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.

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.

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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

WeeklyWatch – Keeping an eye on Iran developments

24^th March 2026

Stock Take

Hawkish turn for central banks towards Iran conflict

It’s been nearly a month since the Iran conflict began, and the rapidly changing developments in the region are making it difficult for global markets to keep up.

Yesterday (23^rdMarch), there was a significant rise in equity markets following President Trump’s announcement that there will be a five-day pause to strikes, following successful talks. Immediately, equities soared, while oil prices and gilt yields shifted in the opposite direction.

Prior to this, the opposite had been going on, with the two sides locked in a war of words and statements that served to escalate tensions further. At the weekend, Trump issued a 48-hour ultimatum to Iran: fully reopen the Strait of Hormuz or face attacks on their energy infrastructure. Iran’s response was to threaten a like-for-like retaliation on US-linked assets within the region.

When markets have to move quickly due to fast-paced developments, prices can undergo rapid change, exemplified in the way that soon after Trump made his announcement, Iran denied that talks had taken place. When it comes to the bigger picture of investing, it’s important not to resort to making snap, short-term, emotional investment decisions or make any guesses as to ‘timing the market’. No one can know the direction of travel over the days to come, let alone the weeks to follow.

The fog of war

The medium- to long-term effects of the Iran conflict remain shrouded in uncertainty.

One example of this can be seen in last week’s numerous strikes on gas and oil facilities across the Middle East; we know that the impact of this will linger for some time, even if a peace agreement were to be reached tomorrow. Prices will remain high, and over the upcoming months, inflation will also rise – but the scale and length of this are unclear.

The long-term fallout on global markets also remains unknown. After Russia’s invasion of Ukraine in 2022, the equity markets fell but then rebounded. And before the US/Israeli attack, the markets were trading at or close to record highs around the globe. Will their recovery be just as quick?

In 2022, governments around the world offered their assistance in supporting consumers with energy prices in order to limit inflationary effects. If oil and gas prices continue to increase, questions will arise as to how the government will be able to intervene this time.

The world is in a very different position than it was four years ago. The start of the Ukraine war followed swiftly on from the Covid pandemic, from which consumers emerged with excess savings that they could spend, which aided recovery. At the time, inflation was rising quickly and interest rates were very low. Now, consumer savings are lower and interest rates have increased, and both these and inflation were, for the most part, on a downward path. In summary, equity markets might not adhere to a similar pattern as four years ago.

Reactions from the central bank

As the conflict across the Middle East ensues and develops, it leaves the central banks in an increasingly awkward position. With increased energy prices and uncertainty, it came as little surprise that the Bank of England (BoE) decided to keep interest rates the same in their meeting last Thursday.

They highlighted that it’s expected that CPI inflation will be close to 3.5% in March – almost 0.5 percentage points higher than was estimated in February, which is a result of the increased energy prices. The BoE said they stood “ready to act as necessary” to make sure that CPI inflation stays on track in order to meet the 2% inflation target.

Prior to the conflict, markets had priced in two interest rate cuts over the course of the year, and now they’re expected to increase interest rates two or even three times over the year, which is a significant swing.

While investors predict more rises, there’s been an increase in gilt yields: they hit their highest levels since 2008 on Friday, and the benchmark 10-year rate crossed 5%. After Trump’s ceasefire announcement, yields fell below 4.9%. Higher borrowing costs will affect the government’s future fiscal headroom.

This was the most dramatic swing; however, the BoE wasn’t the only central bank to decide on their current interest rates. Over the last seven days, the US Federal Reserve, European Central Bank and Bank of Japan also voted to keep their interest rates at the same level.

The Chief Economist at St. James’s Place, Hetal Mehta, said:

“This week saw an unusually heavy central bank calendar, with the Fed, BoE, ECB and BoJ all in the same week for the first time since December 2021. Back then, in a pre-Russia–Ukraine conflict era, the global economy was still emerging from the pandemic. Growth was solid, inflation was picking up rapidly and interest rates were still very low. Then came the Russia–Ukraine conflict, which saw energy prices soar, triggering the first major supply shock since the 1970s. Central banks tore up the textbook prescription to look through supply shocks and hiked rates aggressively in the hope of containing inflation expectations.

“Fast forward to the current juncture, and the same central banks are once again grappling with another energy shock, this time stemming from the disruption in the Middle East. All four of the central banks voted to keep interest rates unchanged amid a fast-moving and very uncertain backdrop, highlighting the intention to wait and see.”

Wealth Check

Iran conflict impacts UK households

The inflationary impact is starting to be felt by consumers as the conflict in the Middle East deepens, approaching the one-month mark since the US’s first attacks.

The disruption to the Strait of Hormuz (the narrow shipping route on Iran’s southern coast) has resulted in a significant decrease in shipments of oil and gas. Consequently, the cost of energy has increased, and UK drivers are seeing the price of their fuel fill-ups increasing.

UK households are being warned to prepare for increased domestic energy bills over the next few months. Additionally, the cost of food and consumer goods (clothing, electronics, etc.) is likely to be higher as a result of the cost of transport and rising bills within the supply chain.

Moreover, with inflation also on the rise, banks are taking a more cautious approach when it comes to lending. Lenders across the market have been increasing the cost of fixed-rate mortgage deals over the last few weeks. The result will be higher borrowing costs for first-time buyers and remortgage customers.

As the Iran conflict develops, it’s likely to create a longer period of raised consumer costs. Holidays could become more expensive with airlines facing higher fuel bills. Additionally, some insurance types, e.g. motor and home, could also see increases, with insurers facing increased costs when settling claims. These costs will be passed on through higher premiums.

We’ve compiled four top tips for UK consumers to help minimise the effects of these increased costs:

Switch cash savings to more competitive accounts that have higher interest rates.
Review the fixed-rate energy tariffs that are available and consider changing.
Look into creating long-term financial resilience, which can be done by investing in ISAs and pensions.
Talk to a financial adviser to voice your concerns and help ensure your financial plans stay on track.

10-year backstop on FOS complaints imposed by government

It’s been confirmed by HM Treasury that a 10-year absolute limit for complaints submitted to the Financial Ombudsman Service (FOS) will be imposed.

No time limit currently exists where consumers have only recently become aware of an issue or detriment.

As part of the proposed reform, the 10-year limit will remain absolute, but the Financial Conduct Authority can still grant limited exceptions where appropriate.

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

The favourable tax treatment of ISAs may be subject to changes in legislation in the future.

In the Picture

The continued conflict in Iran has had a huge effect on the price difference between international Brent and US WTI oil prices. This reflects the geopolitical energy disruption vulnerability in Europe and Asia compared to the US.

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 23/03/2026

WeeklyWatch – Oil impacts market momentum

D.6367 Wellesley WeeklyWatch 17.03.26 – 1420 x 474

17^th March 2026

Stock Take

The caution and optimism sentiment scale

Even though global volatility continues to shake up markets, the FTSE 100 still managed to finish last week in positive territory – boosted by the energy sector. Its success came about in spite of January’s disappointing economic data and fading hope in the Bank of England (BoE) making an interest rate cut this week.

The widespread prediction was that the UK would register a modest economic expansion of 0.2% in January compared to the previous month, but this didn’t come to pass. Rather, there was no sign of any growth. The strain was felt across the more dominant services sector, manufacturing and construction. If this pattern continues, it’ll be unlikely that the economy will grow by 0.3% in the first quarter, which is what the BoE had forecasted.

However, optimistic observers highlight that investors should avoid reading too much into only one month’s worth of data. In the last few years, the first quarter performance of the UK economy has been good in comparison to the rest of the year.

Yet the US–Iran war is entering its third week and continues to complicate an already uneasy economic outlook, both domestically and overseas. Earlier in March – but too late to take into consideration the beginning of the hostilities – the Office for Budget Responsibility (OBR) revised and downgraded the UK economic growth forecast for 2026 from 1.4% to 1.1%.

Hopes of UK interest rate cut fade

Over the last month, the Brent crude oil price has risen more than 50% – at the end of last week, the price was more than $100 per barrel. Consequently, the BoE are more likely to decide against an interest rate cut when they meet later this week. Even if the war in the Middle East concludes soon, the resulting disruption to supply is expected to keep energy prices high. This feeds into inflation, which will result in increased costs for businesses and consumers. While a cut in UK interest rates would be supportive for consumers and businesses by reducing borrowing costs, the BoE are expected to prioritise inflationary pressure points.

It’s still a case of ‘wait and see’ when it comes to global events. A worst-case scenario could be that the economy slips into stagflation – when low economic growth combines with high inflation and unemployment numbers. In the UK, the last significant period of stagflation followed the 1973 Arab–Israeli war, when oil prices nearly quadrupled.

Global shockwaves felt strongly in Asia

The UK is far from alone – energy and geopolitical shocks are weighing on economies worldwide, at a time when global growth expectations for 2026 were already modest.

Asian economies in particular are vulnerable to the events in Iran. Much of the oil that passes through the Strait of Hormuz is destined for Asian markets, with China, India, Japan and South Korea accounting for the majority of these purchases.

Even though China is the world’s largest oil importer, they’re expected to be fairly shielded from the near-term volatility in energy prices – this is down to the country’s strategic reserves, which could support their economy for three to four months. And even though Japan imports almost all their oil, they also have a strategic reserve that can cover the next couple of months of consumption.

Imported energy is also relied on by India and South Korea, and some analysts are concerned that disruptions to the South Korean economy could result in a negative knock-on effect when it comes to domestic chip production. This highlights the high energy requirements needed to manufacture chips (South Korea is a global leader in this area) and the resulting high dependency on energy imports.

Market turmoil, but that’s not a new story

The increased volatility across the financial markets in the last few weeks serves as a reminder that geopolitics and economic shocks regularly happen and are a huge part of investing. Recent examples of such events include Trump’s “Liberation Day” tariffs in 2025, Russia invading Ukraine in 2022 and the start of the Covid pandemic in early 2020. Being disciplined and diversifying across regions and asset classes is one of the best ways to combat short-term negative sentiment.

The Director of Portfolio Management at St. James’s Place, Robin Ellis, highlights the significance of diversification, discipline and having a long-term mindset when it comes to investing. He says it’s more down to preparing well, which includes diversifying portfolios before periods of market volatility come into force, instead of being reactive during a crisis. He adds:

“Market events like this are highly uncertain, evolve quickly and cause significant market fluctuations. While tempting, trying to predict how these will unfold so often destroys value over the long term. Looking through the noise, remaining invested and allowing returns to compound over the long term is usually the best strategy in building long-term wealth.”

Wealth Check

Lords pursue higher limit for pension salary sacrifice

An amendment to the current bill on pension salary sacrifice has been passed by the House of Lords (HoL), seeking to double the government’s proposed cap. The government are wanting to limit the tax relief on pension salary sacrifice arrangements – to £2,000 per year from April 2029 – with the bill currently making its way through parliament. However, the HoL amendment is looking to increase the annual cap on employee contributions eligible for full National Insurance relief on salary sacrifice from £2,000 to £5,000.

St. James’s Place and other wealth management and pension companies have actively called for the proposed £2,000 limit on pension salary sacrifice to be scrapped.

As well as the revised cap, the HoL have also put forward further amendments to the bill, which include a motion for basic rate taxpayers to be exempt from the cap completely. Additionally, they want any contributions above the cap to be excluded as income in order to work out student loan repayments.

Since Chancellor Rachel Reeves laid out plans to limit pension salary sacrifice in her 2024 Budget, the proposal has been met with controversy and strong opposition by industry leaders.

There’s concern from ministers that limiting National Insurance contributions tax relief on pension contributions in this manner will have negative long-term effects on pension savings.

If it remains unaltered, the £2,000 cap could affect many more people than initially thought and not just people in higher tax rate bands, according to the OBR. The OBR estimate the measure could generate £4.7 billion in revenue for the government in the 2029/30 tax year.¹

On Monday 23^rd March, the bill will return to the House of Commons, and the amendments will be considered by parliament.

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

¹Office for Budget Responsibility – February 2026.

In the Picture

In the chart below, we can see the chances of an interest rate cut in the UK later this week has dropped to almost nothing. Analysts initially thought that lacklustre growth, a deteriorating jobs market and inflation heading towards the target figure would urge the BoE’s rate-setting committee to make a 0.25% cut. But global events have altered the course.

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 16/03/2026

WeeklyWatch – Iran conflict creates uncertain market pathways

D.6367 Wellesley WeeklyWatch 09.03.26_1420 x 474

10^th March 2026

Stock Take

Iran conflict causes markets to fall

It’s been just over a week since the US and Israel launched their latest campaign against the Iranian regime, and investors are continuing to try to get their heads around the repercussions.

Some key questions they find themselves asking are:

How long will the current situation last?
What’s happening or will happen in the Strait of Hormuz (a key area in the global flow of energy)?
What will Iran look like once the dust has settled?

The answers to these questions will inevitably have massive ramifications, both for the global economy and investment markets.

One particular resource that wasted no time in reacting was oil. Since the Friday preceding the attacks, the price of oil has increased from $72.5 per barrel to a peak of $119 (at the time of writing the price has fallen to $104). Iran have since been targeting energy production facilities in neighbouring nations, indicating that the conflict is set to continue, and with it, further increases in the price of oil.

The impact has been felt in other areas too – notably, flight prices. Additionally, fertilisers, which need a lot of energy to produce, have significantly increased in price. The shock to fertiliser prices is likely to have a knock-on effect on food prices down the line.

Overall, this will cause more inflationary pressure for the global economy, putting extra pressure on central banks seeking to reduce interest rates. In the UK, the odds of an interest rate cut happening in March fell from 74% before the crisis to 11% at the beginning of this week. But the Bank of England still have time to make their decision, so much could change before 19^th March.

The longer the conflict persists, the more these pressures will intensify.

How have the markets reacted?

While the future remains shrouded in uncertainty, and inflationary pressures continue to increase, it’s fair to say that the markets faced a challenging week! The FTSE 100 and European STOXX 600 finished the week down 5.74% and 6.11% respectively. A similar pattern continued into this week – the FTSE 100 fell 1.85% in the opening hours of trading and the STOXX 600 fell even more.

However, the US – as a net energy exporter and therefore more insulated from these pressures – was less affected by the Iran conflict.

It was a case of changing fortunes for ‘safe haven’ assets. Last Monday, there was a quick flocking for safety to defensive assets like gold and US treasuries. As the inflationary implications of the war became clearer, more turned their attention to these, which caused bond yields to rise.

The Equity Strategist at St. James’s Place, Carlota Estragues Lopez, explained the market behaviour, saying:

“Despite the escalation of the conflict, market reaction until recently had been relatively contained. Equities softened, bonds sold off, the dollar strengthened and energy prices rose but moves initially looked orderly.
“Investor behaviour suggested profit taking rather than outright de‑risking, with many drawing comfort from historical experience that geopolitical shocks rarely leave a lasting imprint on asset prices. There has also been a widespread belief that the conflict will be contained, energy supplies will normalise, and that the US remains relatively insulated from a sustained energy shock.
“However, this calm may be misleading. While oil and gas prices remain below crisis extremes, a prolonged disruption to energy supplies would have significant implications, particularly for Europe, emerging markets and parts of Asia. Markets currently appear priced for a short‑lived shock, not a sustained one, raising the risk that both bonds and equities could come under pressure simultaneously if tensions persist.”

Conflict shockwaves in Asian markets

The market ramifications have been felt much more strongly across the Asian markets than Western markets. The Nikkei in Japan fell by over 7% at the start of the week and there were even bigger falls in South Korea – all on the back of significant falls in the previous week. Approximately 90% of all oil for the Far East is carried through the Strait of Hormuz, meaning it’s more vulnerable to disruption.

The timing falls in line with China starting to release details of their 15th five-year plan, covering the years 2026 to 2030. Many details are still to be released, but the annual growth target for 2026 has been publicly revealed: 4.5%–5%, compared to 5% achieved in 2025. This is the lowest level targeted since 1991.

However, lowering the target isn’t all bad. It can be seen as more of a recognition that the Chinese economy is more mature now. The nation is recording historic trade surpluses, it’s world-leading in many fields when it comes to their high-tech sectors, and the population has started to shrink – meaning there’s less space for it to grow.

US jobs take a hit

Despite their equity markets not suffering as much of an impact from the Iran situation, the US still experienced a disappointing payroll release on Friday. It was expected by economists that 55,000 non-farm jobs would be added to the US economy in February. Jobs actually fell by 92,000, according to the US Bureau of Labor Statistics.

As a result of the drop in payroll numbers, unemployment figures were also affected, rising from 4.3% to 4.4%. However, it must be remembered that February’s figures were affected by a healthcare strike which would have reduced the total number; this same strike will serve as a boost to March’s numbers. Figures were also impacted by prior revisions.

With investors already feeling unnerved by the current state of the world, lower numbers like these meant that US equities concluded the week on a downward note.

Wealth Check

Government encouraged to limit powers under Pension Schemes Bill

Pension industry groups are coming together to urge the government to remove their mandating power from the Pension Schemes Bill before it becomes law.

The bill is currently in report stage in the House of Lords and grants the government significant power to direct how pension schemes invest savers’ money and target different asset classes.

The government have said they intend to include a reserve power in order to support the Mansion House Accord. This is a voluntary agreement where the largest workplace pension providers invest at least 10% of their default funds into private markets by 2030 – at least 5% will be allocated to UK private assets.

In its current form, the bill gives the government greater powers to direct the way in which workers’ pensions are invested by pension schemes.

The broader aims of the bill have been welcomed by the Association of British Insurers and Pensions UK. The hope is it will simplify workplace pension saving for millions of employees, offer access to a large range of assets for investors and result in better value over the long term. But they’ve warned that the bill could create risks that undermine the confidence of pension savers.

They’ve proposed the following amendments to the bill:

Cap the percentage of investment that can be mandated, in line with the 10% and 5% targets outlined in the Mansion House Accord
Limit the government’s scope to their stated intention and purpose
Impose a deadline on any minimum asset allocation

If it receives approval in the House of Lords and Royal Assent, the bill will become law in the middle of 2026.

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 09/03/2026