Market summary – Review of Q2 2026

US equities delivered a strong rebound during the quarter, up by 14.5%, supported by robust corporate earnings, resilient economic growth, and continued optimism around AI. Investors remained focused on companies benefiting from spending on data centres, semiconductors, and cloud infrastructure. As confidence improved, gains broadened beyond the largest tech companies into more cyclical sectors, while more defensive areas of the market lagged.

European equities were up 12.8% as improving investor sentiment, easing energy prices, and resilient company earnings supported performance. However, Europe’s lower exposure to the technology sector meant the region benefited less from the AI-driven rally. Industrial and financial companies performed well as confidence in economic growth improved. More defensive sectors lagged as investors favoured areas offering greater earnings growth potential.

UK equities were up 4.2% but underperformed other developed markets. The UK’s limited exposure to technology companies meant it benefited less from the resurgence in AI-related investment. Falling commodity prices also reduced support for the energy and mining sectors that had performed strongly earlier in the year. Nevertheless, improving global risk appetite and resilient corporate earnings helped underpin returns.

Japanese equities performed well during the quarter, up 13.5%, supported by improving investor sentiment and strong demand for technology-related businesses. Companies linked to semiconductor supply chains benefited from continued investment in AI. Export-oriented businesses were also supported by healthy global demand. Strong corporate profitability and improving confidence in economic prospects also helped drive returns higher across the market.

Emerging market equities were the strongest-performing asset class in the quarter with a return of 23.3%. Markets with significant exposure to semiconductor manufacturing and technology hardware, particularly in Asia, benefited from renewed investor enthusiasm for AI-related growth. South Korea and Taiwan performed especially well as demand for advanced chips and technology infrastructure remained strong. Improving global risk appetite also supported returns.

Fixed income markets delivered modest positive returns, although performance varied across regions. Falling energy prices helped ease inflation concerns and supported investor confidence. Corporate bonds outperformed government bonds as stronger economic growth and resilient company earnings led credit spreads to tighten. Government bond markets were more mixed as investors assessed the outlook for inflation, growth, and interest rates.