Alastair Power, Investment Research Manager
- Geopolitical instability still lingering
- UK markets settle after new Chancellor appointed
- Overseas interest in UK firms remained undeterred
3 min read
Will the Iran war have further impact on investors?
As we progress through the third quarter of 2026, the year has seen positive returns for investors across key asset classes, despite ongoing tensions between the US and Iran. De-escalations and peace agreements have been positive for markets and general sentiment. However, at the time of writing, renewed US airstrikes on Iran and the resumption of hostilities have increased geopolitical uncertainty.
Despite geopolitical events, equity markets have been reaching and surpassing all-time highs, with ongoing positive expectations for strong earnings growth. This has been particularly true within Asian and emerging market economies.
The price of a barrel of oil has retraced by nearly US$40, alleviating some of the inflationary concerns associated with elevated energy prices. Only the European Central Bank took action to curtail potential issues, raising its three key interest rates by 0.25%. Neither the Bank of England nor the US Federal Reserve followed suit to the time of writing, but all three have commented on the uncertainty of the outlook, with upside risks of inflation and downside risks to economic growth.
Are politics affecting UK markets?
Within British politics, Labour had a turbulent first half of the year, with Andy Burnham eventually becoming the new Prime Minister. With the new cabinet announced, concerns around a left-leaning high tax and high spending Chancellor have been alleviated by the unforeseen appointment of John Healey. Clarity around the financing of key policies, adherence to fiscal rules and growth plans, however, remain lacking.
In the lead-up to Burnham appointing his cabinet, Government borrowing costs reflected concerns around uncertainty. 10-year government bonds continued to be priced at a higher yield than G7 peers, which has the potential to increase government borrowing costs and impact consumer finances. It is worth noting that political volatility and fiscal credibility concerns were just part of the reason for this pricing.
Value stocks attracting investor interest
Somewhat undeterred by political issues, foreign buyers continue to see value in UK markets with an ongoing stream of takeover approaches. EasyJet, the budget airline, was the latest to announce a takeover deal with US private equity company Apollo Management following multiple approaches and a prior agreement in principle with rival US firm Castlelake.
Tate & Lyle, the food and beverage ingredients manufacturer with a history dating back more than 165 years, agreed to a takeover with US group Ingredion. Segro, the industrial property-focused real estate investment trust, rejected a bid from US peer Prologis citing significant undervaluation of the business and future growth prospects. Each situation highlights the perceived disparity between share prices and underlying company values and future prospects, indicating ongoing value on offer within UK markets.
In Summer’s edition of 1875…
Within this edition, our
Stock Focus article continues the theme of price and value disparity, exploring housebuilders. 2026 has thus far proved challenging at both company and sector levels.
Our
Investor Insights article from
long-standing Redmayne Bentley Investment Manager, Morven Whyte explores intergenerational gifting and making the most of the wealth you have, today.
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. The information and views were correct at time of publication but may have changed at the point of reading.