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Market Commentary – Managed Portfolio Service
Quarterly report – Q2 2026
After a volatile start to the year, the second quarter brought a welcome shift in mood.
News that Iran and the U.S. were working towards a ceasefire allowed markets to move beyond near-term energy concerns and focus on the potential winners in the AI race.
The standout theme of the quarter was technology. The adoption of AI has prompted a surge of demand for processing power and memory, driving strong price rises – particularly among Asian chip manufacturers. Although these firms are ramping up production, supply is expected to remain constrained for some time yet. Our overweight position in Asia and Emerging Market equities meant portfolios were well placed to benefit.
Facing growing price pressures, central banks adopted divergent stances. The European Central Bank hiked rates in June to combat energy-driven inflation. The Federal Reserve (the Fed) held rates but adopted a hawkish tone under new Chair Kevin Warsh, pressured by robust labour market data. The Bank of England also remained on hold citing price pressures. Inflation risks persisted due to elevated energy costs, though
gold dipped as central bank demand weakened.
In UK, political uncertainty mounted after Labour’s heavy local election losses in May and Andy Burnham’s by-election win in June, which cleared the way for him to run for prime minister. Markets weighed the impact of potential Labour leadership changes on government spending, but the new leadership will face the same fiscal constraints as the outgoing one.
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