The week that was …
Economic round-up
UK retail sales slump in March
The war in the Middle East led to a sharp decline in UK consumer spending in late March with consultancy BDP concluding retail sales declined by 3% and nearly 8% in the penultimate and final weeks of the month respectively. Consumers had increased spending in early March before Mother’s Day and the final weekend of the annual Six Nations rugby tournament. Read more from the Times here
Energy costs push up Eurozone inflation
Euro area annual inflation hit 2.5% in March 2026 – up from 1.9% in February – according to a flash estimate from Eurostat. Energy inflation hit 4.9%, compared with -3.1% in February, followed by services, which saw a rise of 3.2%, compared with 3.4% in February. Read more from Eurostat here
US consumer confidence surprises
US consumer confidence unexpectedly edged higher in March, even though households remain downbeat on the labour market and anticipate higher inflation over the next 12 months, due to rising energy costs. Economists suggest lingering uncertainty caused by president Donald Trump’s trade and immigration policies has undercut demand for, and supply of, workers. Read more from Reuters here
Warmer weather supports US retail sales
US retail sales increased by the most in seven months over February as motor vehicle purchases rebounded and temperatures warmed up. Higher energy costs are expected to curb spending in the months ahead, however. The national average retail gasoline price last week topped $4 (£3) a gallon for the first time in more than three years. Read more from Reuters here
US non-farm payrolls beat consensus
US non-farm payrolls rose a seasonally adjusted 178,000 in March – a reversal from the 133,000 decline seen in February and better than the Dow Jones consensus estimate of 59,000. The unemployment rate edged lower to 4.3%, while wages rose less than expected, with average hourly earnings up just 3.5% from a year ago. Read more from CNBC here
China manufacturing expands again
China’s manufacturing sector expanded for a fourth straight month over March, with output and new orders rising – however, rising price pressures sharply intensified, according to the RatingDog China General Manufacturing Purchasing Managers’ Index, compiled by S&P Global. The index fell to 50.8 in March from 52.1 in February, missing analysts’ forecast of 51.6. Read more from Reuters here
Markets round-up
Sell-off leads managers to boost debt allocations
Fund managers have been snapping up government bonds after a brutal sell-off triggered by the Iran war. They are hoping the market will start to focus on the likely economic growth that should follow the conflict, rather than inflation. Investment giants JPMorgan Asset Management, M&G Investments and Schroders have been among those adding to their holdings of debt, including UK gilts. Read more from the FT here
Unilever reveals restructuring plans
Unilever has announced a $45bn (£34bn) tie-up with American spice-maker McCormick for its food brands business. The group will own 65% of the spin-off, but it will be run by McCormick. Unilever, which now plans to refocus on its health and personal care business, saw its share price fall 7% in the wake of the deal. Read more from the Times here
UK markets push higher
London’s FTSE 100 index rose strongly into the close on Friday, with rumours and uncertainty surrounding the Middle East sparking sharp market moves. The FTSE 100 closed up 71.50 points (0.7%) at 10,436.29, while the FTSE 250 dropped 45.89 points (0.2%) to finish the week at 21,642.30. Read more from the Independent here
ME nations weigh up new pipelines
The threat of long-running Iranian control over the Strait of Hormuz is pushing Gulf countries to revisit plans for alternative pipelines to bypass it. While costly, new pipelines may be the only way to reduce Gulf countries’ vulnerability to disruption in the strait. Read more from the FT here
Chinese government bonds sidestep sell-off
Chinese government bonds have emerged as a haven from soaring energy prices and rising global inflation. Yields on China’s 10-year government bond have dipped marginally to 1.81% since the end of February, while yields on 10-year US treasuries have surged by 0.4 percentage points. Read more from the FT here
“The AI hyperscalers now face the prospect of paying more for the data-centre build-out, more for the debt to fund it and more for the energy to power it.
Selected equity and bond markets: 27/03/26 to 03/04/26
| Market | 27/03/26 (Close) |
03/04/26 (Close) |
Gain/loss |
|---|---|---|---|
| FTSE All-Share | 5325 | 5566 | +4.3% |
| S&P500 | 6369 | 6583 | +1.6% |
| MSCI World | 4181 | 4316 | +3.2% |
| CNBC Magnificent Seven | 357 | 375 | +5.1% |
| US 10-year treasury (yield) | 4.44% | 4.32% | |
| UK 10-year gilt (yield) | 4.92% | 4.78% |
Investment round-up
Net inflows well up in February
Investment funds recorded net retail sales of £2.4bn in February – a substantial increase on the £662m recorded in January and the fourth consecutive month of inflows, according to data from the Investment Association. There were higher inflows into actively managed funds (£1.5bn) compared with index trackers (£890m) while North American equity funds attracted sales of £417m.
Copia Capital appoints new MPS lead
Discretionary fund manager Copia Capital Management has appointed Ian Hooper as managing director to leads its custom and off-the-shelf managed portfolio services (MPS). He joins from Progeny Asset Management, where he was group chief investment officer.
Gries leaves BlackRock on health grounds
BlackRock Greater Europe manager Stefan Gries has left the group to “focus on personal health issues”. Gries, who was head of European equities at BlackRock and managed the BlackRock Greater Europe trust, will be replaced by Benjamin Moore, who joined BlackRock in January from Columbia Threadneedle where he ran the CT European fund.
WisdomTree launches pair of defence ETFs
WisdomTree has launched the WisdomTree Asia Defence UCITS ETF and WisdomTree Global Defence UCITS ETF. The ETFs track the firm’s Asia Defence UCITS and Global Defence UCITS indices, respectively. The Asia option has 0.5% fee, while the global ETF charges 0.4%.
BlackRock tops fund brands
BlackRock, JP Morgan Asset Management and Fidelity have retained the top three places in an annual ranking of fund brands – the Broadridge’s Fund Brand 50. JPMorgan AM did see its total brand score drop 48 points after surging 755 points in 2024.
… and the week that will be
Inflation in focus
Investors will be closely tracking Friday’s Consumer Price Index report for March. Consensus expectations among economists have prices rising 0.9% from a month earlier, according to Wells Fargo, and 3.4% year-on-year. Prices rose 2.4% in February from a year earlier – the same as in January and in line with expectations – although that did not incorporate the effects of the conflict in Iran. Read more from Investopedia here
Company earnings
Initial company results this week could start to show the impact of the war in the Middle East on corporate America and the wider economy. This may provide markets with some clarity, as investors wrestle with conflicting signals about a potential winding-down of the war that began over a month ago, with the US-Israeli military strikes on Iran. Results from Delta Air Lines and beverage maker Constellation Brands will be especially monitored. Read more from Reuters here
The week in numbers
Federal Reserve minutes: The Fed’s Open Markets Committee left rates unchanged at its March meeting but the discussion around the Iran war revealed by the minutes will be of interest to markets looking for clues about whether the central bank is shifting towards a more hawkish posture.
US inflation: Consensus forecasts have US consumer price inflation jumping over March – up to 0.8% month-on-month from 0.3% in February, and to 3.1% year-on-year from 2.4% – due to the surge in energy prices. Core inflation, which excludes energy and food, is expected to be 0.2% month-on-month and 2.6% year-on-year, compared with 0.2% and 2.5% in February.
US consumer inflation: The US Personal Consumption Expenditures index – a measure of price changes in goods and services purchased by consumers – is expected to rise 0.3% month-on-month and 2.8% year-on-year over March, in line with February.
US consumer sentiment: Consensus expectations for the preliminary April reading of the Michigan index of US consumer sentiment is for a fall to 52.9, from 53.3 the previous month.
US business sentiment: The US ISM services purchasing managers’ index for March is forecast to fall to 54 from 56.1 in February. US employment data: Initial jobless claims in the US for the week ending 4 April is forecast to be 215,000.
China inflation: Consensus forecasts have March prices in China rising 0.2% month-on-month and 1.1% year-on-year.
In focus: Meanwhile, back at AI …
Given all that has happened over the last six weeks, it is easy enough to forget that investors started the year as obsessively focused on the implications of AI as they now are on the price of oil. Understandably, market attention has been diverted by the Iran crisis but a lot has been happening for big tech – and, over the long term, this may be prove to be more significant for investor portfolios.
The results of two jury trials in Los Angeles and New Mexico are, at best, a headache for some of the tech giants – and at worst, could represent their own ‘tobacco’ moment. For much of their existence, big technology businesses have been able to hide behind a longstanding federal law that holds online platforms are not responsible for the content posted by their users, but this may not be enough from here.
These two trials indicated that technology companies could be held accountable for the way they design their algorithms, the content they choose to prioritise and the type of engagement they seek to generate in their users. The trial in Los Angeles concluded, for example, that Meta and Alphabet’s YouTube had deliberately designed their products to be addictive, contributing to the mental health struggles of the plaintiff.
At $6m (£4.5m), the damages in Los Angeles were trivial for the trillion-dollar technology giants – though the New Mexico jury ordered Meta to pay the state $375m for failing to protect young users from child predators. The district attorney in New Mexico commented: “Policymakers and law enforcement officials across the country can help make this verdict a turning point in the fight for children’s safety.”
It would be easy enough to dismiss the potential impact for big tech – the fines were small, they have plenty of other strings to their bows, they have deep pockets to appeal, the law moves at a glacial pace – and yet, as Moody’s points out, there are risks for many technology companies in the rulings.
Plaintiffs argue that algorithmic optimisation plays a central role in how engagement is created and sustained, which is why the potential relevance extends beyond any single platform.”
“Plaintiffs argue that algorithmic optimisation plays a central role in how engagement is created and sustained, which is why the potential relevance extends beyond any single platform,” the company notes. “Analogous engagement-driven design practices appear in various forms across a wide range of industries outside social media, including video games, sports betting, chatbots, online retail, streaming services and other consumer-facing digital products.”
The group’s litigation tracker reveals 1,168 cases against social media companies are currently pending in the Los Angeles Superior Court jurisdiction alone. “More broadly, addictive software design actions around the country now include more than 4,000 cases targeting 166 different companies across a wide range of industries, including online gaming, sports betting and chatbots,” it adds.
For the time being, it is difficult to disaggregate the impact of these lawsuits on the technology sector from a difficult backdrop for equities. The tech giants have generally performed poorly this year – for example, the CNBC Mag 7 index is down 11.5% over the year to date, which puts it behind the S&P 500 (down 3.8%) and even the FTSE 100 (up 5.1%).
At the same time, the companies at the heart of the litigation do not appear to have suffered disproportionately: Meta is down 11.7%, while Alphabet is only down 6.6%. For context, Microsoft is down 21%, while Apple is down 5.6%. For now, investors appear to be using the technology giants as a source of liquidity, so it is not clear that pricing has adjusted in the wake of these trials.
Another warning shot for the technology giants should come from the controversies around Palantir. The company has become a flashpoint in political campaigns across the US, with candidates with ties to the controversial AI group attacked by opponents.
Palantir’s role in helping US Immigration and Customs Enforcement (ICE) track and manage deportations has prompted increasing scrutiny while there are growing efforts to prevent its use in government agencies more generally. New York City hospitals, for example, recently dropped Palantir software, while there is a growing campaign in the UK’s NHS to prevent its use. It has been a reminder how, even when AI technology can do amazing things, it still needs to be implemented and managed by humans to realise its productivity gains.
Even when AI technology can do amazing things, it still needs to be implemented and managed by humans to realise its productivity gains.”
Finally, there is the issue of an energy shock and the extent that could impact the adoption of AI. The data-centres needed to store and process the data required to generate AI insights are energy-hungry – indeed, International Energy Agency (IEA) forecasts suggest data-centres are set to account for almost half of the growth in electricity consumption in the US between 2025 and 2030.
As it stands, fossil fuels provide nearly 60% of power to data-centres, according to the IEA. Renewables account for just 27% of their demand, while nuclear provides the remainder.
Equally, there is a danger that higher inflation will raise the projected costs for the data-centre roll-out. As things stand, the technology giants are slated to spend $635bn on data centres, chips and other AI infrastructure in 2026, according to S&P Global. Much of this spending has been financed by debt.
Morgan Stanley estimates the AI hyperscalers and their adjacent companies will raise $400bn from the US investment grade corporate bond market in 2026 alone. These companies now face the prospect of paying more for the data-centre build-out, more for the debt to fund it and more for the energy to power it.
At the very least, this should prompt investors to ask whether big tech merits the still-lofty valuations it commands. “Despite the volatility that the conflict has generated, risk premia in global equity and debt markets remain compressed by historical standards, heightening the risk of a sharp correction if macroeconomic conditions worsen,” the Bank of England warned recently. “AI-related repricing could transmit widely throughout the financial system and impact the real economy.” AI companies now appear more fragile than they have for a while.
Although there are significant vested interests backing them to come through this period of weakness, there are also clear reasons to be wary about this part of the market.
Read more on this from the FT here, from the Guardian here and from Reuters here
In focus: Renewables renewal
Renewable technologies such as wind and solar were responsible for generating more than half of the UK’s electricity in 2025, according to the Energy Department. The 52.5% total represents a 5.7% rise on the previous year so, with a second energy crisis in four years brewing, could the renewables sector finally re-emerge as a credible investment option?
The Energy Department said the rise was driven by more renewables options, with the UK adding 3.8 gigawatts of capacity to the grid. Weather conditions were also favourable. Wind generation rose 4.1%, to provide 30% of the UK’s power mix, while solar power soared by 36.6%. At 6.9%, however, it remains a smaller share of the energy mix.
The energy crisis has once again turned the spotlight on the reliance of fossil fuels. In the last crisis, renewable energy assets enjoyed a revival among investors so could we once again see the unloved renewable energy investment trust sector reinvigorated? It has been an unrelentingly grim period for the sector, with the average fund down 17.3% over five years in share price terms. The average discount to net asset value also remains historically wide – at 34%.
In theory, the trusts should be beneficiaries of higher energy prices. That said, trusts do not necessarily benefit in full. Some will have agreements to sell energy at lower prices already in place. There are also risks around higher inflation and borrowing costs. Again, many of the cashflows for these companies are inflation-linked – but the mechanism is imperfect and the performance of these trusts in 2022 showed their vulnerability to worries over higher interest rates.
Nevertheless, some of the trusts have started to recover – tentatively – since the start of the year. For trusts such as Bluefield Solar and Greencoat UK Wind, discounts have started to narrow and the net asset value has started to tick higher. Six trusts in the sector have delivered a positive NAV performance over the past year. Equally, yields are very attractive, with the average yield above 10%. Foresight Solar offers a yield of 12.9%, while the Renewables Infrastructure Group has a yield of 11.7%.
Professional investors are increasingly interested in the sector. Chelsea has held renewable infrastructure trusts in its VT managed funds, for example, while Rob Burdett, head of multi-manager at NedGroup also has exposure.
“We have meaningful holdings in real assets and inflation-resilient parts of the market,” he says. “Our renewables investment trust holdings offer a degree of protection through revenues that are linked, directly or indirectly, to power prices. Atlas Global Infrastructure also brings significant exposure to infrastructure assets with resilient cashflows, including energy exposure. Energy storage names should benefit from greater power price volatility, which tends to rise in periods of supply stress.”
This may represent a turning point for sentiment towards the renewables sector. It has been a long and miserable period for investors, but high dividends, low valuations and a change in the energy environment could see it revive.
Read more on this from the Independent here
