficits have created concerns that monetary policy is being directed at eroding debt burdens rather than managing inflation, a state known as fiscal dominance.

The relatively new Federal Reserve (Fed) Chair, Kevin Warsh, had the job of rebutting such concerns at last week’s Jackson Hole Economic Policy Symposium. He did so forcefully, acknowledging that inflation hasn’t meaningfully slowed and that the Fed has work to do. He reiterated the inflation target, said that short-term interest rates are the primary policy tool and acknowledged that the economy had strengthened. Without explicitly offering guidance, he gave the distinct impression that a rate hike was likely in mid-September.

That prospect saw a strong U.S. dollar and weaker bonds as Warsh affirmed the Fed’s commitment to controlling inflation with higher interest rates. That weighed on gold as it indicated the Fed won’t facilitate further inflating away national debt.

However, a lot could happen this week to tip the scales for or against a rate hike. A host of jobs data will come in on Friday – including the non-farm payrolls report, which was surprisingly downbeat last month.

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

Alex Clare

03/09/2026

Please see below, todays daily update article from Brooks Macdonald, received this morning – 02/09/2026:

What has happened?

September has begun with a clear risk-off tone as escalating tensions between the US and Iran, rising energy prices and a sharp global bond sell-off weighed on investor sentiment. US air strikes on Iranian targets around the Strait of Hormuz and subsequent Iranian retaliation pushed Brent crude above $95 per barrel, reigniting concerns over inflation and global supply disruptions. At the same time, government bond yields reached multi-year highs across major markets, with UK gilts, US Treasuries and Japanese government bonds all under pressure as investors priced a greater likelihood of further central bank tightening. Equity markets declined across the US, Europe and Asia, with technology shares among the weaker performers, while attention now turns to US labour market data and Broadcom’s earnings later this week.

Markets Confront a Stagflation Shock

The standout theme is the re-emergence of stagflation concerns. Higher oil prices are arriving at a time when inflation has already proven more persistent than expected, prompting increasingly hawkish rhetoric from central banks. Markets are now pricing a much higher probability of a September Federal Reserve rate hike, while the ECB and Bank of England also face renewed pressure from energy-driven inflation risks. The combination of rising commodity prices and higher yields is challenging both equity and bond markets simultaneously, creating a difficult backdrop for traditional diversification. Unlike earlier geopolitical shocks, investors are increasingly focused on whether sustained energy price strength could delay the global easing cycle and prolong restrictive monetary policy.

Both Sides of the Yield Equation Turn Against Markets

A nominal bond yield comprises a real yield, which represents the return after expected inflation, and a breakeven inflation rate, which reflects both inflation expectations and the compensation investors demand for inflation uncertainty. Until recently, rising government bond yields had largely been driven by higher real yields, reflecting tighter policy expectations and an increase in term premia. The latest move is more concerning because both real yields and breakeven inflation rates have risen. Central banks continue to signal that policy may need to remain restrictive, while higher oil prices are adding to inflationary pressures and supply-related risk premia. The rise in breakevens suggests investors are not only pricing a higher near-term inflation path but are also demanding greater compensation for inflation risk. More importantly, it may indicate growing concerns about how quickly central banks can return inflation to target if supply shocks persist and inflation expectations become less firmly anchored. This combination increases the discount rate applied to future corporate cash flows while also threatening profit margins, consumer purchasing power and earnings growth. The result is a less favourable backdrop for equities, particularly long-duration growth stocks, and a reduction in the diversification benefits of government bonds, as inflation shocks can cause both asset classes to fall simultaneously.

What does Brooks Macdonald think?

While the geopolitical backdrop has clearly deteriorated, the market reaction reflects more than just Middle East tensions. The recent rise in yields also highlights the resilience of global growth and the reassessment of how much policy tightening may still be required to contain inflation. We believe investors should distinguish between short-term volatility and longer-term fundamentals. Strong economic activity, robust corporate earnings and structural growth themes such as AI remain important supports for risk assets, but higher oil prices and bond yields are likely to keep market volatility elevated in the near term. For now, markets appear to be transitioning from a growth-focused narrative to one increasingly dominated by inflation and policy expectations, making diversification particularly important.

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

02/09/2026

Please see the below article from Tatton Investment Management discussing the latest market outlook, including resilient growth, strong earnings, geopolitical and inflation risks, bond yields and AI-related investment, received this morning – 01/09/2026

Tantrums and other 21st century resolution mechanisms

Last week saw little movement in the main asset classes, with equities a touch higher and the dollar recouping much of last week’s losses. Bond yields rose, mostly in shorter maturities. We open this week with higher energy prices (again) following a resumption of “kinetic” war in the Gulf and another push up in yields, enough to impair equity market confidence slightly.

Kevin Warsh’s Jackson Hole address emphasised returning inflation to target with “speed”, while unwinding some of the “debasement” talk that followed Bessent’s bond market intervention last week. Investors welcomed his apparent preference for the inflation mandate over the employment mandate. Short yields ticked up on the prospect of a September hike; large caps rose while small caps, more exposed to interest costs, fell — not what President Trump wanted after “firing” Jerome Powell. Warsh said nothing on the Fed’s bond holdings; a task force’s recommendations will “come later” and won’t affect the September or November FOMC meetings.

Growth remains resilient while inflation edges back from levels that might force further hikes. Headline inflation is still elevated by the Iran conflict’s fuel price jump — in the UK, regulated energy prices rise 4% from October, softened only by a temporary VAT cut. But secondary effects are milder than feared: developed-world core inflation is now around 2.4%, a “miss” versus the 2% target no worse than the 1997-2019 average.

Given the past decade’s shocks, this resilience is remarkable. One reason: household and corporate debt has fallen substantially relative to economic size, even as government debt rose to fill the demand gap. That balance is now shifting — the private sector has stopped saving and is spending heavily on AI- and defence-related investment, a drive likely to be long-lived if bumpy. Growth keeps surprising to the upside: Germany’s Q2 GDP was revised up to 1% year-on-year, with confidence measures beating forecasts too.

So what could go wrong? Governments could lose faith in the system, try to protect weaker areas, or simply make mistakes. Bessent has promised a fiscal plan to cut the deficit and intervened in bond markets, warning of a US “Doom Loop”. Monday’s “Project Outcast” tariffs on Iran’s trading partners are not that plan — they will be smaller and, by design, less sustainable than 2025’s “Liberation Day” tariffs. The real risk is that Republicans facing the mid-terms resist the squeeze needed to make any plan work.

Elsewhere, Trump’s trade belligerence towards Canada — encouraged by Commerce Secretary Lutnick — looks resolvable despite unsettling swing-state voters on both sides of the border. Putin-aligned voices have floated “tactical nuclear” rhetoric over Ukraine, but such threats have surfaced before without escalation; brinkmanship raises both the perceived risk and the incentive to de-escalate. Geopolitics rarely moves markets as much as headlines suggest, and stated intentions rarely match outcomes.

Back to School Outlook 2026 – overview

Economic conditions remain supportive heading into autumn. Despite geopolitical noise, global growth and corporate profits have been strong in 2026, powering investment returns, and we expect that strength to continue into 2027, driven mainly by private sector investment.

Clients remain worried — about a tech bubble, an inflation surge, and UK wealth taxes. These concerns are reasonable but have persisted for most of the year without derailing markets, which have stayed resilient on the back of strong corporate profit growth.

Middle East tensions are a continuing risk to the medium-term outlook, with markets oscillating between calm and concern over oil and gas supplies through the Strait of Hormuz. Tighter supply has been offset by weaker global oil demand, particularly from China, and both sides retain strong incentives for a lasting ceasefire. Investors have grown somewhat numb to the back-and-forth, though continued disruption into winter would hurt more, especially in Europe.

Business sentiment is strong almost everywhere, with manufacturing rebounding as AI infrastructure spending offsets higher energy costs. Government and defence spending, particularly in Europe, add further support. Households — especially lower earners — remain squeezed and confidence is subdued, though employment has held up and feared AI-related job losses haven’t materialised.

Core inflation remains well contained, easing pressure on central banks to raise rates and supporting markets. AI infrastructure spending, fuelled by intense hyperscaler capital raising, should keep powering growth and earnings. But strong hyperscaler bond issuance is crowding out other borrowers, pushing up yields for lower-rated credit and government debt — a dynamic that, usefully, keeps the broader economy from overheating even as capital demand stays high.

Investment may be concentrated in a handful of large tech firms, but corporate profits are much more broadly spread and look healthy, suggesting growth is well founded and likely to continue, all else being equal.

Regional outlook summary

US
US corporate earnings remain strong, driven by AI infrastructure spending, though gains are skewed — non-tech firms face rising borrowing costs from hyperscaler demand. Consumers have stayed resilient to oil prices. Tariffs have eased, though a combative stance towards Canada may resurface ahead of midterms. Fed policy remains the bigger driver; a cut looks more likely than a hike, though Warsh’s plan to reduce central bank liquidity is a bigger risk.

UK
UK growth has surprised positively, led by strong private investment despite gloomy sentiment surveys. Valuations remain cheap versus the US, attracting private equity interest. Persistently high gilt yields — a structural issue — limit fiscal room, constraining PM Burnham’s spending plans. Contained core inflation helps, but gilts stay vulnerable to volatile international flows.

Europe
Growth expectations have eased slightly as the defence-spending boost matures, though earnings, especially banks’, have surprised positively. Low gas storage leaves Europe exposed if the Iran conflict disrupts supply into winter. Domestic politics, notably France’s 2027 election, is a bigger threat than tension with Washington.

Japan
The investment case remains strong on low labour costs and improved corporate governance, but persistent yen weakness — despite a large current account surplus — is a growing concern. Coordinated intervention has had limited lasting effect. A stronger yen could trigger self-reinforcing capital repatriation by Japanese investors.

China
China remains the outlier, with deflationary pressure from overproduction and weak consumer demand. Fiscal policy has tightened rather than eased, hurting profits. Late-August hints of easing offer hope, though seasonal spending patterns may explain much of it. US trade tensions add risk ahead of midterms.

Emerging Markets
EM equity performance has been dominated by AI-linked chip stocks (TSMC, Samsung, SK Hynix), masking weakness in China and India. Broader EM performance hinges on easing energy prices and a genuine Chinese policy pivot.

Asset classes

Equities
Strong corporate earnings should keep supporting stock prices into next year, with margins especially strong in US tech names driving the AI buildout. Earnings growth has outpaced share prices for AI firms this year, so valuations have fallen despite healthy returns — arguing against a classic bubble, even if some gains (like Amazon’s and Alphabet’s from AI investment stakes) look somewhat circular. Fundamentals remain strong, and downside looks limited while that continues.

One risk is currency volatility: growing foreign ownership of equities means exchange-rate swings could raise perceived risk and prompt selling, though we see this as unlikely.

The bigger risk is bonds. Historically high real yields make equities look less attractive by comparison — valuations aren’t cheap once adjusted for that. Capital hasn’t yet rotated out of stocks, as holders remain entrenched, but rising yields could change that. The equity outlook ultimately hinges on the bond outlook.

Bonds
Shorter-dated yields broadly match the medium-term growth and inflation outlook, but longer-dated yields have risen further than expected. Investors are effectively paid more than the economy’s likely return just for holding government debt, even as growth stays decent and inflation falls.

The problem is capital demand: indebted governments compete with AI firms racing to raise debt, and supply keeps outrunning demand. Yields likely won’t fall until investment returns drop below borrowing costs.

The UK is a concern, but France and the US worry us more — both have high debt and rising deficits with little will to fix them, risking a vicious fiscal-premium cycle. Bond vigilantes could emerge anywhere given ample supply; a US “Liz Truss moment” would hit markets harder than the UK’s in 2022.

That isn’t our base case — selling bonds amid falling inflation looks unattractive. The outlook stays mixed, with pockets of attractive return for diversified portfolios.

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

Marcus Blenkinsop

1^st September 2026

Please see below an article from WH Ireland, received this week, discussing the new Burnham government’s policy agenda and its potential impact on UK economic growth, housing, defence, taxation and public sector reform.

The new government led by Mr Burnham has raised Labour’s poll ratings a little and has revived media interest in what changes it might put through. Both the voters and the markets are keen to see if the new team will make a difference to the growth rate and will find ways to boost living standards. There was general disappointment with the tax rises, the increase in unemployment and the often sluggish growth under the Starmer administration, which led to higher long-term interest rates and a fall in housebuilding.

Mr Burnham has been flexible in his views over his political career. He has been a loyal Blairite as a Minister, a supporter of the party when Jememy Corbyn won the leadership, then developing his own approach as Mayor of Greater Manchester.

He has provided us with more up to date evidence of his views in speeches to win the Makerfield by election and in his subsequent talks as Prime Minister. He told his electors that he would apply a Makerfield test to everything he and the government do. This test is to bring fairness to places Whitehall has neglected.  He set out five principles of “unity, honest politics, distinctively Labour direction, all place government and devolution of power from Whitehall.”

He has said “We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last forty years”.  He proposes a new political and economic model to be defined, and a 10 Year Plan to be drafted.  “In the 1980s Britain took some wrong turns. Political power was centralised, economic power privatised, large parts of the country de-industrialised, and they still haven’t recovered”. He wishes to “carry power to every postcode in the land”. He wants “to put life’s essentials back under stronger public control”.

Burham plans to “re industrialise Britain, using public procurement to back British industry”; to build more Council houses, refusing to revise down the very stretching 1.5 m new homes target for this Parliament. He promised to “honour our commitments on defence to our international partners”, “to meet our fiscal rules” and “to end rough sleeping”. A new National care service has been mooted, with a caveat for further study and cross party involvement. Previous governments have tried to get a consensus on social care reform without success. It would be expensive with Reform and the Conservatives ruling out a dedicated tax.

He has backed a “duty of candour” in public life after criticising the failure of the Establishment to tell the truth about the Hillsborough disaster in 1989.He has promised to be “relentless” in tackling illegal migration, whilst also saying he wants more to enter by safe routes. He often sounds as if he is campaigning against Margaret Thatcher, a Prime Minister in office four decades ago.

Increased defence spending with the promise of more work for UK factories and shipyards is part of the Growth plan which he inherited. The PM has been careful not to commit to large additional spending on defence this Parliament. The Chancellor, John Healey, resigned from the last government because he judged the budget increase in defence to be insufficient to defend the country and to meet NATO commitments. Both men agree that defence buying should be used to provide more orders and jobs for businesses to be based in the UK, though there were always more permissive rules for defence spending to allow more home content.

They have highlighted the work at UK shipyards already underway to provide new ships and new submarines for the navy.

The last government agreed to increase defence spending to 2.7% of GDP by 2027/8 and to keep it there until 2030. Mr Healey wanted more rapid progress to 3% by 2030 requiring £13 bn more. The 3.5% NATO target for 2035 would be achieved by a successor government nearer the target date.

The extra spending of £15bn put into budgets relies on £10.3bn of cuts in other departments, £1bn of identified savings in the Ministry of Defence budget and a further £3.7bn of unidentified MOD cuts. There remain big issues to be agreed between PM and Chancellor before the budget.

Housing too was an important component of the inherited Growth plan.

The 1.5m target for new homes 2024-9 looks unachievable. In the first two years they have witnessed the construction of under half the number of homes needed to hit this rate. The PM’s idea of more Council homes probably means more social homes, as directly financed Council houses will be part of public spending subject to the budgets and decisions of local Councils. The aim will more likely be to get the Housing Associations to raise private finance to let them build and rent out more.

The government has stated a spend of £39 bn over ten years to 2036 without yet translating that into specified annual budgets. With subsidy on a socially rented home in London extending to £170,000 per unit, around £4bn a year will not add sufficient to achieve a target of 300,000 new homes in total each year.  There is both a financial and a building industry capacity constraint on how many more homes can be built. Private sector housebuilding for sale which is usually the dominant part of residential construction is limited by dear mortgages, high prices and low levels of confidence amongst potential homebuyers. The pressures on the UK government bond market keeps the interest rates for mortgages relatively high.

Further tax rises would be unhelpful, as it is widely observed that the increases in National Insurance and IHT under the last government reduced employment and hit small businesses and family farms. The PM has promised to observe the Manifesto by avoiding Income tax, National Insurance and VAT hikes on working people as he seeks more money to spend. It is difficult to see he has any scope to raise Income tax thresholds for which he has shown some support, and which would increase spending power for employees. There may well be other tax rises, with rumours about capital gains tax which could be unhelpful to business growth.

The government wish to spend more of its cash on buying British needs to tackle three issues to bring this about. The first is the need to obey international trade rules. The second is that the UK has missing capacity in various cases making it difficult to find suppliers who can deliver what is needed. The third is the state is often a bad customer, as we see in MOD procurement with large cost overruns and cancellations of expensive programmes, with the customer often changing their mind over what is wanted. This can lead to excessive public spending and more pressure on interest rates.

The government may be able to impose a so called ” social weighting” under World Trade rules on contract bids and has already said it will do so. This means that it can consider the benefits in tax and social outcomes of having more of the work done at home. This needs to be proportionate, and foreign companies must be free to bid with carve outs in their proposal for some additional UK based work.

All governments claim they will learn the lessons of bad procurement, visible in the Post office computer, NHS computerisation, the Ajax armoured vehicle and others. Mistakes have so far continued.

Mr Burnham wants to reverse some privatisations, seeing nationalised businesses as a source of growth he can direct. Labour inherited the policy of full rail nationalisation from the outgoing Conservative government. Labour in office from 1997 nationalised the track, signals and stations of the railways, forming state owned Network Rail. They are now adding the train operating companies as their licences expire.  They have a target of increasing rail freight substantially, but it is unlikely there will be much extra growth from a nationalised railway.

Labour decided to intervene to take operating responsibility for British Steel (Scunthorpe) over a year ago. They have just completed its nationalisation. The business owns two very old blast furnaces, is losing £1.3 m a day and is considering an expensive plan to build a replacement electric arc works. It would then shut down the blast furnaces and shed a substantial amount of the workforce. Meanwhile, because the Government did not reach agreement with the Chinese owners in the first place, they now face a claim for £1 bn of compensation for a heavily loss-making business with many liabilities. The Steel Plan when it emerges is likely to mean fewer employees and little or no net additional steelmaking capacity.

The nationalised Post office runs the counters businesses we see on some High Streets. It has been losing around £500m a year, now disguised by payment of a large grant. The Post office does not yet have a convincing growth plan.

The government would like to privatise water, but the costs of buying out the current owners who in some cases include UK pension funds and small savers would be very high. Thames Water which has got into serious financial difficulty could be put into administration if they cannot sort out their refinancing. This might provide an opportunity for state ownership but given the size of Thames and the need for major investment in new pipes, new reservoirs and treatment works it would be a big increase to   the public spending figures. There are inherited plans to build more reservoirs, but these are all proceeding very slowly to letting contracts to build.

Growth will largely be determined by the success of the private sector economy. As yet, there are no new policies that could get interest rates or taxes down to provide more stimulus. It is true the Burnham opinion poll bounce may help with confidence. The PM needs to avoid plunging the country into weeks of fears of new and higher taxes in the run up the budget which hit confidence and activity under the previous Chancellor.

The government will struggle to find a way to hit their housing targets which was scored favourably for growth when first devised. Increases in defence over and above the £15bn accepted by the last PM will be modest, with the main increases put off into the next Parliament. There is limited scope to get more defence work done in the UK given industrial weakness and the substantial use of UK main contractors already for much of the programme.

The government is likely to give the much delayed go ahead to the Jackdaw and maybe Rosebank fields in the North Sea but will not unleash more activity by licencing more drilling for prospects. This will give a small boost to UK GDP. General de industrialisation which has been proceeding rapidly in recent years thanks to very high energy prices is likely to continue in the absence of big moves to cut energy taxes and renewable subsidies. Government spending will increase a little. More effort will be made to direct public investment into infrastructure, energy and water but it will prove difficult as these large projects are very delayed by UK planning and regulation.

It is doubtful that Mr Burnham will pull off the large revolution he envisages over his first year in office. As he wants growth to be public sector led and to be spread into every postcode he will find there are many delays and obstacles in the way of getting things done which have frustrated previous governments. Tax cuts on enterprise, investment and savings do not seem to be part of his thinking, and substantially lower energy taxes and prices seem ruled out. These might be more helpful in boosting growth.

While  the’ jury is out’, there are some positives in that UK services will continue to grow, and services trade remains a UK strength. Inflation should stay under reasonable control as money and credit are not excessive and wage increases in the private sector relatively restrained. Where there is less time to reflect is in an attractively valued UK stock market, quite cheap by international standards, which is, as a result, attracting a significant number of bids for important companies. Others are moving their listings to the US seeking a higher rating. The engine for Mr Burnham’s growth plans is under duress.

 

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

28/08/2026

 

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 25/08/2026.

Are governments engineering bond demand?

Discover why debt keeps climbing, but the political will to cut has gone.

Key highlights

• Washington and the yield curve: The U.S. Treasury doubling its buybacks of outstanding debt adds evidence of financial repression.
• UK inflation rises: UK inflation data for July came in at an annual rate of 2.9% on Wednesday. The first rise in four months suggests inflationary pressures remain.
• Bank of England to hold interest rates: Decidedly mixed economic data out of the UK has left markets expecting the Bank of England to hold interest rates at its September meeting.

Is Washington quietly taking control of the yield curve?

Source: LSEG

A recurring concern for investors during extraordinary periods of expansion has been the sustainability of debt. How can the good times continue when the debt-to-GDP (gross domestic product) ratio keeps increasing and with it the share of tax revenue being spent on interest payments alone?

The maths is straightforward, if uncomfortable. The most obvious way a government can improve its debt position is by cutting spending or raising taxes, but these are both politically thankless, whether you lean left or right. And while there was a brief period following the Great Financial Crisis in which fiscal repair was not completely rejected by voters, those halcyon days have passed.

For example, my colleague Atul Bhatia from our U.S. fixed income team describes U.S. policymakers as “one-way Keynesians” – they ramp up spending during economic shocks (such as a global pandemic), but neglect to run a corresponding budgetary surplus during better times.

If spending cuts and tax rises are politically untouchable, the only remaining route to lowering debt is by widening the gap between growth and borrowing costs. An optimistic scenario is that an AI miracle results in high growth and lowers inflation and therefore interest rates, allowing countries to outgrow their debt. While this is possible, it’s but one possibility. A particularly vigorous AI revolution could, for example, result in lower employment and higher benefits payments, which would have quite a different impact on public finances.

What does seem likely though, partly because it’s already happening, is that governments can achieve the same result with nominal growth (which includes inflation) rather than real growth. It’s quite customary for nominal growth to exceed interest rates, allowing countries to either pay down debt or, more commonly, run fiscal deficits. Widening that gap would give policymakers more palatable options.

To see this in action, Japan – the most indebted major economy in the world – has trimmed its debt-to-GDP ratio since 2020 by precisely this route: inflation has risen faster than interest rates even as the country continued to run a budget deficit.

Source: LSEG

With that in mind, U.S. Secretary to the Treasury, Scott Bessent, confirmed it would at least double its buybacks of outstanding 10-year to 30-year debt, lifting operations from $2 billion to $4 billion. That saw a rally in the bond market. It was short-lived, but the buybacks announced won’t start until September, so this doesn’t mean it’s been futile.

When long-dated Treasury bond buybacks first began under former Secretary to the Treasury, Janet Yellen in 2024, ostensibly to manage liquidity, they were considered controversial by some. But last week’s events seem to connect the policy to the management of bond yields (interest rates).

It comes shortly after the U.S. sold euros to buy yen to spare Japan from selling its U.S. Treasury holdings. Demand for Treasuries is also being supported in other ways, such as making it easier for banks to hold them and potentially creating demand as collateral for stablecoins.

Now it seems possible to join the dots and see steps being taken towards a regime in which above-target inflation is tolerated and low interest rates are targeted to ease the servicing, or even reduction, of debt. Over the long term, this creates opportunities in the form of a steeper yield curve. This would weigh on the dollar relative to less repressive currencies and would highlight the attractions of real assets with limited supply, such as gold.

The implication for portfolios is one we’ve been building towards for some time. If governments lean on inflation to manage their debts, longer-dated bonds look vulnerable – there’s overwhelming pressure to cap yields, but little natural limit on how much debt can be issued. Assets, whose supply is genuinely constrained (gold being chief among them), become more appealing by contrast. Last week’s news doesn’t change our thinking so much as confirm it.

UK ‘stagflationary’ pressure remains

Source: LSEG

Closer to home, UK inflation data for July came in at an annual rate of 2.9%. It’s the first rise in four months and a touch above expectations on the core measure.

These figures were the first to reflect higher household utility bills due to the U.S.-Iran conflict and because of the lagged impact of the regulatory price cap. Fortunately, that landed during a month when fuel costs fell.

Beneath the surface, the signals are mixed: services inflation eased to 3.4%, but that was largely airfares and the Bank of England’s (BoE) preferred underlying measure – the Consumer Price Index – actually rose to an annualised 2.9% in July, up from 2.6% in June.

Another way of gauging underlying pressure is the median category price change, which reached its highest level since mid-2025, suggesting inflationary pressure remains.

Despite this, there’s definitely a better mood in the UK at the moment, which seems to have coincided with new Prime Minister Andy Burnham having a more optimistic tone. Consumer confidence rebounded to its highest since 2024 – notably, the strongest reading under the current government. Yet retail sales slipped slightly, flattered only by a World Cup boost to food and drink. Public finances continued to show how difficult the new chancellor’s job will be ahead of October’s budget.

Employment data released last week told a similar tale of tension: payrolls fell for a second month, and vacancies hit a five-year low, yet wage growth held firm at 3.5%. That awkward combination – slack in jobs, stickiness in pay – has left markets expecting the BoE to hold interest rates at its next meeting in September.

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

26/08/2026

Please see below the daily update article from Brooks Macdonald, suggesting that markets were cautious as rising energy costs and trade tensions continued to create uncertainty for investors, received this morning – 25/08/2026

What has happened?

Markets began the final week of August on a cautious footing. US equities moved lower as semiconductor stocks remained under pressure ahead of Nvidia’s results, with the S&P 500 and Nasdaq retreating while broader market performance was more resilient. Bond markets found support as Brent crude fell back from last week’s sharp gains after the US outlined further pressure on Iran but stopped short of announcing major new measures. Treasury yields moved lower, although European bond markets were less responsive as natural gas prices rose to their highest level since early 2023 amid concerns over low European storage levels. Trade tensions also remained in focus after the US announced higher tariffs on Canadian automotive imports.

 

Trade wars and energy risks re-emerge

The key theme remains the interaction between energy prices, inflation expectations and interest rates. While oil prices eased yesterday, European natural gas prices continued to rise, highlighting that energy supply risks have not disappeared. European gas storage levels are currently at their lowest seasonal level since the data series began in 2009, raising concerns about energy availability heading into winter. At the same time, ongoing tensions involving Iran and continued disruption to grain exports from the Black Sea region underline how geopolitical developments can quickly feed through to commodity markets and inflation expectations. These pressures are being closely watched by central banks, with markets continuing to price further policy tightening in several regions.

 

What does Brooks Macdonald think?

Recent market moves reinforce the view that investors remain highly sensitive to any developments that could influence inflation, growth expectations and bond yields. The decline in oil prices provided short-term relief for fixed income markets, but higher natural gas prices and broader commodity uncertainty suggest inflation risks have not fully faded. At the same time, the breakdown in US-Canada trade talks serves as a reminder that tariffs and trade disputes remain an important market risk, with the potential to weigh on growth while adding to price pressures. Against this backdrop, semiconductor weakness shows that highly valued growth sectors continue to face scrutiny as investors assess whether earnings can justify elevated expectations. We remain constructive on the economic backdrop, with markets to be driven by the balance between resilient growth, inflation risks and policy uncertainty in the short term.

 

 

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

25/08/2026

Please see the below article from Tatton Investment Management discussing the renewed influence of bond markets, rising long-dated government yields, fiscal discipline returning to focus in the US and UK, and the rapid growth of China’s Unitree Robotics — received this morning – 24/08/2026.

The might of the bond markets returns

We start the week in a quiet frame despite Friday’s resumption of a US-Canada trade war. Last week, the underlying narratives were largely unchanged: strong tech earnings and simmering energy fears. However, for the first time this summer, the seasonally low trading liquidity and its role in the rise in government bond yields became a real issue for wider markets.

Government bond yields finally reached levels too high for equity investors to ignore, moving higher on Monday and Tuesday despite tame inflation data – probably because reduced summer liquidity limited the market’s ability to absorb supportive news. Global 10-year yields reached a new post-pandemic high, close to a 20-year peak; the global average real yield is now essentially at 2%. Equities sold off broadly from Monday, most sharply in the US and Japan; Europe held up better.

The US Treasury was less sanguine than bond traders. Scott Bessent announced on Wednesday that the US would at least double buybacks in the 10-to-30-year range, to at least $74bn from the $38bn programme flagged two weeks earlier. Yields fell 0.12% initially, before rising back 0.06% on Thursday; equities bounced. The dollar weakened against most currencies – a move which may prove more persistent than others. Coupled with rising gold and a surging Bitcoin, it suggests the seasonal summer liquidity drought may be ending.

Trump backed this intervention although his suggestion that the next bout may involve the military was perhaps not entirely thought through.

Had this been purely about bond liquidity, the implications might be ephemeral. But on Thursday Bessent told CNBC of “an increased focus on fiscal consolidation,” tasked by President Trump alongside Budget Director Russ Vought. His original “3-3-3” pledge – 3% growth, 3 million extra barrels of oil, a 3% deficit – has landed two out of three: the deficit has failed, never below 5%, with US debt passing $40 trillion this week.

Republicans seeking election in the mid-terms are likely to welcome a big focus on deficit reduction, especially if it delivers lower mortgage rates – the 30-year is back above 6.75% – given a housing market that has been dire since 2022.

For the UK, June’s positive balance data was followed by a disappointing £1.8bn monthly deficit, despite buoyant July receipts. Fiscal discipline is back in fashion in the West, though falling US yields should pull UK yields down too. Flash PMIs stayed expansionary, and consumer confidence improved.

Next week brings Nvidia’s results and the Fed’s Jackson Hole symposium of global central bankers, where balance sheet signals will be watched.

What’s gone wrong with bond yields?

Since the start of the year, yields of longer-maturity bonds have risen sharply – and not just in the UK. This summer has seen the developed world aggregate at levels not seen in 25 years.

What is driving this move?

Many commentators point to rising government deficits, corporate borrowing to fund AI investment, and inflation concerns coupled with less Federal Reserve guidance.

For example:

On August 18th, Jonas Goltermann of Capital Economics told Reuters: “Bond yields’ recent surge suggests investors are losing patience with fiscal profligacy.”

But there is no consensus on the most decisive driver. We think the shift has less to do with increased risk than with how bond investors and issuers are behaving as buyers and sellers this year.

Bond yields split into inflation expectations, a real “risk-free” return, credit risk, and a term premium – compensation for locking into a long- rather than short-term rate.

The inflation component has moved little (outside Japan), arguably vindicating Fed Chair Warsh’s inflation-fighting stance.

Fiscal concerns, measured against risk-free swap rates, rose 0.4-0.8% between 2022 and 2025, but are barely changed this year despite deficits still rising – a worry, but no worse than other components.

Where moves have been significant is in inflation-adjusted “real” yields, especially in Japan.
We note that substantial issuance of AI infrastructure bonds by hyperscalers is affecting supply and demand. Bloomberg reports investment-grade companies have sold nearly $1.5 trillion of bonds this year, a 36% jump, with big tech borrowing alone equivalent to 25% of the Treasury’s net issuance.

That keeps equity investors positive on profit growth, so few are swapping equities for bonds, despite the most tempting yields this millennium. The bond investor cohort is therefore static at best, with Chinese investors increasingly favouring domestic bonds over foreign ones.

Japanese bond holders are now suffering what Western holders endured four years ago, with the term premium at highs there and rising in the US too, as fewer long-bond investors face rising issuance – leaving more sellers than buyers and stressing liquidity.

Scott Bessent’s aforementioned announcement that the Treasury would increase its buying of long-maturity Treasuries, was therefore as notable as it was unusual, given its main job is issuing them.

Investors currently happy holding equities may need convincing that bonds are worth having again. But some of the illiquidity may be seasonal, with buyers tending to return as autumn begins.

Unitree: The $50 Billion Robot

On Wednesday last week, a ten-year-old company from China’s Hangzhou that makes robot dogs and dancing humanoids became one of the most valuable robotics businesses on earth. Unitree Robotics listed about 10% of itself on Shanghai’s STAR Market, valuing it at about $9bn – double its original target.

Demand was remarkable: 9.78m subscribers cut the retail allocation rate to 1 in 5,500. Shares closed the first day at CNY 845, up 460%, with a market cap above $50bn – one of the most oversubscribed IPOs in STAR Market history.

Unitree was founded in 2016 by Wang Xingxing, then 26, and grew in Hangzhou, the tech hub that also produced Alibaba and DeepSeek.

It sells robot components as well as complete quadruped and humanoid robots, claiming over 60% of the global quadruped market, with humanoids undercutting Western rivals’ pricing by an order of magnitude.

DeepSeek has taken a stake to collaborate on foundation models and “embodied AI” – the field on which Tesla’s valuation, via Optimus, increasingly rests too.

Unusually for an early tech company, Unitree is profitable: on the back of revenues of CNY 1.699bn last year, it generated a net profit of CNY 278m, through gross margins of near 60%.

China’s state is deeply invested – several state-owned enterprises hold stakes, and the company enjoys tax incentives under China’s SME support scheme.

Security concerns have followed it abroad: flaws have let robots transmit data to Chinese servers, prompting the Pentagon to add Unitree to its Chinese military companies list and the FCC to block new equipment approvals.

Britain and Europe favour a lighter, context-based approach – restricting use in policing, defence and infrastructure rather than banning Unitree outright – while European demand outstrips supply. The result is a bifurcating market: a protected domestic base plus Europe and the Global South, against a shrinking US position.

Unitree has proven humanoid robots can be built cheaply and profitably, but margins may be harder to hold: it is not even the biggest producer by volume across robot categories – that is AgiBot, with over 43% of global shipments in H1 2026 (according to Counterpoint Research), with rivals like Dexmal and Chery’s AiMOGA also emerging.

What remains open is whether they can be deployed usefully at scale — and how much of the world will be permitted to buy them.

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

Marcus Blenkinsop

24^th August 2026