A quarter that had started in a slough of despond with war in the Middle East and the price of oil marching ever higher managed to transform into one of the brightest for stock markets in quite some time. It is hard to see what, if anything, has been achieved by President Trump’s (and Benjamin Netanyahu’s) assault on Iran; perhaps time can reveal some benefits. At least, it appears to be over for now (though so much remains unsettled), and the price of oil has returned to earth. 

To do ourselves justice, we did suggest that markets had probably seen the worst by the end of March (though we did hedge our commentary a bit...).  Market gains for the quarter, most notably in America, have been impressive, though we must remember that the first quarter was negative. Of course, it is also cheering to see that all of our equity portfolio funds saw good returns.

Of concern is the jump in stock volatility and the market’s dependence on an ever narrower range of high-flying stocks. Most extraordinary is that the group of companies that manufacture computer chips, an area long seen as highly cyclical, now account for almost one-fifth of the value of world stock markets.

For a number of years, the value of companies coming to stock markets - initial public offerings (IPOs) - has been in decline, while private markets have taken up the running. But now we have been treated to the biggest ever IPO in the form of Elon Musk’s SpaceX (actually a bit of an agglomeration of his companies) to be followed by, equally massive, Anthropic and OpenAI shortly. I applaud these companies coming to public markets but have an uncomfortable feeling that this might be a convenient exit for those on the inside. 

Back home we have had our own little local difficulty, carelessly losing another Prime Minister (and presumably Chancellor of the Exchequer shortly).  We wait to see what an Andy Burnham Premiership might bring (though it is encouraging to see Jim O’Neil and Andy Haldane as advisers). ‘Economic growth’ is the mantra, and it would indeed make a big difference, but it is hard to see much really being achieved without tackling excessive Government spending.

Economies generally have, once again, proved to be resilient in the face of shocks, e.g. COVID, Russia’s invasion of Ukraine, war with Iran and the closure of the Straits of Hormuz, despite the dire predictions on each occasion. I remain optimistic for investment despite a rather split market outlook. Some areas do look overblown and ripe for correction but much of the rest is attractively priced and presents us with good opportunities.

The full Quarterly Review is available here.

July 2026

Important Information

The contents of this article are for information purposes only and do not constitute advice or a personal recommendation. Investors are advised to seek professional advice before entering into any investment arrangements.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.