Q2 market commentary 2026

Overall, equity markets were strong over the quarter as a tentative agreement of understanding between the US and Iran allowed markets to rally alongside broadening out of AI expectations. Concerns around inflation and the potential interest rate rises remain in focus as geopolitical events influence markets.

The domestic market

In the UK, we have another change of leadership with Sir Keir Starmer resigning and Andy Burnham becoming the new Prime Minister. We expect some policy change and new initiatives as a new Prime Minister settles into Dowing Street. The UK market, as measured by the Morningstar UK All Cap Target Market Index, was up by 2.20% over the quarter. The Bank of England (BoE) held interest rates unchanged as potential inflation concerns resurfaced following the conflict between the US and Iran.  Corporate earnings remain strong at this stage, and we will continue to engage with companies should inflationary pressure come through from the conflict such as increased energy costs.

What about the USA?

The US market had a good quarter as corporates reported strong earnings and a broadening out of the AI theme continued. Alongside earnings we continue to see a significant increase in the development of AI infrastructure and data centres. The smaller cap indices also performed strongly over the quarter, reflecting the broad market appreciation. The US consumer continues to be overall resilient, and the World Cup may well also boost hospitality and retail sales.

What’s happening in Emerging Markets and Asia?

Emerging Markets and Asian markets had a strong period. The tech theme was also prevalent with semi-conductors and some IT hardware names leading the gains. The region also benefited from the easing of tensions in the Middle East as it is a net importer of oil from the region.

ASAM’s outlook

Looking at the investment outlook for the long term, we continue to focus on fundamentals and what drives investment returns over investment time frames. Many short-term markets movements are sentimental and reactionary without long-term consideration of how individual companies are performing and adapting to the economic environment. The dislocation in markets presents opportunities for active management. Our portfolios remain blended and diversified throughout the regions and sectors. Each asset type will perform differently in the portfolios over the investment time frame. We continue to focus on longer term drivers of asset class returns and not trying to second guess short-term sentiment, or to be reactive to macro or geopolitical events.

Our full market commentary for Q2 2026 can be accessed here.

This information is obtained from sources considered reliable, but its accuracy and completeness is not guaranteed by Anderson Strathern Asset Management Limited. Neither the information nor any opinions expressed constitute financial advice. Investments can fluctuate in price, value and/or income and may return less than the original amount invested. Past performance is not necessarily a guide to future performance. Anderson Strathern Asset Management Limited is authorised and regulated by the Financial Conduct Authority.

We’re here to help

Contact us and a member of our expert team will get back to you. Alternatively, call us on 0131 270 7700