The week that was …
Economic round-up
Irish slump hits Eurozone GDP
A 12.1% slump in Irish GDP pulled the Eurozone economy into an unexpected 0.2% contraction in the first quarter of the year, according to a revised estimate. Eurostat had originally estimated first-quarter growth at 0.1% in the 21-country bloc, compared with the previous three month-period. Read more from the FT here
Energy prices push up Eurozone inflation
Eurozone inflation rose to 3.2% in May – in line with expectations but boosting the case for a rate rise at the next European Central Bank meeting. The reading was up from 3% in April and marked the highest annual inflation rate since September 2023. Energy was the strongest contributor. Read more from the FT here
UK construction decline continues
Shrinking order books and rising economic uncertainty prompted another steep decline in UK construction activity during May. The S&P Global UK Construction Purchasing Managers’ Index (PMI) showed a reading of 38.2 in May, down from 39.7 in April. Higher energy, fuel and transportation costs are also leading to the fastest pace of input price inflation since June 2022. Read more from S&P Global here
World Cup boosts US jobs numbers
US non-farm payrolls increased 172,000 in May – down slightly from the 179,000 recorded in April but well ahead of consensus estimates of 80,000. Ahead of the World Cup, the leisure and hospitality sector led the way in new hires. The unemployment rate in the US meanwhile held steady at 4.3%, as had been widely expected. Read more from CNBC here
US manufacturing surprises in May
US manufacturing activity increased more than expected in May, hitting its highest level in four years. The Institute for Supply Management said its manufacturing PMI advanced to 54.0 last month, up from 52.7 in April. The jump may have been driven by businesses front-loading orders in response to the war in Iran. Read more from Reuters here
Markets round-up
Nasdaq sees biggest drop in a year
Stockmarkets suffered a sharp drop on Friday, as investors fretted a strong US jobs report could prompt a rise in interest rates. The Nasdaq index saw its biggest one-day drop since April 2025, falling by more than 4%. Read more from the BBC here
Chipmakers lose $1.3tn in value
Chipmakers lost around $1.3tn (£980bn) in market value on Friday, with deep losses in Nvidia, Micron Technology and Advanced Micro Devices. A weak report from Broadcom showed demand for its custom AI chips falling short of expectations. Read more from Reuters here
European retail investors target SpaceX
European retail investors are among those bidding for a share of SpaceX. The group, which launches its IPO this month is considering allocating as much as 30% of the deal to individual investors with offerings planned in the UK, Germany, Denmark, France, the Netherlands, Norway, Spain, Sweden and Switzerland. In the UK, eight online investing platforms have invited customers to apply for shares in the $7bn raise. Read more from Reuters here
Opec+ raises oil production
Opec+ has agreed to increase its oil production targets for a fourth successive month although the closure of the Strait of Hormuz should limit the impact of the decision on global markets. The group of oil producers has agreed to increase its production by 188,000 barrels a day in July. Read more from the FT here
Apollo drops Bodycote bid
Private equity group Apollo has abandoned its £1.5bn bid for components business Bodycote. The group said it would not proceed with a conditional offer of £8.85 a share announced last month. The move keeps Bodycote, which was listed in 1972, on the London market. Read more from the FT here
Bitcoin sell-off
Bitcoin saw its largest weekly loss since November 2022 after the cryptocurrency’s biggest institutional shareholder sold a portion of its holding for the first time in more than three years. Bitcoin’s losses for the week were almost 18%, after Michael Saylor’s Strategy venture said it had sold 32 bitcoin last week for a total of $2.5m. Read more from the FT here
“Geopolitical uncertainty may create the conditions for a second wave in wind and solar deployment – this time driven more by energy security and industrial competitiveness.
Selected equity and bond markets: 29/05/26 to 05/06/26
| Market | 29/05/26 (Close) |
05/06/26 (Close) |
Gain/loss |
|---|---|---|---|
| FTSE All-Share | 5604 | 5574 | -0.5% |
| S&P500 | 7580 | 7384 | -2.6% |
| MSCI World | 4866 | 4756 | -2.3% |
| CNBC Magnificent Seven | 455 | 429 | -5.8% |
| US 10-year treasury (yield) | 4.44% | 4.52% | |
| UK 10-year gilt (yield) | 4.8% | 4.9% |
Investment round-up
Investment trust discounts narrow
The average investment trust discount stood at 9.6% in May – the first month since August 2022 it has fallen to single digits, according to the Association of Investment Companies. Richard Stone, AIC chief executive, noted the sector had seen “unprecedented levels of M&A and share buybacks, as well as mandate changes and fee cuts to give shareholders a better deal.”
UK funds enjoy inflows over April
Inflows into UK funds were £1.5bn in April – a slight increase on March’s £1.3bn and a sixth consecutive month of inflows, according to data published by the Investment Association. Equity outflows narrowed sharply in April – down to -£689m from -£1.3bn in March, with index trackers reaping the benefits.
Evelyn Partners announces Kenny as CEO
Evelyn Partners has reshuffled its leadership team as part of its planned acquisition by NatWest. Chief executive Paul Geddes and chief financial officer Alex Gersh will step down with Chris Kenny becoming chief executive. He will report to Emma Crystal, chief executive of NatWest’s private banking and wealth management division.
Actively managed ETF assets hit $2.33tn
Total assets invested in actively managed ETFs listed globally reached a record $2.33trn (£1.75tn) at the end of April, according to data from ETFGI, after inflows of $312bn in the first four months of 2026. This was a 20.7% rise from the end of 2025.
Mixed asset funds rise in popularity
UK investors drove near-record demand for mixed asset funds in May and the strongest fixed income inflows in three years, according to Calastone fund data. Investors moved money out of money market funds, but also trimmed equity exposure, reallocating towards income-producing and diversified assets during the month.
Premier Miton sees £1.3bn drop in AUM
Premier Miton suffered a £1.3bn drop in its assets under management (AUM) over the six months to 31 March 2026, after its international equity strategies saw outflows. The group’s AUM stood at £9bn at the end of the period.
Ninety One reports profits bounce
Ninety One reported an adjusted operating profit of £211.3m for the financial year ended March 2026 – up 12.5% year-on-year and 1.5 percentage points ahead of consensus. The group’s net management fees rose 8.9% to £617.3m, supported by a 17.7% increase in average AUM to £171.8bn.
UK advisers shift defensively
UK advisers are increasingly prioritising defensive positions and adding to active holdings, according to Schroders’ latest UK Financial Adviser Pulse Survey. Around half (51%) of the 212 advisers polled said they were repositioning client portfolios more defensively, with 28% moving into cash.
… and the week that will be
Renewed tensions in Middle East
Despite optimistic talk of a deal in the Middle East, Israel launched fresh attacks on Iran, in retaliation for strikes against northern Israel. It is the first time the two sides have attacked each other since a fragile ceasefire came into force in April and is likely to have implications for both the oil price and stockmarkets. Read more from the Times here
SpaceX IPO
SpaceX launches its trillion-dollar floatation this week, which may include the largest retail allocation ever attempted in a megacap IPO. SpaceX founder and global tech entrepreneurship poster boy Elon Musk is seeking to reserve as much as a quarter of the rocket and satellite group’s $75bn float for individual investors. Read more from the FT here
The week in numbers
UK economic growth: Consensus forecasts have the three-month average for UK GDP rising to 0.8% in April, up from 0.6% in the previous period.
Eurozone interest rates: Consensus expectations are that the European Central Bank will increase Eurozone interest rates by 25 basis points – to 2.4% – at its meeting this week. This would be the first increase since 2023.
US inflation: Consensus expectations have headline US inflation in May at 3.9% year-on-year, up from 3.8% in April; but slowing to 0.4% month-on-month, down 0.6% in the previous period. Core inflation is meanwhile expected to hold at 2.8% year-on-year and fall to 0.3% month-on-month, down from 0.4%.
US consumer sentiment: Consensus forecasts have the preliminary June reading of the Michigan index of US consumer sentiment rising to 46, up from 44.8 in May.
China inflation: Consensus expectations have prices in China rising 1.4% year-on-year and 0% month-on-month over May.
In focus: Secure line
Electrification has been a well-established ‘megatrend’ for the past decade but the crisis in the Middle East has refocused investors’ minds on energy security – subtly changing the parameters of the sector and creating new areas of investment. Fund managers and other professional investors now view energy security as a strategic imperative for companies and governments alike, which is leading to significant opportunities in the market.
The war in Iran has once again highlighted the vulnerability of ‘non-transitioned’ industries, such as aviation, farming and, of course, shipping. Companies and countries that have diversified their energy mix have proved more resilient, creating a competitiveness gap.
One such example has been Spain, whose significant investments in alternative energy have meant the oil shock of recent months has had less impact. As Manesh Shah, manager on the Renewables Infrastructure Group (TRIG), says: “There are now so many renewables on the system, be it hydro or solar, that Spain has been relatively insulated from the energy shock.”
For its part, the UK has taken some small steps to boost companies’ resilience – for example, the government recently changed the rules to allow businesses to contract directly with renewable energy groups. “The government has started to recognise this can be a useful way to insulate at least part of the economy from shocks,” says Shah. “Allowing operating renewables to bid for a government-backed fixed-price contract essentially delinks energy from the gas price.”
Nevertheless, far more is needed. According to BNP Paribas, global energy investment hit an all-time high of some $3.3tn (£2.48tn) in 2025, with $2.2tn flowing into clean energy technologies – electrification, grids, nuclear, renewables and storage – versus $1.1tn into fossil fuels. China now accounts for nearly one-third of global clean energy investment, spending almost as much as the US and EU combined.
Even if the Strait of Hormuz reopened tomorrow, the strategic focus would remain on future-proofing infrastructure, securing supply chains and reducing reliance on geopolitically volatile regions and fossil fuels more broadly.”
And yet, argues Jamie Mills O’Brien, manager of the abrdn Future Supply Chains ETF, global spending on renewables is still around two-thirds short. “We are only spending a third of what we need to create energy security,” he explains.
“We are investing behind services companies that are building some of these assets, including real assets businesses, such as Williams Companies, and companies providing grid infrastructure. Electricity demand is rising – both from AI and onshoring. It is going to be a huge driver for these assets.”
Ben Leyland, senior fund manager on J O Hambro Global Opportunities, says this has also become an increasingly important theme for his fund. “Markets have initially focused on higher oil and gas prices, supply disruptions and short-term windfall profits for commodity producers,” he continues. “Yet the more important long-term implication is the accelerating shift towards energy resilience, diversification and domestic supply security.
“Even if the Strait of Hormuz reopened tomorrow, the strategic focus would remain on future-proofing infrastructure, securing supply chains and reducing reliance on geopolitically volatile regions and fossil fuels more broadly. As a result, capital expenditure is likely to accelerate most rapidly in the regions currently most exposed as governments and industries strengthen long-term energy security.”
Renewables may be part of the story, but the theme is far broader. Leyland points out that renewables enjoyed an ESG-driven surge of enthusiasm five to 10 years ago and then stagnated as interest rates rose and higher inflation brought project execution challenges. “Now, geopolitical uncertainty may create the conditions for a second wave in wind and solar deployment – this time driven less by decarbonisation targets and more by energy security and industrial competitiveness,” he reasons.
Other areas Leyland is focusing on include domestic energy production, liquefied natural gas infrastructure, nuclear power and electrification. Beneficiaries in turn include industrial equipment providers, engineering specialists and businesses supporting grid modernisation and plant upgrades. Electrification, meanwhile, includes electric vehicle adoption and enterprise adoption.
The bottleneck for the development of datacentres may not be microchips but access to energy.”
To what extent will the specialists in the renewable energy infrastructure investment trusts participate? Despite a performance revival over the last three months, the sector is still trading at significant discounts – and with double-digit dividends.
TRIG’s Shah believes the ability to contract directly with companies is a boost for their business, explaining: “It improves the visibility over the revenues and increases confidence on being able to service the dividend. We are trading at an 11% dividend yield – it is about taking action to show that dividend is secure.”
The company has signed direct renewable agreements with five corporates, including BT and Virgin Media. “Corporates would not be buying from us if it was not affordable,” says Shah. “They like to fix the power price for 10 years as that means, when a shock like this happens, their bills do not go up.” TRIG also has exposure to battery storage.
With most trusts, investors will only be gaining exposure to one part of the trend – and their returns are likely to be dividend-focused – but some funds such as Polar Capital Smart Energy offer exposure to the full value chain.
According to manager Thiemo Lang, it holds “power generation to transmission, to distribution and the grid, temporary storage and batteries, up to end-markets where electricity is being consumed. We also want consumption to be as efficient as possible.” That means the trust covers a wealth of sectors including transportation and industrials.
This can help diversify against periods of difficulty for individual sectors. Renewable energy may be having a renaissance, for example, but it has had a difficult few years and Lang has just one solar company, which focuses on solar panels for space. Instead, the trust has had much more mid and downstream exposure. This has benefited from AI and grid development as well as the inclusion of batteries.
A broader focus also allows funds to participate in datacentre growth, which remains the next great challenge for energy markets. “The bottleneck for the development of datacentres may not be microchips but access to energy,” notes Lang. Datacentre providers have pushed the grid providers to deliver energy but, increasingly, they are turning to onsite power generation – and natural gas power stations in particular. Small nuclear reactors may also be part of the solution.
The Iran crisis may have created a temporary boost for fossil fuel groups but investors now appear to be refocusing on long-term energy security on the assumption this will be a target for government spending. Renewables are certainly part of the story and yet the theme brings in a far broader range of companies as countries wean themselves off volatile international fossil fuel markets.
Read more on this from BNP Paribas here and from Hargreaves Lansdowne here
In focus: Semis detached
It has been an astonishing period for the semiconductor industry. The Philadelphia Semiconductor index is up more than 70% over the year to date, while Asian semiconductor groups have enjoyed an even higher return. There was the hint of a problem last week, however, as Broadcom’s results indicated a potential chink in the sector’s armour.
Demand for semiconductors has been significant and multi-faceted, coming from areas such as datacentres, electric cars and robots. Broadcom’s latest results worried investors, though, as the group pointed to weaker-than-expected revenue in its second-quarter earnings report. In particular, investors were concerned that CEO Hock Tan did not raise the company’s full-year target of $100bn (£75bn) in AI chip sales.
This could suggest that chip demand is faltering, even though, on the surface, that does not appear very likely. After all, at the start of June, TSMC CEO Che-Chia Wei said: “Customer demand is so high and we can only support so much. We are already working very hard. We are doing our best to ensure TSMC does not become a bottleneck.”
The answer may be that not all semiconductors are alike. There are the commoditised semiconductors – where demand is likely to be more cyclical – but also the high-end semiconductors, where demand should be more structural.
“We have had semiconductor companies that have doubled and, in some cases, quadrupled,” notes Chris Rossbach, manager on the J Stern World Stars Global Equity Fund. “That is now a bubble. We see it as equivalent to what happened in 1999/2000.”
Nevertheless, he still holds Nvidia. “You need Nvidia’s GPUs to power large language models,” he explains. “If you are going to do computing at that level, you need its chips. There is no alternative. The more commodified part of the semiconductor industry – for industry, for automation, for memory – they are capital-intensive, cyclical, commodified businesses.”
While such businesses are undoubtedly enjoying a demand boom, Rossbach believes AI adoption is likely to take longer than expected and may not prove sufficiently robust to justify current valuations. This is where the pressure point lies.
At these valuation levels, investors need to be increasingly discerning about their technology exposure. A lot of companies have been caught up in the excitement that may not merit their lofty price tags. Last week was an early sign that investors may be beginning to realise this.
Read more on this from CNBC here and from Reuters here
