The W1M Investment Barometer – June 2026

If peace is breaking out in the middle east, is it time to be more positive on markets? Or is the good news all in the price already? What is the growth and inflation picture for the global economy? Is the UK going to have a new Prime Minister and Chancellor soon? Is populism declining or is the mainstream populist now? Are taxes going up? How can Europe (including the UK) create more jobs? There are lots of questions on investors’ minds. The importance of being properly diversified, actively choosing what to own and what not to own, having inflation resilience in portfolios and protection strategies, as we go into the summer, seems clear.

Macro and Fixed Income

Oil prices peaked in March. The Bank of England then warned that prices sustaining around $130 per barrel could lead to UK inflation reaching 6% next year. Thankfully, oil prices have eased significantly since and have fallen below $80 (Brent) this week as the US and Iran have signed a ceasefire agreement. Markets have been expecting an agreement for a while as continuing or deepening the conflict with Iran was clearly not on the agenda of the US president; going into mid-term elections with a conflict ongoing and higher oil prices could not have been an attractive prospect. We have been heading towards a deal for a while. This has supported oil prices falling and inflation expectations moderating from their peaks and equity markets remaining resilient.

Fixed Income

10yr Gilts vs Brent Crude

Source: W1M, FactSet

“I support the fiscal rules, there needs to be a plan to get debt down.” Andy Burnham, 17th May 2026

The chart above shows how oil prices and UK government bond (gilt) yields have moved in similar ways. As oil prices have moderated,  reducing inflationary pressures, bond yields have come back below 5%; but, the conflict has damaged the inflation outlook; we have written before about how the UK and other countries which were expecting to cut rates now face rate rises. This week, we have seen the Bank of England keep its base rate unchanged at 3.75% given inflation at 2.8% is above target levels. Weak growth and labour markets also ease inflationary pressures potentially; UK unemployment is still relatively high (4.9%), youth unemployment has hit 11 year highs, but wage growth is still higher than inflation at around 3.4%. Inflation is also above target in the US (US CPI is around 4.2% while core CPI is close to 3%).The new US Federal Reserve Chair may have disappointed the president who appointed him by not cutting interest rates and stating clearly that he is focussed on containing inflation. In the Eurozone, which has weaker growth, The European Central Bank raised its main deposit rate from 2% to 2.25% to contain inflation; this is expected to be the first of three rises by next spring; it was the first interest rate rise from the ECB in three years. Japan too has raised rates but that is good news for Japan after decades of deflation. The conflict may be over, but the inflation caused by higher oil prices will not evaporate and central banks are well aware of that.

Politics may lead to higher borrowing costs in the UK if we get a new PM and Chancellor in the near future. We already pay more to borrow than the US or even Greece these days. But, we could be asked to pay more if bond markets see UK fiscal policy getting looser. The main challenger to the current PM, Andy Burnham, has in the past talked of not being “in hock” to the bond markets but has recently supported  the idea that national debt at around 100% of GDP should be reduced ultimately. If the UK sees a new Prime Minister installed in the next few weeks or months, bond markets will be watching the fiscal / government borrowing impacts of any new policy directions carefully. It is generally a good idea to keep on good terms with your lenders or they can be less keen to lend, charge more or both. Bond markets may take a view if they see more “tax and spend” but if nothing much changes, the good news is that the UK, like other G7 economies, is not expected to see very significant interest rate increases however the labour market is tough (especially for young people). In this uncertain environment, we remain underweight fixed income.

Equities

Global equities are up strongly this year. We have been overweight equities most of this year; this has been correct despite all the reasons there have been to worry; moving to neutral recently was partly an acknowledgement of how stock markets have looked through a challenging geopolitical environment already and been strong. There  remains a lot of excitement about “AI” and “hyperscalers” as well as space, obviously. We remain concerned about index concentration risks and the dominance of tech in global earnings. It would be “healthier” if there was greater breadth and depth in equity markets. If markets are pulled up by a small number of stocks, they can be dragged down by the same “mega caps” too.

Global Equities: Market leadership remains highly concentrated

c.70% of MSCI ACWI’s return in May driven by semis and tech hardware stocks (c.60% QTD)

May - Sector contribution %

QTD – Sector contribution %

Source: MSCI, Factset., W1M

1. Communication Services sector excl. GOOG + META
2. Consumer Discretionary sector excl. AMZN
3. Info Tech sector excl. Semi & Semi Equipment + Tech Hardware sub-groups
4. Mag3 = GOOG, AMZN, META (US hyperscalers not classified within Info Tech)

More positively, unlike in the “dotcom” crash, there is significant earnings support for the performance of the big, leading AI technology stocks currently. The, now famous, Nvidia AI-chip leader has had an amazing few years but this year, it has not been a top performer partly because its price already prices in huge future expected success and also because other companies are  showing strong products and sales.  W1M global portfolios have benefited from another US chip designer, AMD, outperforming Nvidia. Asian tech leaders like Samsung are seeing higher profits from supply constraints in the memory industry appearing to shift customers to sign long- term supply agreements and away from short term pricing models. Taiwan Semiconductor has been another strong performer this year.  Global equity market valuations and earnings growth strength are discussed by our CIO Bill Dinning here: Global Outlook June 2026 | W1M.

Tech sector performance underpinned by strong earnings expectations...

Most of the uplift to CY26 earnings estimates has been driven by semis, tech hardware and oil stocks

MSCI ACWI: CY26E EPS +25% (+12 pts)

Source: MSCI, Factset., W1M. All in USD.

Absolute Return and Real Assets

In a world of uncertainty, W1M multi asset solutions aim to both mitigate risk and include assets giving portfolios inflation resilience as explained by Co-Head of Multi Asset, James Mee: “Our multi-asset strategies include investments in the energy complex, infrastructure, defence, domestic industrial & manufacturing beneficiaries and the commodity complex. The strategies are diversified across macro variables, and we include hedging strategies in every mandate we manage on the Multi-Asset Team.” (The fragility of stability: Why calm periods breed crisis | W1M)

Protection Strategies

Uncertainty is high. Even when long-term prospects are good, there can be short-term volatility. W1M multi asset solutions have bespoke protection strategies which aim to mitigate losses when there are sharp market moves. Despite the US-Iran conflict negatively impacting the inflation and interest rate outlook globally, equities have not had any significant sell-offs this year -yet. Nobody can say there definitely will be a crash. Neither can anyone say there definitely won’t be a sharp correction at some point. But, in addition to active positioning within our portfolios, we actively take steps to protect our multi asset solutions, to be ready for whenever volatility may spike. Paying for appropriate insurance tends to be a prudent idea.  

If you expect volatility, do you have a Protection Strategy?

How Did it Perform During Covid-19 Crisis?

Actual PS performance vs S&P 500 (TR) 

Back-tested returns in previous crises

*Inception: 19th April 2016  Data to from 31.12.19 to 31.03.20

Source: Goldman Sachs, Bloomberg, W1M.

Figures are calculated on a total return basis, net of fees.

Risk Warning: Past performance and simulated past performance is no guarantee of future results and the value of such investments and their strategies may fall as well as rise. You may not get back your initial investment. Capital security is not guaranteed.

In summary

The US-Iran conflict may be ending but has obviously given the global economy an inflation and growth hit. We are neutral on equities at current levels as markets seem to have “looked through” geopolitical challenges already, underweight fixed income as rates are expected to rise, overweight real assets for inflation resilience and we implement bespoke protection strategies in case volatility spikes. The importance of being properly diversified, actively choosing what to own and what not to own, having inflation resilience in portfolios and protection strategies, as we go into the summer, seems clear.

Summary of our views

Current asset allocation positioning

*The table shows bond allocations relative to bond composite index

**Hedging includes gold & Protection Strategy if possible.

Source: Morningstar. As at 17.06.26. The weightings are calculated as a percentage of the Waverton Balanced platform model portfolio and the peer group equivalent of Model GBP Allocation 40-60%. MSCI AC World weighting assumes a 60% allocation to equity. The above should be used as a guide only and is subject to change.