WeeklyWatch – Two indexes: one hot, one cold

D.6367 Wellesley WeeklyWatch 02.06.2026_1420 x 474

2^nd June 2026

Key Takeaways

A record high for US stocks in June which was boosted by a 19% drop in oil prices over the period.
Additional catalysts included strong corporate earnings updates and an increasing pool of AI beneficiaries.
Multi-year highs were reached for US Treasury yields during May but then eased following apparent peaks in the Iran tensions.

Stock Take

Double digit returns registered by S&P

Hopes that the US and Iran may finally reach a deal and continued AI optimism resulted in US markets reaching new highs last week. It’s the ninth consecutive weekly rise for the S&P 500 – its longest streak since 2023. The index is now trading at more than 10% above levels from before the Iran war started.

Negotiators helped the two countries reach a tentative agreement on Thursday. This included allowing for an extended 60-day ceasefire, but this requires a final sign-off. Over the weekend, Trump suggested that more changes will be needed before he makes an agreement.

US equities have been fairly unscathed by the conflict, but this hasn’t been the case for all markets. Further missile exchanges between the US and Iran on Thursday resulted in a fall in the FTSE 100, pushing the UK index slightly into the red at the end of the week. The performances of the FTSE 100 and S&P 500 have been in stark contrast to each other – the S&P is up more than 10% and the FTSE 100 is down more than 4%, both in the same period.

What’s clear is that the US market has some advantage over the UK equivalent within the current climate. The US is a net energy producer which means that it’s more insulated than the UK from energy shocks linked to the conflict, as an example.

One of the other significant differentiators is the market composition – more specifically, the dominance of the tech sector within the US. Before the Iran conflict, investors voiced major concerns about the high investment levels going into AI. Now, these fears seem to have subsided and some tech companies have seen massive gains over recent weeks. One such company is Dell, which surged more than 30% last Friday after strong results and an ever-improving outlook for its AI server sales.

But it’s not all green pastures. The US is also facing significant inflationary pressures. Federal Reserve Governor Christopher Waller (one of the voices previously advocating for lower interest rates) recently called for the removal of the ‘easing bias’ from Federal Reserve policy statements.

Waller spoke in Frankfurt at the end of May, adding:

“That doesn’t mean, however, that I think we should be considering rate increases in the near future… But I can no longer rule out rate hikes further down the road if inflation does not abate soon, and that is especially true if measures of inflation expectations, some of which have risen lately, show signs of becoming unanchored.”

Clouded decisions for Europe

While the US seems to be ruling out a sudden increase in interest rates, the picture is very different elsewhere. Reuters polling predicts that the European Central Bank will increase interest rates by 0.25% later in June. This is as a result of the economic bloc continuing to struggle with the effects of weak output, low consumer confidence and the inflationary impact of higher energy prices.

However, the bank will need to be cautious as they consider interest rates. Higher interest rates reduce demand, which impedes economic growth. Many European economies are struggling with anaemic growth, meaning the central bank will have to be careful to get the balance right and not push things too far.

Similar questions will be asked of the Bank of England (BoE). UK consumers have so far been protected from some of the energy shock by the energy price cap. This is revised on a quarterly basis and limits the amount charged by gas and electricity companies for their energy. The full effects of the Iran conflict haven’t materialised completely, but Ofgem revealed last week that the price cap will rise by 13% from 1^st July. This increase also adds to growing inflationary pressures and will heavily cloud the BoE’s upcoming decisions. The bank is due to meet on 18^th June to make a decision on interest rates.

Additionally, it was revealed that the number of babies born in England and Wales fell again last year. According to the Office for National Statistics, 585,396 were born in 2025 which is down from the 594,667 from 2024. Furthermore, this was the lowest number recorded since 1977. England and Wales are already facing issues with costs of elderly care and pensions; a falling birthrate will only create further future fiscal problems for the government.

A relaxation for bonds

In better news for the government, bond yields relaxed across many markets for the second consecutive week. This reflects the optimism that the Iran conflict might not have prolonged inflationary shocks and tensions may have finally peaked. However, this is subject to change and it should be borne in mind that even though bond yields are generally below the level they were at two weeks ago, they’re still above levels seen at the start of the year.

Wealth Check

Pension withdrawals increasing

More people are taking money out of their pensions to get ahead of April 2027 when unused pots will be counted as part of an estate for inheritance tax (IHT) purposes.

It’s been reported that hundreds of thousands of UK pension savers are cashing out their pension pots in full ahead of the proposed changes coming into effect next year. Savers have historically used pensions to pass on family wealth to beneficiaries due to pensions being exempt from IHT.

However, this could mean that more people could be paying more tax than needed. The lump sum allowance (the amount a pension saver is allowed to take tax-free) is typically 25% of the pension pot, to a maximum of £268,275. Any withdrawals above this level are taxed at the individual’s marginal tax rate.

By withdrawing a pension in one go, more people could be pushed into higher tax bands, triggering unnecessary tax bills.

Government estimates suggest that bringing most unused pension wealth into scope for IHT from the 2027/28 tax year could have a significant impact. Approximately 10,500 more estates are expected to become liable for IHT, with a further 38,500 likely to pay more. On average, affected estates could see their IHT bill rise by around £34,000.¹

As always, this is where taking expert advice shines, helping you find the best approach for you in planning for a secure future.

April sees IHT receipts fall

HMRC registered £0.7 billion in IHT receipts for April 2026, a decrease of £65 million compared with the same period last year.²

The government have pointed to high receipts in April 2025 as the reason for the decline.

The short-term dip isn’t expected to be too much of an issue, with the government expecting revenues to increase over the long term which will be boosted by increased wealth transfers, higher asset values and the continued freeze in income tax thresholds until the 2030/31 tax year.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

Sources

¹UK government (2025). Inheritance Tax on pensions: liability, reporting and payment – Summary of responses. Available at: https://www.gov.uk/government/consultations/inheritance-tax-on-pensions-liability-reporting-and-payment/outcome/inheritance-tax-on-pensions-liability-reporting-and-payment-summary-of-responses (Accessed: June 2026).
²UK government (2026): HMRC tax receipts and National Insurance contributions for the UK (monthly bulletin). Available at: https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin (Accessed: June 2026).

In the Picture

The Korean stock market (KOSPI) has underperformed in the global market for many years. But it’s now more than doubled since 2025. The growth has been boosted by a small number of tech companies that are integral to the AI supply chain. By removing just two of the key players in the space (electronics giant Samsung and semiconductor manufacturer SK Hynix) the index growth is more than halved.

The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

“FTSE Russell®” is a trademark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

Source: MSCI. Certain information contained herein, including without limitation text, data, graphs, charts (collectively, the “Information”) is the copyrighted, trade secret, trademarked and/or proprietary property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or any third party involved in making or compiling any Information (collectively, with MSCI, the “Information Providers”), is provided for informational purposes only, and may not be modified, reverse-engineered, reproduced, resold or redisseminated in whole or in part, without prior written consent.

Source: Bloomberg. BLOOMBERG®” and the Bloomberg indices listed herein (the “Indices”) are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the Indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by the distributor hereof (the “Licensee”). Bloomberg is not affiliated with Licensee, and Bloomberg does not approve, endorse, review, or recommend the financial products named herein (the “Products”). Bloomberg does not guarantee the timeliness, accuracy, or completeness of any data or information relating to the Products.

SJP Approved 01/06/2026

WeeklyWatch – SpaceX eclipse AI earnings

D.6367 Wellesley WeeklyWatch 27.05.2026_1420 x 474

27^thMay 2026

Stock Take

Good but not good enough for Nvidia

Markets experienced a busy week last week! Over in the US, there were further market gains, and the S&P enjoyed another rise for the eighth week in a row. By style, small-cap and value outperformed growth and large-cap.

The chip maker and world’s most valuable company, Nvidia, revealed more impressive results for the first quarter. In comparison to 2025, sales increased by 85% and net earnings increased threefold. Both sets of results exceeded expectations and confirmed that demand for data centres and AI remains high.

Nvidia’s earnings results have historically dominated headlines and helped shape investor sentiment; however, the last few quarters have revealed how challenging it’s been for the company to wow investors in order to get a positive share price reaction. Although the company’s share price eased following the results, it remains around 20% higher year-to-date. In the long term, some analysts remain focused on Nvidia’s significantly high (70%+) gross profit margins. The fast roll-out of lower-cost AI chips by the company’s competitors may not be a direct threat to Nvidia. What is likely, though, is investors contemplating how long the company will be able to maintain such high margins.

SpaceX IPO – as big as the stars

It’s been confirmed that Elon Musk – the world’s richest man – will list his satellite and rocket company, SpaceX, which contributed to the fairly muted reaction to Nvidia’s earnings. This week’s ‘In the Picture’ reveals that SpaceX’s listing on 12^th June is expected to be the biggest in history and more than twice as large as the current largest, oil major Saudi Aramco.

Once listed on the tech-focused Nasdaq index, Musk’s SpaceX is expected to become one of the most valuable companies in the world. Estimated market capitalisations are $1.75 trillion to $2 trillion. Despite these predictions, SpaceX’s recent earnings profile has been mixed, and the company overall is currently unprofitable – 2025 revenues of $18.7 billion were joined by losses of $4.9 billion.

SpaceX’s goal is to “make life multiplanetary, to understand the true nature of the universe and to extend the light of consciousness to the stars”. However, the company’s revenues are underpinned by their internet-service provider business, Starlink. Nearly 10,000 satellites make Starlink the only profitable part of the business. The company’s prospectus identifies a total market size of $29 trillion, with growth initially underpinned by demand for Starlink satellites, which are launched by SpaceX rockets.

The public wait for Anthropic and ChatGPT

The ongoing positive sentiment surrounding AI is being boosted by AI coding giant Anthropic’s news that second quarter revenues will more than double to $10.9 billion in comparison to the previous quarter.

Claude’s operator says this will support in generating an operating profit by mid-year, surpassing expectations. Although they’re not a public company, Anthropic showcased the latest details in their last funding round, leading many to suspect that the company is preparing to go public.

Elsewhere, Anthropic’s rival OpenAI (operators of ChatGPT) may be lining up to list in September. Three high-profile tech and AI-related companies listing this year will reinforce 2026 as the biggest ever for IPO funds raised.

Easing pressure on UK gilts

It was a better week for UK government bonds (gilts). ‘Bad news is good’ was partly behind it, as the domestic unemployment rate rose to 5% in March from 4.9% in the previous month. It’s a somewhat unsurprising result considering the effects of the energy shock and low business confidence. Although it wasn’t welcome news for the economy, it served as better news for gilts. Market expectations for future UK interest rate hikes have eased, and this in turn has seen gilt yields fall (and prices rise).

Contender for Labour Party leader and prime minister, Andy Burnham, also brought reassurance to investors this week. If he wins the leadership challenge, he said that he will commit to the existing government’s fiscal rules. The price of 10-year gilts consequently saw a recovery. Only a week before, they were trading above 5% (levels unseen since 2008) and finished the week at 4.9%.

Market indicators are now leaning towards the notion that the Bank of England will reduce the expected two to three interest rate hikes to only two 0.25% rate hikes in 2026.

Are energy markets in limbo?

Crude oil prices finished the week slightly lower – reflective of an easing in some supply dislocations. Despite this, the Chief Economist at St. James’s Place, Hetal Mehta, says that it will still be six to eight weeks before there needs to be a resumption of tanker traffic through the Strait of Hormuz. She added that the airlines that said there would be severe jet fuel shortages are now re-evaluating and think supplies will be sufficient over the summer season.

“A lot of energy experts seem to have been surprised we haven’t seen more dramatic price moves, given how long the Strait of Hormuz has been closed.”

A significant reason for this is that considerable commercial reserves have been put to use, helping to mitigate the worst of the shocks.

Wealth Check

15 million not saving enough for retirement according to Pensions Commission

Across the UK, the Pensions Commission has voiced that 15 million aren’t saving enough for retirement.

An interim report was published last week and the government-backed commission drew attention to the challenges facing the current system. It was determined that low and middle earners, self-employed people and women are the groups most at risk of inadequate pensions due to not saving enough for their retirement.

Further details revealed that nearly 18 million people – equivalent to 45% of working age adults – aren’t saving into a pension, and only 4% of the self-employed are saving for retirement.

The final report will be published in early 2027.

St. James’s Place recently published their Financial Health Report 2026 and revealed that the cost-of-living pressures have resulted in a drop in financial resilience in many UK households.

The survey, conducted by Opinium among 6,000 adults, found fewer people now describe themselves as financially comfortable, compared to 12 months ago (37% in 2026 compared to 42% in 2025).¹

Money returned to bereaved families by NS&I

£367 million from National Savings and Investments (NS&I) will start being returned to bereaved families who were impacted by the missing savings scandal.

It was revealed in March that the state-backed bank was having difficulty tracing accounts that belonged to deceased customers.

The scandal saw the dismissal of NS&I’s then-chief executive, with the new CEO saying that the search process used to handle bereavement claims is now fixed.

Source:

¹Opinium survey of 6,000 UK adults between 17^th March and 9^th April 2026, on behalf of St. James’s Place. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population.

In the Picture

It’s expected that SpaceX’s upcoming IPO will be the largest in history. Even though there’s been a mixed recent earnings profile and they’re currently unprofitable, the company will probably become one of the world’s most valuable companies.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 26/05/2026

WeeklyWatch – Assessing the market trigger points

D.6367 Wellesley WeeklyWatch 19.05.2026_1420 x 474

19^thMay 2026

Stock Take

There was a continued rise in UK government bond yields last week, thanks to investor concern over challenges to leadership and international questions.

UK gilt behaviour explained

In the UK, 10-year gilt yields stayed above 5% for the last few days, finishing the week above 5.1%. For perspective, 10-year gilt yields haven’t breached 5% since 2008. The 30-year gilt concluded the week incredibly close to 6% – its highest levels since 1998.

Since Covid, yields have been trending up, but recently the increases have been influenced by specific triggers.

Sir Keir Starmer’s position as prime minister has been the topic of much public conversation, creating uncertainty across domestic bond markets. There are several candidate names in the ring to possibly fill the role, should Starmer resign; however, there are also concerns that the candidates will resort to opening the purse strings in order to secure their position. UK government finances are tight, and news of further increased spending will not be favoured by markets.

The UK is also highly vulnerable to external energy shocks. As the Iran crisis continues, it’s likely that higher energy costs will remain the norm for a while. The International Energy Agency (IEA) has said the market will remain ‘severely undersupplied’ until October, even if the conflict came to an end in June.

On the positive side

The irony of the current struggles is that the UK economy performed quite well in the first quarter.

The Office for National Statistics (ONS) revealed that the UK economy (as measured by GDP) rose 0.6% in the first quarter of 2026, which was the strongest of any G7 nation.

Over the period, it was services that emerged as the big winners – particularly vehicle sales and the repair trade. The Society of Motor Manufacturers and Traders (SMMT) said that UK new car sales for March were the highest since 2019, breaking 380,000 units sold. Furthermore, electrified vehicles celebrated their best-ever month for sales, reaching 196,000 units sold and accounting for over half of all new cars sold in March.

But there are some caveats to these Q1 GDP figures. The UK economy has grown at its quickest rate in the first quarter of the last few years, and then growth has slowed as the year has gone on. Additionally, the current political uncertainty could have a very negative impact on near-term growth, having already made government borrowing more expensive.

And then there’s the elephant in the room: the Iran conflict. First-quarter figures mostly predate the impact of the conflict, which started at the end of February, and inflationary effects will have gradually become more prominent. Growth will inevitably be impacted by this, with manufacturing costs and increased selling prices putting pressure on both businesses and consumers.

The inflation picture for the US

While we await the ONS’s inflation figures for the UK in April, US data could give an indication of what can be expected.

CPI inflation figures for April were released last Tuesday by the US Bureau of Labor Statistics (BLS) and showed that inflation hit 3.8%, which was above expectations and hit the highest level since May 2023.

The Iran conflict can be pinpointed as the reason for the rise, as the high oil and gas prices are the main contributors. The BLS identified that core inflation (for all items except food and energy) was only at 2.8%. Air fares have surged and petrol pump prices are at their highest levels since the post-Covid inflation shock – for consumers, this won’t have come as a huge surprise.

Despite this, the figures will certainly cause some discomfort for Republican politicians who are mindful that inflation is often a significant issue for the electorate. Midterm elections are coming up in November, which could see the Republicans potentially lose control of both houses in Congress, where they currently only have a small lead.

Another individual who will find little joy in the figures is Kevin Warsh, Trump’s nominee to succeed Jerome Powell as chair of the Federal Reserve, who was confirmed by the Senate last week. Trump has publicly advocated for interest rates to be decreased, but with inflation on the rise, his wishes are unlikely to come to fruition.

On the move for US treasuries

Even though they remain below gilts, the latest developments have put US Treasury yields under more pressure. Although the US is an energy exporter, the resulting inflationary impact of the Iran conflict takes partial blame.

The Fixed Income Strategist at St. James’s Place, Greg Venizelos, said:

“We’re seeing the market say, ‘even if everything goes back to normal now, we are past the point of no return for inflation’. Reserves won’t be replenished before autumn, and a lot of inventories that need to be in place, including by-products like fertilisers, neon, argon and so on, will take a while to replenish. So, we’re seeing that inflation shock feed through, and now it’s a question of how quickly it can recover, or whether it might get even worse.”

Pressure in the fixed income market gave investors a scare in the latter part of last week. It was a record high on Thursday for the S&P 500 but then a sharp drop the next day reversed a lot of the gains from the week.

Wealth Check

FCA reviewing investment firms’ support of bereaved customers

How investment companies treat bereaved customers is being looked into by the Financial Conduct Authority (FCA), assessing whether they’re receiving the right support.

The review will involve the regulator examining customer experience, starting from when a death is reported until when a settlement is reached or investments are transferred.

Starting this month, selected investment firms, including advisers, platforms and wealth managers, will be contacted by the FCA. They’ll need to demonstrate how they communicate with and support their vulnerable customers. The FCA will also be conducting assessments on service standards and how firms handle fees on bereaved accounts.

These actions follow similar reviews that the FCA have undertaken in retail banking and the insurance market. They revealed that bereaved customers often faced unclear processes, repeated information requests and delays that could be avoided. Good practice was found, but it was determined by the FCA that it was inconsistent.

National Savings & Investments (NS&I) found themselves paying out millions in compensation to bereaved families towards the start of the year, following a series of administrative errors that resulted in lengthy delays in payments. As a government-backed savings provider, NS&I doesn’t fall within the scope of the FCA.

The published findings of the review will come out later this year and will highlight good practice and areas for improvement.

More government details for IHT on pensions

A technical note from the government sets out further details on how inheritance tax (IHT) will be applied to pensions. This includes most unused pension funds and pension death benefits.

Published on 11^th May, the note outlines the thinking behind the changes, who and what’s in scope, and how the rules are to work in practice. Changes will apply to deaths on or after 6^th April 2027.

More details on the role of personal representatives (PRs) are also included in the note. They’ll be responsible for identifying, reporting and ensuring payment of any IHT due on the deceased’s notional pension property.

Notional pension property usually includes uncrystallised defined contribution pension funds, crystallised drawdown funds, most lump sum death benefits and pension benefits where the member had control over benefit destination.

Pension scheme administrators will be more reliant on the information that’s provided by PRs to determine:

If IHT is payable
How much tax applies to the pension element
If benefits can be paid out in full

Previously, pension providers have usually largely assessed death benefits independently of the estate. Under the new system, they will need confirmation from the PRs concerning the overall estate position.

This will increase the administrative burden on PRs, who will be required to provide pension schemes with the death certificate and confirmation of whether IHT is payable on the estate, as well as other information.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

In the Picture

The fifth Financial Health Report, carried out by Opinium, has been published by St. James’s Place. It reveals that financial resilience has decreased since 2025 amid the increased pressure from the cost of living. One in three is making a lifestyle changes to deal with their stretched financial situation.

But for those who have a financial plan, are investing and have received professional advice in the past 10 years, the outlook is more optimistic. Those with a financial plan were three times more likely to say their financial situation had improved in the past year.

Find out more in the report’s findings here: Financial Health Report 2026.

The chart below reveals how average household wealth climbs significantly among those who have a financial plan, are investing and are receiving ongoing financial advice.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 18/05/2026

WeeklyWatch – What do local election results mean for markets?

D.6367 Wellesley WeeklyWatch 12.05.2026_1420 x 474-2

12^thMay 2026

Stock Take

The pressure’s on – local election results and government borrowing pressure

The UK local elections left Labour feeling bruised, leading to media reports questioning the security of Prime Minister Keir Starmer’s position. But looking at the UK bond market, it seems stability of continuity is preferred over a change in leadership – for now.

Borrowing costs haven’t been the current government’s friend. It’s been nearly two years since the last general election, and 10-year gilt yields (i.e. the interest the government pays on the bonds) have increased from below 4% to a peak of over 5%.

Higher yields are challenging for governments – because it results in more expensive borrowing, it limits government’s options surrounding taxes and spending.

The majority of the causes of this rise are beyond the government’s direct control. Factors include an ageing population, a large amount of debt and the behaviour of foreign powers, to name a few.

Within the last two weeks, high oil prices and local election predictions have both contributed to 10-year gilt yields spiking to over 5% – the first time since 1998.

What happened at the elections?

There were notable results from the local elections: last Tuesday gilts reached their highest point and then gradually fell back down to below 5%.

Reform and the Green Party made an impact at the expense of traditional parties, and the increased yields became a good reflection of market perception on the possible uncertainty this could cause, particularly if it lasts until the next general election, which is due before 15^th August 2029.

Reform ended up winning the largest number of councillors, with Labour and the Conservatives losing out the most on the day.

Despite this, bond investors remained encouraged following Starmer’s reiteration of his plan to stay the course of the current government. But with yields floating around 5% and several reports discussing plans to oust him, it shows that the optimism wasn’t particularly far-reaching.

A possible end to the Iran conflict?

Outside of domestic politics, investors took comfort from reports that suggested that a peace deal in Iran was looking more likely.

Oil prices dropped significantly on Wednesday when reports came out of a one-page memorandum of understanding that was close to being agreed upon. WTI crude oil decreased from over $100 per barrel to slightly over $90 – it ended the week just over $95. However, there’s still a large gap between the current price and the sub-$60 prices that it was trading at prior to the Iran conflict.

Despite the initial positive signs, the optimism began to wane over the weekend when reports revealed that more tankers had been hit and seized. This took a further negative turn on Monday when Trump regarded Iran’s peace proposal as ‘unacceptable’. As a result, oil prices increased.

Further optimism in the US markets

US equities seem to have weathered the storm of the Iran conflict well. At the end of last week, they posted more strong returns and continued to move up into record territory.

Tech companies have been the main driver of this growth. They struggled at the beginning of the year as a result of investor concerns about high spending on AI and the time it would take to make returns. Since then, it looks like some of these worries have subsided. After March lows, the sector has recorded double-digit growth. And chip makers are feeling the boost too, with companies like Intel and AMD seeing their value double over the last month.

Shares have been boosted by the recent earnings season, which surpassed many expectations. The wider performance is reflective of the increased optimism that the impact of the Iran conflict will be short-lived.

But the Equity Strategist at St. James’s Place, Carlota Estragues Lopez, warns that the optimism might be premature. She says:

“Equity markets have been quick to price in the de-escalation narrative, but less patient in pricing the economic damage of the conflict. One risk that may be underappreciated is that inflation doesn’t need to reaccelerate sharply to matter, it just needs to remain sticky enough to keep pressure on earnings expectations. So, while the index rally makes sense if the worst outcomes are avoided, the overlooked risk is complacency around inflation persistence.

“The first quarter earnings season covers results announced from mid-February to mid-May and doesn’t capture the full extent of the impact of the conflict. Even in a contained scenario, we still have to work through issues like inventories, insurance costs, shipping routes and margin pressure, which may become more evident in second quarter earnings season.”

Friday brought good news regarding US jobs. April saw 115,000 non-farm jobs added, which exceeded expectations. Wage growth increased slightly to 3.6%; however, this wasn’t enough to reverse the longer-term downward trend.

Overall, the figures suggest that the labour market is fairly healthy. But it won’t be enough to move the needle for the Federal Reserve, who are likely to keep focused on inflation when they next discuss interest rates.

Wealth Check

A stretch for homebuyers – the most since 2008

More than a fifth (21.3%) of homebuyers’ gross income was committed to meet mortgage payments in 2025 – this is the highest level since the global financial crisis. This is according to a UK Finance report, which highlights intensifying affordability pressures on homebuyers across the country.¹

Even though costs have increased, house purchase mortgage completions have gone up by 17% year-on-year in 2025 to 723,000.

The report also showed the pressures for borrowers across the buy-to-let sector, where there’s been a reduction in returns and many landlords have chosen to leave the market.

Landlords face a much more challenging environment as a result of stamp duty surcharges, the progressive removal of income tax relief for mortgage interest, higher mortgage costs and stricter underwriting standards.

Additionally, the Renters’ Rights Act that recently came into law is also likely to add further costs and a further administrative burden on beleaguered landlords.

Mental Health Awareness Week 2026

Mental Health Awareness Week, the annual campaign that highlights issues surrounding mental health, is happening this week.

The initiative is run by the UK charity Mental Health Foundation, who encourage people to initiate conversations, offer support and advocate for changes to improve mental health.

This year, the theme is ‘action’, and the charity are encouraging people to do something for themselves or for someone else to support and promote good mental health.

Money concerns can be an unwelcome cause of stress, but there are several steps you can take to improve your financial well-being and mental health. These include:

Creating a small emergency savings fund. By having a buffer, your sense of security can improve.
Having a conversation with a trusted friend, family member or professional financial adviser so you can voice any financial concerns.
Forming frequent positive actions like regular saving and bill payments to help reduce decision fatigue.

Source

¹UK Finance (2026). Loans Where We Live: Regional mortgage market compendium 2026. Available at: www.ukfinance.org.uk/system/files/2026-05/Loans%20where%20we%20live%20-%20Regional%20mortgage%20market%20compendium%202026.pdf (Accessed: 11^th May 2026).

In the Picture

Currently, UK intermediate and long-term gilt yields have reached, or are near, multi-year highs – reflecting a difficult economic outlook and concerns closer to home (weak economy, high dependency on imported energy and political uncertainty). This unappealing risk profile means that UK bond yields are higher than its G7 peers.

Higher borrowing costs will limit the government’s ability to increase spending and reduce taxes – many more tough decisions may lie ahead.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 11/05/2026

WeeklyWatch – Calm shores emerge despite conflict

D.6367 Wellesley WeeklyWatch 05.05.2026_1420 x 474

6^thMay 2026

Key Takeaways

US shares have the best monthly performance since 2020
Investor sentiment remains positive following upbeat earnings and intact AI investment thesis
Energy and associated costs as a result of the Iran war being assessed by investors

Last week saw strong tech earnings, accelerating AI investment and resilient investor confidence push US markets to record highs. But on home shores, while people flocked to the coast for the bank holiday, the shorter week across Europe didn’t stop central banks’ hawkish outlook.

Stock Take

US shares reach new highs thanks to tech

By the end of the week, the S&P 500 and Nasdaq reached record highs. And although there was a spike in energy prices, it didn’t dampen market sentiment, with a strong corporate earnings season and positive AI news flow providing the boost.

As reporting season draws to a close, the four key US-based cloud operators (known as hyperscalers) – Microsoft Azure, Amazon Web Services/AWS, Google Cloud and Meta – revealed double-digit revenue growth. This demonstrated strong end-user demand and payoff for the high spending that has already taken place.

What this does is encourage these companies (which make up almost 20% of the S&P 500’s weighting) to raise their aggressive spending plans even further. Before the first quarter 2026 results were revealed, they were expected to spend just over $650 billion on capital expenditure in 2026. Collectively, the figure is now expected to be over $700 billion. Apple also revealed strong earnings at the end of the week.

So far in quarter two, US companies have reported annual earnings growth of nearly 30%, which is more than four times the mid-single digit average growth that’s been recorded over the last five years.

Increased oil prices pushed aside by investor confidence

It was a four-year high for Brent crude oil, which reached $126 per barrel in the middle of the week but then fell back to $110 per barrel as the week came to an end. The spike came about following reports that the US was considering more attacks on Iran in order to break the political and military stalemate. To compare, Brent crude oil cost $61 per barrel at the start of 2026, and on the eve of the war’s outbreak, it was $73 per barrel.

While the Strait of Hormuz stays closed to tankers, the deficit between global energy usage and global supply will get bigger. Global inventory levels are currently serving as a buffer against the energy imbalance. Numerous analysts cite May as a critical month in seeing if the price of oil stays above $100 per barrel for the foreseeable future.

There are only a few sectors, including transportation (airlines especially), that have reported being severely impacted as a result of the higher energy costs. Conversely, the current boosters of market sentiment, like AI and technology, seem to have suffered very little. The limited effects have therefore contributed to the easing in equity market volatility. Even though energy prices are high, the low stock market volatility could suggest that investors believe the worst of the conflict has come to an end. Additionally, it may also be a sign that markets aren’t expecting relations between the parties to worsen.

Will central banks spoil the party?

Three major central banks met last week to decide on interest rate changes, namely the US Federal Reserve (Fed), European Central Bank (ECB) and the Bank of England (BoE). Each decided not to change their rates – a move that was expected by investors. Although it was a holiday-shortened week across Europe, the mood for both the ECB and BoE was hawkish, with investors expecting both banks to increase their interest rates to battle the risks to inflation and growth in the face of the Iran war.

Stagflation (low economic growth and high inflation) risks are becoming more noticeable across Europe. Economic growth of just 0.1% quarter-on-quarter in January to March (which was below expectations) contrasted with an annual inflation rate rise from 2.6% to 3.0% between March and April. Barring a rapid and total resolution to the Middle East war within the next few weeks, investors believe that the ECB will increase their interest rates by 0.5% at their next meeting on 11^th June.

With an already weak growth outlook, vulnerability to energy inflation is a problem for the UK and is likely to negatively impact prospects. Elections taking place this week are also not expected to spell good news for the government. This highlighted risk profile has resulted in UK gilts offering the highest bond yields among the G7 group of advanced economies.

Last week, one member of the BoE’s interest rate setting committee voted in favour of an interest rate increase. It’s expected by investors that when the Bank next votes on 18^th June, there’ll be an increase in interest rates. The Fixed Income Strategist at St. James’s Place, Greg Venezilos, commented:

“In the current environment, it’s good to have a dissenter – it shows that the bank is watchful and alert to the threat of higher inflation. This willingness to hike rates sends a reassuring message to investors.”

Warsh edges closer to Fed chair position

Holding interest rates was less significant news for the Fed; there was more interest in the news that the Senate banking committee approved the nomination of Kevin Warsh as the new Fed chair. The nomination is likely to go to a vote by the full Senate next week. President Trump has spoken publicly about his desire for interest rates to be cut and investors are unsure about what Warsh’s leadership of the central bank will mean. Warsh has expressed that he would prefer less frequent transmitting of Fed thinking on rates to markets, and there is further concern as to how resilient Warsh will be when he faces political pressure.

Wealth Check

Royal assent for Pension Schemes Bill after months of back and forth

The House of Lords and the House of Commons have been debating the Pension Schemes Bill for months, and last week it received royal assent.

A breakthrough was reached when the Lords agreed to a scaled-back version of the mandation powers, which had been one of the biggest points of contention between the two houses. These allow the government to influence how pension schemes can invest savers’ money.

Under the new law, and following concessions made by the Commons, the House of Lords was satisfied that the mandation powers will now have the appropriate safeguards in place.

The Pension Schemes Act 2026 has been welcomed by the pensions industry. It’ll bring about major reforms to the UK pensions system and require schemes to prove that they will deliver value for money for pension savers.

What other measures are included?

The value for money framework will protect savers from being stuck in underperforming schemes. Additionally, it’ll standardise how value is assessed, which will make schemes easier to compare and more transparent.
Small pension pots can be automatically combined.
It will reduce costs and increase choice by creating larger defined contribution ‘mega funds’ of at least £25 billion.

Renters’ Rights Act in action

On Friday 1^st May, the Renters’ Rights Act became law in England, with major changes for private landlords and tenants coming into place. Now, no fault-evictions are banned and landlords in the private rented sector can’t evict tenants without a valid legal reason.

Fixed-term contracts have also been removed, which means that all tenancies are open-ended. Landlords are allowed to raise rent on a property only once a year and with at least two months’ notice. Tenants are allowed to challenge increases if they feel these increases are unfair.

A ban on offers above the advertised price of properties on the market is also in place to put a stop to bidding wars. When an offer is accepted, landlords won’t be able to ask for more than one month’s rent in advance as part of the deposit.

In the Picture

When experiencing times of economic uncertainty, central banks usually choose to keep borrowing costs higher in order to control rising inflation. For example, the Russia–Ukraine conflict created a spike in inflation and the BoE increased the base rate to 5.25%.

So far, the Iran conflict has resulted in the BoE keeping the base rate at 3.75%, but analysts are now expecting the BoE to increase the rate at least twice this year.

Consequently, lenders have been increasing the cost of new fixed-rate mortgages. The average fixed-rate mortgage deal is rising in the UK. The chart shows that the average five-year fixed-rate deal went up to 4.43% in March, compared to 4.01% in February.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 05/05/2026

WeeklyWatch – US–Iran ‘tug of war’ rages on

D.6367 Wellesley WeeklyWatch 28.04.2026_1420 x 474-

28^th April 2026

Stock Take

US markets rise despite ongoing Iran conflict

Positive sentiment towards technology and AI continues, and another good week of corporate earnings resulted in a boost for US markets – including new highs for the S&P 500 and the Nasdaq Composite.

Nearly one third of companies in the S&P 500 have now revealed their first quarter earnings, with a higher-than-average number reporting positive earnings, surpassing expectations. Buyers sought out chip manufacturers, which boosted investor sentiment in the technology sector. It’s widely believed by investors that these companies will have a significant role as AI use continues to expand and competition between the main players increases.

The Equity Strategist at St. James’s Place, Carlota Estragues Lopez, commented on the US market’s narrow reliance on technology since the Iran war began, saying that traditional hedges such as fixed income and gold haven’t worked as well as they have previously. She added:

“This greater uncertainty has meant investors have been reluctant to sell risk to avoid being surprised on the upside.”

Continued higher oil price hinders Europe

There was a rise of 17% in the price of Brent crude oil last week – its largest move since the start of the war. No progress has been made with peace talks, and 10% of global oil supply is sat in the Strait of Hormuz, meaning that demand continues to outstrip supply. The US is benefiting as they produce around 16% of global oil output annually, and their government reported that exports of crude and petroleum products have hit a record of nearly 12.9 million barrels per day.

A combination of factors led to European stock markets finishing the week in negative territory, including weak regional economic data, limited exposure to technology and AI, and dependence on energy supplies from the Middle East. Benchmarks in Germany and France closed more than 2% lower, and the FTSE 100 fell by 2.7%.

Halving the growth outlook for Germany

Germany is the eurozone’s largest economy and importer of energy. Last week, they cut their annual economic growth (GDP) forecast for the year to 0.5%. And for 2027, they’ve reduced the figure from 1.3% to 0.9%. Even though these downgrades were expected, it remains disappointing as there was a tentative 0.2% expansion in 2025, following the two-year shrink in their economy. Russia’s invasion of Ukraine created a big energy shock for Germany and was largely responsible for the nation’s recent economic weakness. On top of an already poor week, Germany’s composite PMI survey – an important indicator of business activity – has also worsened because of higher energy, fuel and transport costs.

It’s a similar scenario for the eurozone’s second largest economy, France. Input prices for business have risen to a three-year high. Currently, German companies have been more aggressive than their French counterparts when it comes to passing additional costs onto consumers.

Retail sales boosted by UK motorists

UK retail sales in March were 0.7% higher than February’s figures, surpassing expectations; meanwhile, domestic consumer confidence has fallen to its lowest level in a year. One of the main reasons for these mixed readings is the rise in fuel sales as motorists prepare for more increases in pump prices and stock up. Average UK diesel prices (incl. VAT) have increased by 34% since the beginning of the US–Iran war, while petrol prices have increased by 19%. Excluding this ‘stock-building’ by motorists, retail sales were a calmer 0.2%.

Path opens for a new Fed chair

It’s been announced that the US Justice Department has ended the investigation into Jerome Powell, the current chair of the US central bank (Fed). Powell had said he’d remain as chair as long as investigations were underway.

Most commentators believe the end of the investigations should help pave a clearer path forward for President Trump’s nomination, Kevin Warsh. Powell’s term comes to an end in May, and the confirmation should bring an end to uncertainty about the transition, which will inevitably be welcomed by markets.

Warsh was a Fed governor during the 2008 global financial crisis and is regarded as an inflation hawk – someone who’s careful when it comes to cutting interest rates too early. Trump’s public preference for lower interest rates seem to conflict with Warsh’s previous comments regarding inflation. But Warsh has indicated that there may be room for US interest rates to be cut from their current levels, which may be possible thanks to the AI productivity gains.

Wealth Check

St. James’s Place supports government campaign to boost British investing

A nationwide campaign has been launched in the UK to showcase the benefits of investing, brought to you by ‘Savvy the squirrel’.

Invest for the Future is a multi-year campaign which is headed up by the UK trade body, the Investment Association (IA), and is supported by the government and numerous UK financial services firms, which includes St. James’s Place.

The campaign’s research reveals that seven million adults in the UK hold at least £10,000 in cash savings.¹ But within that number, nearly half (44%) of savers have no equity-linked investments, despite cash holdings having their own drawbacks. High inflation can erode the value of cash over time, particularly when savings interest rates are low.

This new campaign aims to break down some of the investment barriers and encourage more people by talking more about how it works and debunking myths and fears surrounding risks. The campaign aims to make the benefits of long-term investing clearer and build people’s confidence with the hope that it will create a cultural shift in investment attitude.

Source

¹Opinium research among 4,000 UK adults conducted between 7^th April and 12^th April 2026.

Risk for the Pension Schemes Bill over mandation powers

Doubt over the future of the Pension Schemes Bill has arisen after the House of Commons rejected it again last week.

The House of Lords and House of Commons agree on most parts of the legislation and intended benefits. However, they disagree about the government’s proposed mandation powers, which would allow the government to allocate large portions of retirement savings into UK private market investments.

The House of Lords have repeatedly raised worries that powers like this could be used to place pension assets into projects that benefit the government and are not in the best interests of savers. The issue has gone back and forth between the Commons and the Lords for some months, but if a consensus can’t be reached before the end of the parliamentary session this week, the bill could fail.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may therefore fall as well as rise. You may get back less than you invested.

Investing does not provide the security of capital associated with a deposit account with a bank or building society, as the value & income may fall as well as rise.

In the Picture

The chart below reveals the energy component in UK consumer inflation over March and April, and dates back to 2019. 2022 stands out as this is when Russia invaded Ukraine, which resulted in a sharp rise in energy prices. In 2026, the red bar for March shows the first month’s impact of the Iran war, which nearly matches 2022. Data for April 2026 isn’t available yet, but a similar dramatic rise may not be too surprising.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 27/04/2026

WeeklyWatch – Clearer horizons for markets?

D.6367 Wellesley WeeklyWatch 21.04.2026_1420 x 474-

21^st April 2026

Stock Take

Another week of share gains

For a third consecutive week, markets rose. Friday’s returns were boosted by the announcement from the Iranian foreign minister that the Strait of Hormuz was now “completely open” to shipping. The US dollar eased, plus there was a fall of 9% in the price of Brent crude oil on the hope that cheaper energy will help ease inflationary pressures. However, yesterday (20^th April), the Strait of Hormuz was closed again, and oil prices were up around 6%. It continues to be a fast-moving situation – markets will be watching to see if further Iran–US peace talks in Pakistan come to fruition.

When it comes to interest rate policy, the Chief Economist at St. James’s Place, Hetal Mehta, said:

“Central banks are obviously conflicted when it comes to supply shocks. At the moment, markets are pricing in broadly no change in interest rates by the US Federal Reserve over the rest of this year. For the Bank of England, only one 0.25% hike is priced in, but I think the bar to hiking is relatively high.”

US banks achieve record Q1 results

Positive results from numerous US financial companies aided markets as US earnings season started up last week. Results in this sector are often seen as a barometer of both corporate and household confidence. Financials are expected to deliver one of the strongest quarterly earnings in the S&P 500.

This encouraging growth is set to surpass expectations that were set at the end of last year. The volatility caused by the Iran war has significantly benefited investment banks. One such example is JPMorgan Chase, the largest bank in the US: they recently revealed record trading revenues of US$11.6 billion during the period.

The fees earned in investment banking increased by almost a third, as corporate dealmaking stayed strong. Goldman Sachs and BNY Mellon were other banks that also exceeded estimates.

The heads of Bank of America and JPMorgan Chase both suggested that while consumers are paying more for petrol, the knock-on effect hasn’t reached household expenditure. For US households, the spending on petrol is relatively low, accounting for between 3% and 5% of monthly household outgoings. Oil prices are below US$100 per barrel again, and it’s hoped that the current ceasefire will be extended and the Strait of Hormuz will be opened before existing stocks are exhausted. This will assist in capping inflationary pressures and the need for interest rate increases.

Further economic downgrades for the UK

It’s been three weeks since the Organisation of Economic Cooperation and Development (OECD) downgraded the 2026 outlook for the UK economy, and now another multilateral agency has adopted a similar stance. The impact of the Iran war hasn’t been calculated in costs for the UK economy yet, but the International Monetary Fund (IMF) stated that the UK would likely be hit the hardest out of any major economy as a result of the Iran war. Both agencies opted to cut their projections for 2026 UK economic growth by 0.5%. The OECD’s revised figure now stands at 0.7% and the IMF’s is 0.8%.

While the degree of the IMF adjustment to UK growth in 2026 was relatively high, it’s on a similar growth trajectory to Germany. It’s expected that the UK will grow faster than Italy – their economy is only projected to expand by 0.5% for both 2026 and 2027.

But why is the UK projected to be so severely affected compared to other countries? Our vulnerability lies in our increasing reliance on imported energy. Against the backdrop of a more than 30% rise in the price of oil and natural gas since the war began, UK government data shows that 43.8% of all the energy used domestically was imported in 2024, a 3.4% increase on the year before.¹In contrast with this was domestic energy production, which was at a record low over the same time period, having dropped 68% since its peak in 1999.

The tech comeback

Multiple companies in the US tech sector outperformed during the course of the week, boosting the S&P 500 past its previous all-time high set in January 2026. The tech-focused Nasdaq Composite index also broke another record and delivered 12 consecutive days of “higher highs”. So, what’s changed?

It was a bearish story at the start of the year for the tech sector, particularly with investor anxiety surrounding the large amounts of spending for AI and whether it could ever make a meaningful profit. Tech firms are budgeting half a trillion dollars on capital expenditure in 2026. Simultaneously, there’ve been concerns that AI could replace many of the services sold by software companies.

Investor sentiment has become more optimistic lately, fuelled by the hopes of a settlement between nations at war in the Middle East. A sell-off for tech stocks started at the end of October 2025, and valuations in the sector have had a strong rebound since the start of April.

This momentum has been helped along by positive updates from major players across the sector. Quarterly results from ASML, a Dutch company that manufactures chipmaking machines (and Europe’s most valuable company), and Taiwan Semiconductor Manufacturing Co. (TSMC), a key supplier of chips to industry giants such as Nvidia and Apple, show that industry demand is strong. Both companies also increased their full-year forecasts.

Source

¹Department for Energy Security and Net Zero (2025). UK Energy in Brief. Available at: https://assets.publishing.service.gov.uk/media/688890c3a11f859994409132/UK_Energy_in_Brief_2025.pdf (Accessed: 20 April 2026).

Wealth Check

Is it the end for salary sacrifice pension schemes amid Reeves’ pension raid?

Recent reports have indicated that many companies are now looking to scrap their salary sacrifice pension schemes for their employees.

This comes after Chancellor Rachel Reeves looks to bring in a cap on the amount workers can put in a pension without paying National Insurance contributions (NICs). From April 2029, there’ll be a £2,000 annual cap on the amount of pension contribution individuals can make out of their gross salary that will be exempt from NICs.

In a pensions salary sacrifice scheme, an employee’s contract is changed to reduce their salary in exchange for increased contributions, made by the employer, into a pension. The employee reduces their income tax liability as well as saving on NICs, while employers also get relief on their NICs.

The changes that are coming into effect from 2029 mean that employees (and employers) will have to pay NICs on any salary sacrifice pension contributions over £2,000 per year. Overall, this makes the perk less desirable for both parties.

It’s been argued by experts that introducing the £2,000 cap would have a negative long-term effect on pension saving. The latest reports suggest that many companies are looking to end salary sacrifice before the change is put into place.

The Office for Budget Responsibility (OBR) has suggested the impact of the salary sacrifice cap would affect more people than expected and not just those in higher tax rate bands.

The OBR estimates that the rule change will bring in £4.7 billion in revenue for the government in the 2029/30 tax year.²

Government looks to retain mandating powers from Pension Schemes Bill

The government are one step closer to finalising the Pension Schemes Bill. This will give them the power to direct how pension schemes invest savers’ money and target different asset classes.

The House of Commons approved an amended version of the bill last week, which sees the government set to retain the powers set out, with refreshed wording to draw closer to last year’s Mansion House Accord.

As part of the Mansion House Accord, several UK pension providers pledged to invest at least 10% of their defined contribution schemes into private markets, with the aim to unlock £50 billion for the UK economy by 2030.

The House of Lords originally opposed this part of the bill, saying the government will have too much power to direct pension schemes in how they invest workers’ pensions.

The bill returned to the House of Lords on 20^th April for the latest amendments to be considered.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

Source

²Office for Budget Responsibility – February 2026

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 20/04/2026

WeeklyWatch – Markets back in the fast lane

D.6367 Wellesley WeeklyWatch 14.04.2026 – 1420 x 474-

14^th April 2026

Stock Take

Markets find momentum from ceasefire news

A strong week for the S&P 500 saw it reclaim much of the ground lost since the Iran war began, with other markets also gaining momentum. The tech-heavy Nasdaq Composite rose by almost 5%. European markets bounced back, while Japan’s Nikkei 225 finished the period 7.2% higher.

Energy was the only sector to post negative returns, reacting to the 14% fall in the price of Brent crude during the week. Even after that drop, oil remained more than 30% above the level seen before the conflict started.

Overall sentiment was boosted last week by news of a two-week pause in hostilities in the Middle East, ahead of peace talks held over the weekend in Pakistan. But despite the optimism, the talks broke down and yesterday (13^th April) saw the US blockade Iranian ports and the latter threatening retaliation. The ceasefire agreement is hanging in the balance, with the previous closure of the Strait of Hormuz, Israel’s ongoing military action in Lebanon and the future of Iran’s nuclear programme remaining key sticking points.

Bonds unsettled as yields rose on Friday

Returning to the review of last week, we saw bond yields recover on Friday. The main driver was the release of US March inflation data, which reflected the impact of higher energy prices. Consumer prices rose 3.3% compared with March 2025 – the highest reading in two years and a marked increase from February’s 2.4%. Core inflation, which excludes the more volatile food and energy categories, rose by 2.6%.

Analysts had foreseen the uptick in inflation, with energy prices sitting more than 10% higher than a year earlier. Even so, the figures came in slightly better than forecast. Hetal Mehta, St. James’s Place’s chief economist, said:

“The impact of the energy price shock is still going to take several months to feed through, even if there is a rapid de-escalation and a resumption of supply.”

By contrast, US consumer sentiment data for April disappointed. It fell to a record low as households expect a sharp rise in inflation during 2027. That uncertainty may lead consumers to spend less just as businesses face higher energy costs. Questions are now being asked about whether unemployment could rise. Many investors believe stubbornly high inflation would make it harder for the US central bank, the Federal Reserve, to cut interest rates if the labour market weakens.

Light at the end of the tunnel for China deflation

Many economists see deflation, where prices keep falling, as a bigger challenge for governments and central banks than inflation. When goods become cheaper month after month, people often delay purchases. Why buy a new car or household appliance today if it may cost less next month? As demand softens, manufacturers may cut output. Their debt levels stay the same, while the incentive to recruit also weakens.

Central banks have fewer tools available in a deflationary environment. In most cases, interest rates can only be cut to zero. Although on rare occasions, rates have moved below zero – in 2019, the European Central Bank lowered rates to -0.5% in an effort to encourage spending.

China has now announced that the three-year producer price deflation ended in March 2026. Since 2022, fierce competition in manufacturing, combined with weakness in the property market and subdued consumer confidence after the pandemic, had pushed prices lower.

The turning point has been the sharp rise in energy and commodity prices since the Iran war began. As a result, the producer price index rose 0.5% in March compared with the same month in 2025. In February 2026, the equivalent figure was -0.9%.

While the March rebound had been expected, hopes now rest on it continuing. Energy prices have eased from the highs seen during the first month of the war, and both government and businesses will want that to feed through into consumer behaviour. Rather than delaying spending in the belief that prices will keep falling, the ideal outcome would be for households to bring purchases forward before the war’s effect on costs pushes prices higher.

Wealth Check

HMRC’s warning over pension tax avoidance schemes

HM Revenue & Customs (HMRC) are urging workers to “check before you dip” into private pension savings, warning that schemes claiming to offer better tax efficiency may in fact be pension tax avoidance arrangements. HMRC say those involved could face much higher costs and unexpected tax bills.

The caution forms part of a wider campaign aimed at raising awareness of fraudulent tax avoidance schemes.

People who fall victim to – or who choose to take part in – such schemes may face losses through penalties and interest on unpaid tax. This would come on top of any fees charged by those promoting the scheme.

HMRC have also focused on contractors and agency workers, amid concerns that growing numbers are being drawn into tax avoidance structures marketed through complex pay arrangements.

These schemes are often linked to umbrella companies or agencies. Many are not compliant with UK tax rules, leaving workers exposed to charges and interest on unpaid tax.

HMRC’s tell-tale signs of poor tax advice:

If it sounds too good to be true, it probably is.
Check payslips and contract terms to make sure the correct income tax and National Insurance are being paid.
Research any tax refund company or tax adviser before using them.

FCA asked to rethink investment risk warnings

The Financial Conduct Authority (FCA) have been urged to review the rules around how investment risk warnings are shown to retail investors.

A government-commissioned review led by the Investment Association, and supported by St. James’s Place, found that current warnings, including the prominent “capital at risk”, may discourage long-term investing.

The review also found that repeated use of such warnings can reduce engagement, particularly among people looking for reassurance and clarity when considering investments.

St. James’s Place have played a central role in shaping the guidance published in the Investment Association’s report as part of the technical expert group.

Recommendations include using warnings that give more context and a fairer picture of both risks and potential rewards. Firms should also have greater flexibility over timing and prominence, depending on where a customer is in their decision-making journey.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Source:

Bank of England, April 2026

In the Picture

Eyeing up a staycation? Europe’s airline industry have warned that regional jet fuel supplies may only last a few more weeks unless flows resume. Indeed, some regional airports in Italy have already introduced refuelling restrictions.

Normally, up to half of Europe’s jet fuel passes through the Strait of Hormuz, but traffic through the route has largely stalled. Pressure is being increased by the approaching summer holiday season, when demand typically peaks, as well as damage to refining infrastructure in Saudi Arabia and Gulf states.

Even if hostilities come to an end, jet fuel prices are unlikely to fall at a corresponding rate. Repairing and restarting damaged refining capacity is expected to take months. In the meantime, alternative supply routes will be needed, bringing added complexity and likely higher air fares for some time.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Past performance is not indicative of future performance.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 13/04/2026

WeeklyWatch – Finding a way out of the conflict

D.6367 Wellesley WeeklyWatch 08.04.26 – 1420 x 474-

8^th April 2026

Key Takeaways

The majority of key assets finished the period in negative territory.
Shares were outperformed by fixed income as investor concerns shifted from inflation to recession.
In GBP, US shares were at the front when it came to returns on a relative basis. Markets in Europe were outperformed by the UK. Emerging markets and Japan suffered double digit declines.

Stock Take

Searching for the exit

The past week marked the first positive period for shares in the US and Europe since the beginning of the Iran war. There was a rise of at least 3% in major indices in the US. It was also a particularly successful week for the tech-heavy Nasdaq Composite, which delivered its best weekly returns since November 2025. On the other side of the coin, bond yields and the price of gold fell, while stocks in Japan and China weakened.

Last Thursday, President Trump addressed the US nation, saying that the Iran war would conclude in a couple of weeks, but failed to offer more specific details. Yesterday (7^th April), the Strait of Hormuz remained closed off for nearly all traffic and Trump’s threats of further conflict escalation once again resulted in a spike in oil prices. However, there have been major developments overnight, with Trump announcing he had agreed to a ‘double-sided’ ceasefire for two weeks, to allow negotiations to take place to try and come to a permanent settlement. It’s contingent on Iran also suspending hostilities and fully opening the Strait of Hormuz to commercial shipping traffic, which the regime says it will do.

While the news has had a positive effect on markets and oil costs, there’s a long way to go. Last week, the West Texas Intermediate (WTI) – the US domestic oil benchmark – rose by nearly 12% to its highest price in almost four years. Motorists across the US have received quite the financial spike: the price of petrol has risen by just over $1 from the beginning of the war to $4 per gallon. This will likely be a contributing factor in the headline inflation rise in March (including energy and food prices), the details of which are expected to be revealed later this week by the US Bureau of Labor Statistics.

As his personal poll ratings weaken, both Trump and the wider global markets are hoping for a conclusion to the conflict within weeks rather than months. This positivity is providing support for the bull case for markets, holding them up through the uncertain long-term effects of the conflict on the global economy.

European governments stepping in to help consumers?

The big increase in oil prices following the start of the war created fears of a rebound in inflation in the UK, Europe and even the US.

To begin with, some analysts suggested that interest rates would need to increase. Impact from the conflict on the economic outlook has resulted in a pivot: markets are more concerned about the issues related to weaker economic growth. If central banks choose to increase interest rates, this will hamper the low growth expectations across Western economies.

Increased interest rates will also add pressure on already high government debt. As an example, the Bank of Italy has cut predicted annual domestic economic growth in 2026 and 2027 to just 0.5% as a result of the war in Iran. Simultaneously, the Italian government are facing the challenge to ease some of the additional costs – mainly higher energy prices – by tax cuts. The country has one of the highest government debt to economic growth (GDP) ratios in the eurozone.

Other nations in Europe have similar demands. The UK faces pressure to extend the freeze on fuel duty and to deliver additional support. Governments in Europe will be aware of the need for action to respond to the energy shock, but they also risk provoking the fixed-income markets. Unfunded tax cuts will be punished by higher bond yields.

March marks a good month for US job creation

The best month for US job creation in over a year was March 2026, which saw 178,000 new jobs created, reducing the national unemployment rate to 4.3%. The start of the Iran war didn’t have much effect on what is backward-looking data. It has added to the expectation that the US central bank, the Federal Reserve, will leave interest rates as they are for the rest of the year.

No let-up for the tech sector

In the last few weeks, some analysts have been praising the merits of the US technology sector and have suggested that they’ve been more protected from the global market turmoil. However, since the outbreak of the war, the tech sector has followed the same pattern as the broader indices in the US. The sector’s strong multi-year returns make it a clear option for investors looking to crystallise profits. Despite the sell-off for technology, the sector still accounts for about one-third of the value of the S&P 500.

The first quarter’s weakness has been more evident. The Magnificent 7 – the group of leading tech companies – have significantly underperformed the S&P 500. A further problem could be linked to AI; many mega-tech companies have committed to incredibly high levels of capital expenditure on data centres. It’s been an ongoing concern for investors that the high investment levels will make it extremely challenging to get an attractive investment return.

Wealth Check

Government rejects call to double IHT deadline for pensions

Calls to double the amount of time bereaved families will have to pay inheritance tax (IHT) on pension assets and estates with qualifying agricultural and business property have been rejected by the government.

The House of Lords recently proposed that the current six-month deadline for IHT payments on estates should be extended to one year for those specific assets. It was put forward to give families more time to deal with the complexities that are involved in sorting out IHT that’s due on pensions and business assets.

St. James’s Place has supported the House of Lords’ proposal to increase the payment deadline and provided evidence to show the negative impact of the current six-month timeframe.

Unused pension assets will become liable to IHT from April 2027.

There’s now concern among industry experts that six months won’t be enough time for people to locate the deceased’s pensions, calculate the IHT due on the estate and complete the payment to HMRC.

The current timeframe also poses a challenge for asset-rich, cash-poor farms and businesses that may have to resort to selling their business in order to meet their IHT liability. Valuations may need to take into account assets such as shops and rental businesses, creating further challenges that may require more time to fully resolve.

Late payments of IHT, made after the six-month deadline, incur a charge of four percentage points above the Bank of England’s base rate, which is currently 3.75%.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

In the Picture

The chart below shows the price of urea ammonium nitrate, commonly referred to as UAN. It’s one of the most widely used fertilisers across the globe: efficient, versatile and a liquid, so therefore easy to apply (many other fertilisers aren’t like this). But one of the downsides is that its production is highly energy-intensive.

A key supplier of fertiliser is the Middle East. With the increase in production costs and the near total closure of the Strait of Hormuz, prices of fertiliser have significantly risen. This could result in higher global food prices if they remain high for a long time.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 07/04/2026

WeeklyWatch – Economies take a hit amid conflict

31^st March 2026

Stock Take

Iran conflict marks one month, UK growth outlook down

The Iran conflict is now entering its fifth week, and attention is increasingly turning to how resilient the UK economy would be during a prolonged economic shock.

These concerns have intensified following last week’s revised growth forecast from the Organisation for Economic Co-operation and Development (OECD). They lowered their growth forecast for the UK in 2026 to 0.7%, compared to the 1.3% forecast in December. Out of all the G7 major economies, the UK faced the most severe downgrade.

Additionally, a recent survey conducted by the British Retail Consortium revealed that since the beginning of the Iran conflict, consumer sentiment has taken a nosedive.

Macro noise has been resounding – so much so that when the Office for National Statistics said that UK inflation (measured in CPI) was flat in February, the markets hardly registered the news. However, because the data only covered up to 28^th February, it didn’t carry any of the impact of the Iran conflict.

The economic issues that the UK is facing aren’t unknown. The UK annual GDP growth has been around or just above 1% for a while. Even though inflation has been on a gradual downward trend, it’s still above the 2% target. And ‘stagflation’ could become a reality if higher energy costs increase inflation and stunt GDP growth.

What is stagflation?

When an economy experiences slower growth and both unemployment and inflation are high – all simultaneously – stagflation can happen. The UK isn’t the only country that’s potentially facing this outcome in light of the continuing Iran conflict. In fact, many European nations are facing similar circumstances. And the US could also receive a stagnation shock, despite their faster-growing economy and increased insulation from the current rise in fuel prices.

Central banks are left in a challenging position. Inflation pressures are resurfacing, mostly as a result of higher energy prices, meaning that the banks are more reluctant to cut interest rates. Tighter policy runs the risk of weakening economic growth and causing a stagflationary issue.

The longer the Iran conflict goes on, the higher the likelihood of markets pricing in more tightened measures. In the UK, the markets are expecting the Bank of England’s policy rate to rise to around 4.25% by the end of 2026 – an increase of 1% in comparison to expectations before the conflict.

Should developed market economies fall into stagflation, the Equity Strategist at St. James’s Place, Carlota Lopez, states that US equities could be more exposed than the UK due to higher starting valuations:

“In a stagflationary environment, it becomes much harder to justify the elevated multiples we currently see across US equities. That suggests valuations are more likely to come under pressure. By contrast, valuations in the UK and Europe are less stretched. While the inflation impact could be higher in the UK and Europe because of their higher energy dependence, and these markets could still be affected, on a relative basis, US equities may face greater downside risk, which supports our current positioning across portfolios.”

Stagflation is just one concern. Increased inflation will place more pressure on corporate margins and demand will weaken everywhere. Because of its energy self-sufficiency, the US is more insulated than Europe. Increased energy costs in the latter will affect the bottom line and negatively impact returns.

Despite the advantage, US stocks revealed a similar performance to other global peers in March. The FTSE 100 finished the week down 8.7% since the end of February and the S&P 500 was down 7.4%.

How has the dollar behaved?

US equities claim another advantage over other markets through the resurgent dollar. Prior to the conflict, the currency had been on a downward trend. President Trump’s erratic nature, a constantly changing international scene and investors seeking to reduce exposure to the US had encouraged a softening for the dollar.

As part of the flight to safety since the beginning of the Iran war, investors have demonstrated that there’s still demand for the dollar. Even though the price of gold has fallen from over $5,000 per ounce to under $4,500 since the conflict started, the dollar has moved in the other direction.

Imports are slightly cheaper with a stronger dollar. This, in turn, could help the US with their inflationary pressures. However, it makes US-made products comparatively more expensive to export, which could possibly undermine certain types of US business.

Wealth Check

Investor push to use valuable allowances before end of tax year

Investors are being urged to make full use of their annual allowances before the end of this week, which marks the end of the 2025/26 tax year.

The Head of Advice at St. James’s Place, Claire Trott, says:

“Now is the time to consider if you have used all your allowances for this tax year, especially the ‘use it or lose it’ ones.”

Key allowances for the tax year will lapse if they aren’t used by 6^th April. These include individual savings account (ISA) limits, the capital gains tax annual exemption and some gifting allowances.

£20,000 can be saved or invested in an ISA in the 2025/26 tax year. And any interest, income or growth within an ISA is tax-free, making this an important financial planning tool. Trott adds:

“The ISA is clearly a no-brainer, but other allowances need greater consideration. Time is short, but it has not run out yet.”

The £500 dividend allowance and the £3,000 capital gains tax allowance (or £1,500 for assets held in most trusts) are also subject to the same deadline.

Gifting allowances shouldn’t be overlooked. They can reduce the size of an estate for inheritance tax (IHT) purposes. The £3,000 annual exemption can be carried forward for one year, which means that any unused allowance for the previous 2024/25 tax year will expire after this week.

Individuals can also carry forward unused pension annual allowances from the previous three tax years. This means any unused allowance from 2022/23 must be used before the end of this week.

Payment delays result in NS&I to pay out compensation to bereaved families

Following the government’s admission of significant administrative errors at the bank, National Savings and Investments (NS&I) will need to pay out compensation and return savings to thousands of bereaved families.

The state-backed financial services provider had extensive issues with systems and payments that went out between 2008 and 2025. These resulted in wrong payments being made, plus lengthy delays, in particular with deceased customers’ accounts.

NS&I will pay out £500 million to around 37,500 customers who have been impacted by the problems.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 30/03/2026