Ark Review of the Month
June 2026
Global Markets
June 2026 saw global markets extend their gains as investor sentiment improved further following the US-Iran ceasefire agreement and easing concerns over disruption to global energy supply. With geopolitical risks moderating and oil prices retreating from their April highs, attention shifted back towards resilient economic activity, supportive corporate earnings and the continued expansion of artificial intelligence-related investment.
Global equities delivered another strong month, led by the US and Asia. The S&P 500 continued to reach new highs as enthusiasm surrounding AI investment broadened beyond a handful of mega-cap technology companies into more cyclical sectors, supported by resilient earnings and greater confidence that the Federal Reserve would maintain a measured policy stance. Emerging markets also outperformed developed markets, with Korea and Taiwan benefiting from continued strength in semiconductor and memory-chip demand linked to AI infrastructure spending. Japanese equities advanced further, supported by a weaker yen, improving corporate earnings and continued strength in exporter and financial stocks. European equities also moved higher despite the European Central Bank raising interest rates by 25 basis points, as resilient corporate earnings and receding geopolitical tensions outweighed concerns over slowing economic growth.
Commodity markets reversed much of the gains seen earlier in the quarter. Brent crude oil fell sharply as the ceasefire between the US and Iran reduced fears of prolonged supply disruption, although shipping activity through the Strait of Hormuz remained below pre-conflict levels. The decline in energy prices weighed on the broader commodity complex, while industrial metals remained relatively resilient as continued investment in electrification, renewable energy and AI-related infrastructure supported demand. Precious metals also softened as improving risk appetite reduced demand for traditional safe-haven assets.
Global fixed income markets generated positive returns despite mixed central bank signals. The Federal Reserve kept interest rates unchanged at 3.50%–3.75% while maintaining a cautious stance on inflation, reinforcing expectations that policy would remain restrictive but stable. The European Central Bank raised its deposit rate to 2.25% in response to persistent inflationary pressures, while the Bank of Japan increased its policy rate to 1.0% as strong wage growth and above-target inflation supported further policy normalisation. Corporate credit outperformed government bonds, with both investment-grade and high-yield spreads tightening amid resilient corporate fundamentals and improving investor risk appetite.
As of 30 June 2026:
UK 10 Year Gilt Yield 4.769%
US 10 Year Treasury Yield 4.469%
Germany 10 Year Bund Yield 2.864%
UK Market
UK equities posted modest gains in June but continued to lag many global markets as the FTSE All-Share's relatively defensive composition and significant exposure to the energy sector limited participation in the AI-led global equity rally. While improved global risk sentiment supported broader equity markets, falling oil prices weighed on heavyweight energy stocks, offsetting gains in financials and selected industrial companies.
The domestic macroeconomic backdrop remained supportive for fixed income markets. Annual CPI inflation remained at 2.8%, while softer labour market conditions and weakening business activity reinforced expectations that underlying inflationary pressures would continue to ease. Composite PMI data slipped below the 50 threshold, signalling a modest contraction in private sector activity, while weakness in the housing market pointed to slowing domestic demand. Against this backdrop, the Bank of England voted by a 7-2 majority to leave Bank Rate unchanged at 3.75%, emphasising that although energy prices remained volatile, weaker economic momentum and a loosening labour market should help return inflation sustainably towards its 2% target.
Gilts performed well during the month as expectations for further monetary tightening eased. Political developments, including Prime Minister Sir Keir Starmer's resignation and the anticipated transition of leadership to Andy Burnham, generated only limited market reaction, with investors focusing instead on the improving inflation outlook and softer economic data. As a result, UK government bonds outperformed many global peers, with the 10-year gilt yield ending June at around 4.8%.
Ark Insights
June extended the strong recovery in global markets as geopolitical risks eased following the US-Iran ceasefire, allowing investors to shift their focus back to economic fundamentals. Continued strength in corporate earnings, particularly across AI-related industries, supported another month of equity gains, while improving confidence over the inflation outlook helped both credit and government bond markets perform well.
Looking ahead, investors will continue to monitor whether the recent improvement in geopolitical conditions proves durable. Although oil prices have retreated significantly from their earlier highs, energy markets remain vulnerable to renewed supply disruptions, particularly given ongoing uncertainty surrounding the Strait of Hormuz. At the same time, central banks remain cautious as inflation has moderated but remains above target in several major economies, suggesting monetary policy is likely to stay restrictive until there is clearer evidence of sustained disinflation.
In this environment, maintaining a diversified portfolio across regions and asset classes remains important. While the AI investment cycle continues to provide a powerful structural growth theme, broadening market participation beyond a small group of technology leaders, elevated geopolitical uncertainty and differing central bank policy paths reinforce the value of diversification and active risk management.
As always, your advisers would be happy to assist with any questions you may have.
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The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.
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