30 June 2026
Estimated read time: 5 minutes
The first half of 2026 has been defined by geopolitical uncertainty, particularly conflict in the Middle East, renewed concerns over energy security and an unsettled global economic backdrop. Despite these challenges, most major financial markets have delivered positive returns, with investors increasingly looking beyond the largest US technology companies to a broader range of sectors and regions for opportunities.
The first half of 2026
The defining story of the year so far has been the escalation of conflict in the Middle East. Following military action by the US and Israel against Iranian infrastructure, retaliatory strikes disrupted key trade routes, including the Strait of Hormuz, sending oil and gas prices sharply higher and briefly reigniting concerns about inflation.
As tensions eased under a fragile ceasefire, energy prices retreated as markets shifted their focus back towards the prospect of stability. While questions remain over the long-term geopolitical outlook, markets have once again demonstrated their ability to recover quickly once immediate risks begin to subside.
Another key investment theme has been the broadening of market leadership. After several years of dominance by the largest US technology companies, investors have increasingly diversified into other sectors and regions. Although significant investment in artificial intelligence has prompted scrutiny of the biggest technology firms, it has created strong opportunities elsewhere in the AI supply chain, particularly among semiconductor manufacturers, data centres and related businesses. This has supported particularly strong performance across parts of Asia, including South Korea and Taiwan.
Despite ongoing geopolitical uncertainty, most global markets have remained in positive territory, reinforcing the importance of maintaining a long-term investment perspective rather than reacting to short-term headlines.
Bottom line
Recent events have highlighted once again how vulnerable global energy supplies and supply chains remain to geopolitical disruption. This may accelerate investment in alternative trade routes, energy infrastructure and strategic reserves, further reshaping the global investment landscape.
Q&A
What has fixed income (bonds) done in 2026?
Bond markets have produced positive returns during the first half of the year, with most fixed income sectors outperforming cash. Although interest rate-sensitive bonds experienced a difficult start, many recovered strongly as the year progressed. Corporate bonds, emerging market debt and high-yield bonds have been among the strongest performers, supported by improving investor confidence and a more favourable market environment.
Government bonds have delivered more modest gains but have also recovered from earlier weakness. With bond yields still relatively attractive and interest rates gradually easing, diversified bond portfolios continue to provide both income opportunities and valuable diversification.
What have stock markets (equities) done in 2026?
Global equity markets have remained resilient despite heightened geopolitical uncertainty. Emerging markets have led performance, driven by strong earnings from businesses involved in artificial intelligence and semiconductor manufacturing. Japanese equities have also performed well, benefiting from currency weakness, corporate reform and improving economic conditions.
Other developed markets have generated healthy gains, while smaller companies have also delivered positive returns, particularly in the US and Japan. China has been the notable exception, where concerns over economic growth and weaker consumer demand have weighed on market performance.
Overall, resilient corporate earnings, improving economic conditions and continued enthusiasm surrounding artificial intelligence have helped support equity markets throughout the first half of 2026.
What have real assets done in 2026?
Real assets have generally delivered strong performance this year. Commodities, infrastructure and property have all benefited from favourable market conditions.
Oil prices experienced significant volatility, climbing sharply as Middle East tensions disrupted supply before falling back as geopolitical risks eased. Gold has experienced a more mixed period, with higher bond yields reducing some of its appeal, although it has continued to demonstrate its value as a traditional safe-haven asset during periods of uncertainty.
Infrastructure has benefited from continued investment in electricity networks and clean energy, driven by growing demand from data centres and increased focus on energy security. Meanwhile, property markets have remained resilient, with data centres continuing to be one of the strongest-performing areas of the sector.
Month by Numbers
As at 30 June 2026
Equities
- UK: +0.78%
- Europe: +3.52%
- US: -0.92%
- Emerging Markets: -0.07%
- Japan: +1.77%
Bonds / Rates
- UK Base Rate: 3.75% (0.00%)
- Fed Funds Rate: 3.75% (0.00%)
- UK 10-Year Gilt Yield: 4.76% (-0.06%)
- US 10-Year Treasury Yield: 4.44% (0.00%)
Currencies
- GBP/USD: $1.33 (-1.52%)
- GBP/EUR: €1.16 (+0.51%)
- DXY (US Dollar Index): 101.19 (+2.00%)
Commodities
- Gold: $4,008.48 (-11.69%)
- Brent Crude Oil: $72.92 (-20.78%)
Noteworthy
- Caterpillar: +23.06%