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Please see an investment outlook update below from Evelyn Partners, received this afternoon – 06/08/2026.

The US growth story is far from over

They say life begins at 40. For the US, it may begin at 250. As the US celebrated the 250th anniversary of its founding in July, the milestone offers an opportunity to reflect on whether the country’s strongest years may still lie ahead. Indeed, relative to many of the world’s oldest countries, the US remains surprisingly young. For instance, Japan traces its origins back more than 2,600 years, France more than 1,180 years, Spain more than 530 years, and the Netherlands nearly 450 years.

Despite its relatively short history, the US has established itself as the dominant force in the global economy and financial markets. Its large and dynamic domestic economy has provided a powerful foundation for sustained growth. Importantly, this economic success has been accompanied by a marked rise in real gross domestic product (GDP) per capita, indicating that the gains from expansion have increasingly translated into higher living standards than those achieved in many European peers. This combination of economic scale, innovation, and rising prosperity has helped underpin the economy’s long-term resilience.

More importantly for investors today, there are few signs that the US economy is running out of road. The latest July economic forecasts from the IMF show that US real GDP is expected to expand by an average of around 2.3% for 2026 and 2027, compared to roughly 1.2% for the UK, 1.0% for the Eurozone and 0.7% for Japan for the same period.¹ In other words, the US is expected to continue outpacing many of its developed-market peers, reinforcing the view that its growth story is far from over.

Getting to grips with US long-term economic success

A combination of political stability, strong property rights, and the rule of law have provided a durable foundation for investment and entrepreneurship. Indeed, the US Constitution, ratified in 1788, remains the world’s oldest written national constitution still in force.

Building on this institutional foundation, the US has benefited from a remarkable capacity for innovation. The country invests around 3.5% of GDP in research and development, above the OECD average of 2.9%, helping to drive technological progress and productivity growth. Deep capital markets adds another layer of support for growth and a business culture that embraces risk-taking and rewards success.

Geography has also played a crucial role. The US possesses abundant farmland, extensive inland waterways, access to both the Atlantic and Pacific Oceans, and vast energy resources. Today, it is the world’s largest producer of oil and natural gas. Apart from the attack on Pearl Harbor in 1941 and the terrorist attacks of 2001, its location has provided a degree of insulation from external threats, helping to support economic expansion compared with countries that experienced the devastating effects of two world wars on home soil.

Yet natural advantages alone do not explain America’s sustained success. Its large domestic market has enabled businesses to achieve scale quickly and efficiently. Furthermore, the US dollar’s status as the world’s leading reserve currency has enabled the country to run sizeable budget deficits, supported in part by continued foreign demand for US assets.

Taken together, these advantages help explain why the US has repeatedly adapted to major economic and technological shifts, from industrialisation and the rise of the internet to the development of AI. The result has been a powerful engine of growth, innovation and wealth creation, which has translated into strong long-term returns for investors.

Turning economic expansion into earnings

Economic strength matters for investors only if it ultimately translates into corporate profitability. Since the end of the Global Financial Crisis (GFC) in 2009, the US economy has generally expanded faster than other advanced economies. US GDP has grown from around 50% of the combined GDP of other advanced economies during the GFC to approximately 80% today.³ Over the same period, earnings per share (EPS) growth for US companies has beaten that of their peers in other MSCI indices by around 6 percentage points per year.

Superior economic growth does not always translate into stronger relative earnings growth in the short term. While US EPS is expected to grow by a still robust 24% in 2026, it trails the 33% growth forecast for companies in the MSCI All Country World Index ex-US. However, earnings expansion has been a key driver of US equity market outperformance relative to other developed markets over the long term. According to analyst consensus forecasts, US companies are once again expected to deliver faster EPS growth than other regions in 2027 and 2028.

Balancing US fundamentals with interest rates and market risks

Strong long-term fundamentals do not eliminate shorter-term risks. While the long-term outlook for the US economy remains compelling, investors must weigh these strengths against shorter-term risks. For instance, policy risk from the White House has increased, with President Trump’s shifting positions on Iran and trade tariffs contributing to market uncertainty. Concerns about potential political interference in the Federal Reserve’s (Fed) decision-making have also raised questions regarding the future independence of monetary policy.

Reflecting these issues, investors may need to adjust towards a “higher-for-longer” interest rate outlook, with resilient US economic growth and sticky inflation reducing the likelihood of near-term Fed interest rate cuts. Higher rates may weigh on equity valuations, particularly in the technology and communication services sectors that dominate US markets. Tighter financial conditions have been a slight headwind for US equities this year.

None of this fundamentally weakens the long-term investment case for the US. Rather, it highlights the distinction between attractive structural fundamentals and shorter-term market risks. While the US remains the global leader in innovation, productivity and earnings growth, investors may face periods of volatility as markets adjust to changing interest-rate expectations, geopolitical developments and policy uncertainty.

Opportunities outside the US

A positive outlook for the US need not imply a US-only investment strategy. Given some of the risks associated with the US, investors may wish to look further afield for opportunities. At the same time, strong US growth, and particularly investment linked to AI, continues to create opportunities beyond its borders. As discussed in last month’s Investment Outlook (Investors and firms just can’t get enough of AI), massive spending on artificial intelligence is driving a sharp rise in the market valuations of technology companies globally.

This is becoming particularly evident in Asia, where semiconductor manufacturers have emerged as some of the world’s most valuable companies. TSMC, Samsung and SK Hynix now account for roughly 30% of the Emerging Markets (EM) index. These firms have become central to the rollout of AI data centres, creating strong demand for semiconductors and driving rapid earnings growth. As a result, consensus forecasts suggest EM EPS will grow by 62% in 2026 and 24% in 2027, the fastest rates among the major regions, before moderating to 10% in 2028.⁷ This improving earnings outlook has helped support EM equities, with the MSCI EM index returning 20% (as at 22 July 2026) and outperforming developed markets so far this year.

Wrapping up

The US economy continues to benefit from many of the same strengths that have supported its success over the past 250 years: innovation, strong institutions, deep capital markets and an ability to adapt to change. These advantages continue to underpin earnings growth and help explain why US markets remain so important to global investors, while also creating opportunities in Asia.

If life truly begins at 250, the US may still be in the early chapters of a remarkably successful economic journey. For investors, however, the opportunity is not simply to follow that story, but to identify the winners emerging across all the markets and industries it helps shape.

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

06/08/2026

Please see below the daily update article from Brooks Macdonald, received this morning – 05/08/2026:

What has happened?

Markets rallied as easing concerns over the Strait of Hormuz pushed oil prices and inflation expectations lower, supporting both equities and bonds. Brent crude fell back below $80/bbl. Short-term inflation expectations dropped to multi-month lows, bond yields continued to retreat, and both the S&P 500 (+1.79%) and Stoxx 600 (+0.73%) reached fresh record highs. Risk appetite also returned to the AI theme after July’s volatility, with technology stocks leading gains. The Nasdaq rose +2.59%, while the Philadelphia Semiconductor Index surged +6.55%, its strongest daily gain since March and extending its advance since last Wednesday to +16.58%, the largest four-day rise since 2020.

Strait of Hormuz fears continue to fade

Much of the market optimism reflected further signs of progress around the Strait of Hormuz. Qatar confirmed that a draft proposal had been circulated, while Treasury Secretary Bessent suggested an agreement to restore shipping flows could be reached soon. Reports from Axios and the Wall Street Journal indicated that the US is pursuing a 60-day interim arrangement between Iran and Oman to ease vessel transit through the region. While the longer-term framework remains unclear, investors responded by further unwinding geopolitical risk premiums.

Confidence returns to the AI investment cycle

Investor sentiment was also supported by developments that reinforced confidence in AI-related spending. Palantir (+29.45%) issued a strong outlook, reports emerged that Anthropic had agreed a $10bn computing infrastructure deal, and Caterpillar (+5.60%) raised sales guidance while pushing back against concerns that data-centre investment was slowing. Reuters also reported that US regulators are considering restrictions on imports of Chinese optical transceivers, a key component in data-centre networks. The news boosted domestic suppliers such as Marvell (+12.81%) and Coherent (+12.35%), underscoring how AI supply chains are becoming increasingly intertwined with US-China strategic competition. Some of the enthusiasm faded after the close, however, as SpaceX and AMD shares declined in extended trading following earnings updates.

What does Brooks Macdonald think?

Importantly, the rally in government bonds does not appear to be signalling a meaningful deterioration in growth. While June JOLTS job openings eased to 7.36 million from 7.54 million previously, the broader details remained constructive, with hiring improving, layoffs subdued and the quits rate holding at a healthy 2.0%. Taken together, the recent data suggest markets are reassessing inflation risks more than growth risks. As geopolitical concerns ease and energy prices retreat, investors have become more willing to look through recent volatility and refocus on the underlying earnings and investment backdrop. That has created a supportive environment for both bonds and equities.

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

Cherise Lancaster

05/08/2026

Please see below the daily update article from Brooks Macdonald, received this morning – 04/08/2026:

What has happened?

The combination of lower oil prices and stronger economic data provided a supportive backdrop for risk assets. The S&P 500 rose +1.48% to finish just below its June record high, while the Nasdaq Composite gained +2.13%. Large-cap technology led the advance, with the Magnificent Seven rallying +3.56%. Together with last week’s rebound, the group delivered its best three-day run (+8.98%) since the US-China trade truce in May 2025. Europe also participated in the rally, with the Stoxx 600 up +0.45%. One of the most notable corporate stories came from healthcare, where AstraZeneca fell -8.96% following reports that it had explored a potential acquisition of Bristol-Myers Squibb, a deal that would rank as the largest pharmaceutical transaction on record.

The market gets the best of both worlds

Markets were encouraged by signs that geopolitical tensions and growth concerns may be easing at the same time. Optimism grew after reports of renewed diplomatic engagement between the US and Iran, alongside progress on temporary shipping arrangements through the Strait of Hormuz. At the same time, US economic data surprised positively. The ISM manufacturing index rose to 55.6 in July, its highest level since May 2022 and comfortably above expectations, with employment returning to expansion territory for the first time since September 2023. Survey commentary highlighted strength in semiconductors, artificial intelligence, defence and high-performance computing. The result was a combination investors have seen little of this summer: easing inflation concerns alongside stronger growth signals, helping to support both equity and bond markets.

What does Brooks Macdonald think?

While geopolitical developments helped improve sentiment, the more important takeaway may be that market optimism is still being underpinned by fundamentals. Recent economic data suggest that overall business investment remains healthy. The resilience of corporate earnings and business activity remains an important source of support for risk assets, particularly if growth can continue without a material reacceleration in inflation.

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

Cameron Owen

04/08/2026

Please see the below article from Tatton Investment Management received this morning – 03/08/2026

Learn to make your mind up

We open this week in a positive frame following a week where multi-asset portfolios will have shown either small losses or, more likely, small gains. Diversification proved its worth as bonds, currencies and many high-profile stocks were volatile.

UK equities were a bright spot: the FTSE 100 and the smaller-cap 250 both made new all-time highs, while gilt yields end the week a little lower. Andy Burnham appears to have regained some fiscal credibility, though Capital Economics reckons funding the spending promises implies another £65bn of tax rises – equivalent to Reeves’ first budget move.

The US earnings season is a month old and improving as it goes. Expected Q2 2026 earnings per share growth for the index has risen from 22.3% on 1 July to 27% now. Six of the Magnificent Seven have reported, with Nvidia still to come in the final weeks. Signals on the AI build-out – how the investment is performing, how much more is coming, and who can fund it most cheaply – have been mixed, which is why a previously homogenous group is now showing wide dispersion in share prices. Credit quality remains exceptional, however: the main six sit well above the BBB average rating for corporates generally, leaving considerable room to leverage up before downgrade risk bites. Chip stocks rode the volatility hardest – South Korea’s SK Hynix was down over 25% from the previous week’s close by Wednesday, then rallied more than 35% off that low to finish mathematically unchanged.

Trump has announced of another pause but the Middle East conflict continues to expand rather than resolve, with US missiles hitting Iraqi territory and Ukraine striking Iranian ships in the Caspian Sea. Crude oil prices remain high, but reserves of diesel and other refined products are tight and prices are back at March highs – yet markets have become steadily less sensitive to the news flow.

July’s round of policy meetings ended with no change anywhere. The Bank of England held, with Andrew Bailey striking a dovish tone despite three of nine votes for a rise. The Federal Open Market Committee also held, with three voters seeking a hike and no reference to changing inflation conditions. Kevin Warsh, in his second press conference, was deliberately unhelpful: he declined to shed light on the decision-making process and told markets to make up their own minds. Longer yields rose sharply and the dollar weakened – which we read less as a hawkish signal and more as investors pricing the extra risk of holding long-dated bonds without forward guidance. Jackson Hole on 27-29 August is his opportunity to explain why a little less jawboning is a good thing. What ultimately matters is the Fed’s commitment to the 2% inflation target, not any single policy move.

Growing pains in corporate credit

Corporate credit spreads – the gap between corporate and government bond yields – have widened over recent weeks in both the US and Europe. The move is small and follows a long compression that took spreads to historic lows, but it has been enough to make some investors nervous. Rising spreads are usually associated with weaker growth or recession; we think this move may be something different.

Two things argue against complacency. Higher government bond yields mean total debt costs have risen faster than spreads themselves, and the aggregate figure is skewed by who is borrowing: the biggest, best-rated companies are the ones raising billions for AI infrastructure, and their favourable rates hold the average down even as others pay more. Other signals look more worrying. Credit default swaps on hyperscaler bonds have risen

sharply over the past month, with Oracle hardest hit after S&P Global cut its rating to just above junk. Fitch has also raised its forecast for European loan defaults in 2026, citing “idiosyncratic pressures”.

The unusual feature here is that global growth looks solid – employment is resilient and corporate earnings growth has been strong. AI investment is the driving force, and rapid AI adoption inevitably creates winners and losers. That means more individual defaults even while the aggregate economy is healthy, which is precisely the point Fitch made: greater differentiation between companies, not broad deterioration. Alongside that sits a second story – uncertainty over which AI companies actually come out on top, echoing the recent semiconductor sell-off.

Neither looks systemic today, but either could become so if credit problems tighten financial conditions more broadly. The main risk would be a central bank hike arriving at the same time as spreads widen for unrelated reasons. Kevin Warsh has suggested naturally tighter financial conditions may reduce the need for rate rises, but other Fed officials have sounded more hawkish on the back of strong US growth. For now, wider spreads look like growing pains from AI development rather than the start of a credit crunch.

Who’s afraid of consumer confidence?

US consumer confidence fell again in the Conference Board’s latest survey, extending a long downward trend even as growth data stays strong. The gap between hard data and soft sentiment has become wide enough that many now question whether confidence figures tell us anything at all. We think that is an overreaction: they may not tell us what they used to, but they still tell us something.

There are really two questions – whether the surveys are accurate, and whether consumers genuinely are more pessimistic. Ruchir Sharma, writing in the Financial Times this week, points to falling response rates, political polarisation and social media; Kyla Scanlon’s “vibecession” captures the same idea. The University of Michigan survey has faced particular criticism over its 2024 switch to online-only collection, which some argue increased negative bias and oversampled Democrat voters. Defenders note that online responses correlate well with the old phone data – but as Ryan Cummings and Ernie Tedeschi have pointed out, correlation still allows one series to be materially more skewed than the other.

The debate is mostly American, but the trend is not. French and German consumers have been hit harder than Americans since the pandemic, despite weaker underlying growth in Europe and Japan. A large part of the disconnect is inequality: growth in profits and living standards has been concentrated in the biggest companies and richest households. That is the K-shaped economy, and persistent weakness in consumer confidence is evidence for it – markets began 2026 expecting a rotation away from big tech and AI owners towards more traditional sectors, and confidence data suggests growth is still concentrated at the top.

The broader point is that a correlation breaking down does not make an indicator broken; it means reading it more carefully. The Conference Board survey is more sensitive to job availability, the Michigan survey to the cost of living – which explains their divergence through the post-pandemic inflation period. Interestingly, Michigan has picked up slightly from historic lows while the Conference Board keeps falling, hinting that consumers feel fragile but are less troubled by inflation than headlines suggest. If so, a Federal Reserve rate rise could be what breaks that fragile confidence.

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

03/08/2026

Please see below the daily update article from WH Ireland, received today – 31/07/2026

31 July 2026

The Federal Reserve did not raise interest rates this week. The bond market tightened policy anyway.

The Federal Open Market Committee left the federal funds rate unchanged at 3.50–3.75 per cent, but the 9–3 vote exposed a committee divided over an economy combining solid growth with renewed inflation. Beth Hammack, Neel Kashkari and Lorie Logan wanted an immediate quarter-point increase. The current stance is no longer the product of a settled consensus, merely the point around which a divided committee could assemble a majority.

Chair Kevin Warsh offered little guidance on what comes next. His message: study the economy rather than rely on the Fed to map the path of rates. That sounds like a restoration of market discipline. It may prove to be a transfer of power.

Since the financial crisis, statements, projections and the dot plot narrowed the outcomes investors felt obliged to price. Warsh is loosening that anchor. Investors must now judge not only the next decision but how a divided committee will react to each inflation and employment release. As the distribution of outcomes widens, bondholders demand compensation. That compensation is the term premium.

The decision was therefore neither hawkish nor dovish — a hold accompanied by tighter financial conditions. That may be deliberate: if Treasury yields, mortgage rates and corporate borrowing costs rise on their own, markets may deliver some of the restraint the dissenters wanted without a formal increase.

But allowing markets to transmit policy is not the same as relying on them to set it. A conventional cycle raises short rates according to an intelligible reaction function; a term-premium shock raises borrowing costs because investors are unsure what that function is, restricting credit in places only loosely connected to the inflation problem.

And the present pressure is not simply excess demand. Energy disruption and tariffs raise prices by restricting supply, and higher rates cannot produce more oil or reverse a tariff. They can only weaken demand elsewhere enough to stop the shock spreading into wages, services and longer-term inflation expectations.

Treat that shock as temporary and the Fed risks repeating “transitory”. Respond too aggressively and it imposes a domestic slowdown to offset a foreign supply loss. The dissenters think waiting is the greater danger: supply shocks harden into persistent inflation when companies retain pricing power and workers chase lost real income.

But a central bank cannot absolve itself because inflation begins on the supply side. Policy does not cause the shock, but it influences how far it spreads.

For investors, every release now carries more risk. Under strong guidance, a single number was filtered through a stable framework; under pure data dependency, it can change the framework.

Borrowers get no comfort either. Higher yields lift mortgage and corporate costs, weakening housing, investment and asset prices, and with them collateral and risk appetite — even for borrowers whose own performance has not deteriorated.

The danger is that market-led tightening continues until inflation is no longer the Fed’s principal problem.

Warsh is restoring discretion after an era in which Fed language was itself a tradable asset. There is merit in that, but discretion has a price. Investors who cannot identify the reaction function do not become better economists; they shorten duration, cut risk or demand a higher yield.

The conclusion is not merely that yields may rise, but that the distribution has widened. If inflation persists, the dissenters may gain support. If higher long yields damage housing and credit, the economy may slow before the Fed acts — and long-duration bonds could rally sharply, despite looking least attractive today.

The Fed once guided the bond market. Warsh wants it to discover the price of money for itself.

He should be careful what he wishes for. Markets do not tighten with a central bank’s precision. They tighten borrower by borrower, refinancing by refinancing, until the damage is large enough that the Fed must start guiding them again.

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

31/07/2026

Please see below, an article from EPIC Investment Partners which discusses Microsoft’s prospects in the AI space. Received today – 30/07/2026

Microsoft’s recent results have reignited an important debate among investors: does the company’s aggressive artificial intelligence investment represent exceptional long-term vision, or excessive capital allocation?

The question matters because, despite Microsoft’s consistently strong results, the stock has experienced a challenging period as investors have questioned the scale of AI spending, rising depreciation, margin pressure and the timing of returns. For shareholders, this has been a frustrating journey.

The line between genius and insanity is often only visible in hindsight.

History has shown that transformative technology shifts often require significant investment before the full economic benefits become visible. Companies that successfully identify and control the next major computing platform can create enormous long-term value, but the path is rarely straightforward.

Microsoft, Amazon, Alphabet and Meta all invested heavily ahead of major technology transitions because their leadership teams understood that owning the platforms through which innovation develops could create powerful competitive advantages.

The key question today is whether artificial intelligence represents another such transition.

The market is understandably focused on the trees: capital expenditure, higher depreciation, near-term margin pressure, and uncertainty over when AI revenues will fully justify current investment levels.

However, investors may be missing the wood.

Microsoft’s opportunity is not simply to build artificial intelligence models. Its ambition is to become the platform through which businesses adopt and integrate AI across their organisations.

Azure provides the infrastructure required to train and operate AI workloads. Microsoft 365 brings AI into the daily workflows of hundreds of millions of users. GitHub provides access to the global developer ecosystem, while its cybersecurity capabilities support the trust required for widespread enterprise adoption.

The early evidence suggests demand is already developing.

Microsoft’s cloud business has surpassed $100 billion in annual revenue, providing a significant foundation before AI adoption reaches maturity. Azure growth has accelerated to 43%, reflecting strong demand for AI-related infrastructure. Commercial remaining performance obligations, a measure of future contracted revenue, increased substantially from $368 billion to $678 billion in one year.

These figures suggest AI is not merely a future possibility based on investor enthusiasm. Enterprises are already committing resources towards the infrastructure required for the next generation of computing.

However, the investment case cannot rely only on what may happen over the next decade. Investors also need to consider what could drive recognition of Microsoft’s strengths over the next one to three years.

Potential catalysts include continued Azure growth, accelerating monetisation of AI services such as Copilot, evidence that productivity benefits are translating into customer spending, and improving confidence that today’s capital investment will generate attractive returns.

The risks remain real. AI models could become increasingly commoditised, adoption could progress slower than expected, or customers could capture a larger share of productivity gains than technology providers.

However, Microsoft does not need to win every aspect of the AI race to create significant shareholder value. Its advantage lies in owning the infrastructure, distribution, and enterprise relationships through which businesses adopt this technology.

The market today is focused on the trees: quarterly margins, capital expenditure and near-term uncertainty.

The bigger picture is that Microsoft may be positioning itself at the centre of one of the most important technology transitions of the coming years.

The success of this strategy will depend on whether the competitive advantages created by AI translate into durable revenue growth, stronger customer relationships and attractive returns on capital.

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

Alex Kitteringham

30^th July 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 28/07/2026.

Is inflation set to rise?

The conflict in the Middle East has broadened, leading to higher oil prices – but what could this mean for inflation?

Key highlights

• Middle East conflict: Escalating tensions spread from the Strait of Hormuz to the Red Sea, pushing Brent crude oil prices to above $100 per barrel and renewing inflation concerns.
• Bond yields and rate expectations: Yields rose across developed markets as oil rebounded, with rate hikes increasingly priced in by the U.S. Federal Reserve, European Central Bank and Bank of England.
• AI investment promise: Alphabet raised capital expenditure guidance to up to $205 billion while Google Cloud revenue surged 82%, providing evidence that AI spending is beginning to translate into commercial growth.

A broadening conflict puts inflation back in focus

Markets were dominated by two powerful themes last week: geopolitics and AI capital expenditure (capex). Escalating tensions in the Middle East pushed oil prices higher, renewing concerns over inflation and driving a repricing of interest rate expectations. Meanwhile, corporate earnings provided further evidence that the AI investment cycle remains firmly intact, although the enormous scale of spending is prompting greater scrutiny over future returns.

Geopolitical tensions intensified as the conflict broadened beyond Iran and the Strait of Hormuz. Risks increasingly extended into the Red Sea, where Houthi militants in Yemen targeted Saudi-linked oil tankers, raising concerns that disruption could spread across multiple critical energy and shipping routes. This helped push Brent crude oil to above $100 per barrel as markets priced in a greater risk to global energy supplies.

Source: Bloomberg

The renewed surge in oil comes just as recent inflation data had started to show some improvement. Headline inflation in developed economies eased in June, helped in part by lower energy prices. With oil prices now rebounding sharply, that disinflationary tailwind is likely to fade – and could potentially reverse if higher prices persist.

President Donald Trump announced a new round of tariffs covering dozens of U.S. trading partners, with duties broadly ranging between 10% and 12.5%. Markets largely took the announcement in their stride; the measures are essentially a continuation and restructuring of existing tariffs under a new legal framework rather than a significant new escalation in the overall tariff burden.

Nevertheless, tariffs remain another potential source of price pressure alongside higher energy costs, adding further uncertainty to the inflation outlook at a time when inflation remains above central bank targets in many developed economies.

Bond yields rise as rate expectations turn more hawkish

Source: Bloomberg

Government bond yields rose across developed economies as investors reassessed how central banks may respond if higher energy prices lead to more persistent inflation. The shift in rate expectations has been significant.

In the U.S., markets are pricing in roughly a one-third chance of a Federal Reserve rate hike at its July meeting, with almost two quarter-point increases priced by year end. In Europe, the European Central Bank kept interest rates unchanged at its July meeting, but markets are increasingly pricing in the possibility of a rate increase as soon as September. The repricing has also been pronounced in the UK, where markets are now pricing in almost two rate hikes by year end.

For central banks, much will depend on whether the energy shock produces only a temporary increase in headline inflation or generates more persistent second-round effects. Policymakers will therefore be watching closely for signs that higher energy costs are feeding into broader prices and inflation expectations.

AI spending accelerates, but so does scrutiny

While geopolitics and inflation dominated the macroeconomic backdrop, AI remained the other major force driving markets last week. Alphabet provided perhaps the clearest illustration of both the extraordinary scale of the AI investment boom and the growing debate around its returns.

The Google parent raised its expected capex for this year to between $195 billion and $205 billion, as it accelerates investment into AI computing capacity and cloud infrastructure. That spending comes at a significant cost – Alphabet recorded its first ever quarterly negative free cash flow – of $5.9 billion – since going public approximately two decades ago.

Source: Bloomberg

However, there are increasingly clear signs that rapid AI development is translating into growth. Google Cloud revenue surged 82% year-on-year, making it one of Alphabet’s fastest-growing businesses, supported by strong demand for AI infrastructure and solutions. Intel reinforced the message, with data centre sales rising 59%, benefitting from continued investment in AI and computing infrastructure.

The investment case for AI therefore remains intact. However, as capex reaches extraordinary levels, investors are increasingly scrutinising whether hyperscalers – the largest cloud and technology operators – can generate sufficient revenue, profits and cashflow to justify that spending.

The earnings season is gathering pace, with updates from major technology companies likely to shape sentiment around the AI investment cycle.

UK activity rebounds thanks to football and weather

Amid the geopolitical uncertainty, there was some positive signals from the UK economy. UK inflation slowed to 2.6% in June – below expectations and the lowest level in more than a year. Lower energy prices contributed to the improvement, although the subsequent rebound in oil means this favourable effect may prove temporary.

Economic activity also provided a positive surprise. The latest flash purchasing managers’ indices (PMIs) showed the composite index rising from 49.3 in June to 52.1 in July, moving back above the 50 level that separates expansion from contraction. Services activity rebounded, helped partly by stronger hospitality activity around the World Cup and warm summer weather, while manufacturing also improved.

Taken together, softer inflation and stronger activity provide some welcome evidence that the UK economy has regained momentum. However, some caution is warranted – part of the improvement may reflect temporary factors, and higher oil prices could raise costs for businesses and squeeze household purchasing power.

It remains to be seen whether the improvement can be sustained.

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

29/07/2026

Please see below the daily update article from WH Ireland, received this afternoon – 28/07/2026:

28 July 2026

Climate change is no longer a distant environmental concern; it has become a material macroeconomic risk that is eroding fiscal resilience and destroying billions of dollars of physical capital every year. The rising frequency and severity of extreme weather events, including catastrophic floods, wildfires, hurricanes and heatwaves, are imposing mounting costs on governments, businesses, and households alike. When floods inundate major cities or wildfires devastate residential communities, reconstruction demands absorb vast public resources, diverting capital away from productive investments such as healthcare, education, innovation, and infrastructure. Increasingly, a country’s ability to recover from these shocks depends not only on the scale of the disaster but also on the strength of its balance sheet.

Nations with substantial Net Foreign Assets (NFA), large sovereign wealth funds and healthy fiscal reserves are significantly better positioned to absorb climate-related shocks. High-income Gulf Cooperation Council (GCC) countries, for example, can deploy accumulated financial wealth to rebuild damaged infrastructure quickly, invest in advanced climate adaptation technologies and support insurance markets without jeopardising fiscal stability. These reserves effectively function as a national self-insurance mechanism, enabling governments to protect public services while financing long-term resilience projects. In contrast, lower-income and conflict-affected countries often lack the fiscal capacity to respond adequately. For these economies, even relatively localised disasters can trigger prolonged humanitarian crises, rising public debt and years of lost economic growth.

The financial consequences extend well beyond the immediate destruction of physical assets. Climate risks are increasingly reshaping global real estate and insurance markets as historical actuarial models become less reliable in forecasting future losses. In many high-risk regions, insurers have sharply increased premiums, reduced coverage, or exited markets altogether, leaving homeowners, businesses and mortgage lenders exposed to greater financial risk. Although wealthier nations typically incur larger absolute losses because of their high-value infrastructure, developing economies suffer disproportionately greater welfare losses, as lower insurance penetration and weaker fiscal support leave households to bear the full economic burden.

As climate risks intensify, governments face the difficult challenge of financing both immediate disaster relief and the substantial long-term investments required to strengthen resilience, including flood defences, modern drainage systems, wildfire mitigation, and climate-resilient infrastructure. For countries with weak external balance sheets or negative net foreign assets, a single catastrophic event can erase a significant share of annual economic output, worsening debt dynamics and widening global inequalities. Without sustained investment in adaptation and stronger fiscal planning, the economic costs of climate change will continue to place growing pressure on sovereign balance sheets and long-term global financial stability.

Have a good day.

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

Cherise Lancaster

28/07/2026

Please see below the daily update article from Brooks Macdonald, received this morning – 28/07/2026:

What has happened?

Markets were caught between easing Middle East tensions and renewed weakness in semiconductor stocks. The US-Iran pause agreed over the weekend appeared to hold, helping Brent crude fall -8.7% and supporting broader risk sentiment. The S&P 500 (+0.02%) and Nasdaq (-0.16%) finished little changed, while the Philadelphia Semiconductor Index fell a further -2.2%. Treasury yields also edged lower, although elevated real yields continued to weigh on equity valuations.

Diplomacy tempers energy concerns

Middle East developments were broadly supportive. President Trump said military action against Iran had been paused while negotiations continue, whilst reports pointed to ongoing discussions around the Strait of Hormuz. Although Houthi attacks on Saudi oil facilities over the weekend highlighted that risks remain, investors took comfort from the reduced likelihood of an immediate escalation.

Chips companies under pressure

Technology stocks weakened after another sell-off across the semiconductor sector. ASML fell -8.4% following reports that a Chinese company had begun mass production of deep ultraviolet lithography machines, raising competitive concerns for parts of the chipmaking supply chain. Nvidia also lost -5.0% amid renewed scrutiny of AI-related financing and spending. Despite the sector weakness, the wider market remained resilient, with nearly two-thirds of S&P 500 constituents advancing and the Russell 2000 rising +0.6%.

What does Brooks Macdonald think?

Yesterday’s trading highlighted the balance between easing geopolitical tensions and growing scrutiny of AI-related companies. The de-escalation in US-Iran tensions helped ease concerns around energy supplies and oil prices, although the situation remains fragile. Meanwhile, weakness in semiconductor stocks showed that parts of the AI trade remain sensitive to shifts in investor sentiment. Encouragingly, broader market participation remained healthy, suggesting overall risk appetite has held up well.

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Cherise Lancaster

28/07/2026

Please see the below article from Tatton Investment Management discussing the pause in market optimism, driven by oil price pressures, rising bond yields, hawkish central banks and concerns over whether AI investment can keep supporting equity market momentum, received this morning – 27/07/2026.

Hiatus in optimism

Markets had a rough week, as Brent crude oil pushed back above $100 per barrel and long-term government bond yields rose sharply. This week starts on a better note, with US and Iran ceasing their attacks at least for now. Brent spot is below $92, and bond and equity prices have recovered about half of their losses from last week.

Andy Burnham’s talk of fiscal flexibility unsettled the gilt market, but the new Prime Minister quickly projected a “fiscal discipline” message, and John Healey’s appointment as Chancellor calmed nerves slightly. The UK’s lower-than-expected 2.6% inflation figure helped too.

But gilts take their cue from global bond markets more than domestic politics, so were hurt by rising US and Japanese yields. Resilient US growth, rebounding employment, and enormous AI-driven spending (Alphabet posted a $5.9bn deficit last quarter) are pushing US money supply ahead of nominal GDP. Combined with higher energy prices, that’s a headache for the Federal Reserve, whose officials have turned surprisingly hawkish. Markets now price a 34% chance of a hike next week, up from 10%. As recently as April, a cut still looked more likely.

Oil’s spike came from Red Sea attacks on Saudi tankers, not the Strait of Hormuz. But the Houthis don’t have anything like Iran’s capabilities, and the US, UK, France and Saudi Arabia appeared ready to contain the threat. It will likely be resolved sooner than the US-Iran war, but the timing, just as the Fed turns hawkish, is unhelpful.

Big tech had a worse week than the broader market. Tesla and Alphabet shares fell sharply, even though Alphabet beat earnings forecasts. This was more than just referred pain from oil prices: investors are growing anxious about whether Silicon Valley’s vast AI spending will ever generate hard profits, especially after Chinese firm Moonshot released a competitive model for a fraction of the cost. With so many risks stacked up, questions about where AI’s productivity gains will actually show up – and for whom – are only getting harder to answer.

Oil rises but who wants it?

Brent crude broke back above $100 a barrel on Thursday after a series of escalations in the Middle East – particularly Houthi strikes in the Red Sea, through which many oil tankers have rerouted in recent months.

The strange part isn’t that oil prices spiked; it’s that prices stayed remarkably calm in previous weeks, despite the US-Iran ceasefire falling apart and the Strait of Hormuz closing again. That’s partly because oil traders expected one or both sides to back down, but also because of a sense that the previous Strait closure was not as bad for the world economy as feared.

A fifth of the world’s oil transited through the Strait before the war, but its closure hasn’t led to the doomsday scenarios predicted. That has been helped by strategic reserve releases, sanctions relief on Russian oil, and, above all, a sharp fall in demand.

China is central to that story. Its crude imports have fallen from over 12 million barrels a day before the war to under 8 million now, as Beijing draws down stockpiles and eases off its energy-intensive industrial base. Oddly, China hasn’t rushed to rebuild reserves even after Iran was cleared to sell to it again. Some of this looks structural: cheap electric vehicles were already denting Chinese petrol and diesel demand, a trend this price spike will likely accelerate.

So where does that leave us? The supply-demand balance is genuinely uncertain, and much depends on whether Beijing decides to restock. But we’d stress that this week’s rally, like the ones before it, is really about speculators piling back into energy markets on bets of undersupply, not a reflection of barrels actually going missing. It’s a risky bet – and, in the meantime, one that’s itself helping to destroy the demand it is betting against.

When momentum runs out

Chip stocks had a spectacular first half of 2026 but have sold off sharply in recent months, notwithstanding a small bounce for the Philadelphia Semiconductor index (Sox) last week. Most commentary has focused on how the AI investment boom is washing through a notoriously cyclical industry. We think there is another thread worth pulling on: what the episode says about the dynamics of momentum investing itself.

Momentum is one of the simplest investment factors: buy what is already winning, on the view that winners keep winning. Performance is typically measured on a 12-month rolling basis, but ignoring the most recent month to avoid short-term trend reversals. It somewhat contradicts the usual ‘buy low, sell high’ adage, but momentum has been the best-performing factor of the last decade, according to Bloomberg.

In 2026, momentum funds piled heavily into chips, amplifying the AI-fuelled rally. As chip stocks have sold off, so has momentum as a factor, with higher volatility prompting investors to trim their holdings.

The ’12-1’ measure of performance gives momentum strategies a structural blind spot. Ignoring the most recent month means momentum funds are slow to react to sharp turns. That tends to bite hardest after boom-or-bust periods, as in 2009 and 2020. That predictability is also a vulnerability: other investors can see the rebalancing coming and pre-empt it, buying new winners and selling them on to momentum funds a month later. Crowding compounds the effect, since momentum traders tend to look at the same data and rebalance at the same times, amplifying any sharp turn in markets.

Of course, betting against momentum investors requires deciphering meaningful trend reversals from short-term noise. That gamble has rarely paid off over the last decade. Whether chips and momentum both recover from here depends on one unresolved question: whether the AI theme itself is turning.

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Marcus Blenkinsop

27^th July 2026