Investment insights webinar – Full transcript
Host: Myron Jobson, Personal Finance, Senior Manager at Rathbones
Guest: John Wyn-Evans, Head of Market Analysis at Rathbones
Myron: Hello everyone and a very warm welcome. I'm Myron Jobson and I'm delighted to host our first investment insights webinar of this newish year. It's already proven an eventful start to 2026, and investors are understandably looking for clarity.
I'm delighted to be joined today by John Win Evans, our Head of Market Analysis, who will guide us through the forces shaping markets right now and what they could mean for portfolios as the year unfolds.
Before we look ahead, let’s briefly look back. 2025 was a strong year for global investments, with most major asset classes delivering positive returns. Technology led the charge – especially AI‑linked names – with Nvidia becoming the first company to reach a $5 trillion valuation. Precious metals also surged on the back of geopolitical uncertainty and interest rate cuts, while commodities and mining sectors delivered notably resilient performance.
Investors spent much of the year navigating familiar headwinds – geopolitics, tariffs and inflation – while relearning the value of diversification as growth and value styles posted broadly similar global returns.
So how has the market narrative evolved now that we are in 2026? In many ways, it feels like a case of ‘new year, familiar themes’. Tariff concerns have re‑emerged, especially around the Greenland situation, triggering periods of volatility. Meanwhile, AI continues to dominate market discussions. Valuations are drawing scrutiny, with some commentators drawing parallels to the dot‑com era.
Today, John and I will unpack what these trends mean for markets and what they could mean for your clients’ portfolios. We’ll also explore the early signs of new themes emerging beneath the surface. Our aim is to cut through the noise – and there’s plenty of it – and bring some clarity to what matters most for investors navigating the year ahead.
A reminder that we’ll have a Q&A session at the end. There’s a Q&A tab on the right side of your screen where you can submit questions at any point.
So, without further ado, let’s dive straight in. John, welcome, and please take it away.
Market review and outlook
John: Morning everyone – and it’s good to be back on the circuit doing our investment insight quarterlies. They took a brief hiatus during the merger process, but now we’re back up and running.
Let’s begin by revisiting 2025. It was a strong year for investors, with equities, bonds, commodities and credit all delivering positive returns – a rare combination. Typically, this kind of broad‑based strength only happens after a major market downturn, but 2023 and 2024 had already been good years. The cumulative gains across asset classes were among the highest of the last two decades.
A number of themes supported this: solid global growth, the AI‑driven technology surge, inflation gradually coming under control and central bank rate cuts boosting liquidity.
Divergences across regions
Sector performance varied significantly by region:
- United States: technology led decisively, with communication services (Alphabet and Meta) and industrials benefitting from AI infrastructure spending.
- United Kingdom: financials led the FTSE 100’s strong performance, with banks regaining favour after years in the post‑financial‑crisis “sin bin”. Healthcare and materials also contributed strongly.
We also saw remarkable breadth in the UK market – the top contributors spanned banking, pharmaceuticals, industrials, oil, mining and insurance.
AI: risks, rewards and reality
One of the biggest anxieties among investors entering 2026 is the potential for an AI‑related valuation bubble. Headlines have leaned heavily into the fear narrative. But while risks do exist, we don’t believe collapse is imminent.
AI has been adopted faster than any technology in history, helped by the fact that it’s essentially free to access using devices people already own. Hyperscale data‑centre spending has risen sharply – from $150bn pre‑ChatGPT to over $400bn in 2025 – and is expected to rise further. The key question now is how quickly this investment will generate returns.
Many companies adopted generic models in 2025 and struggled to realise immediate benefits. We're now seeing a shift towards building tailored, application‑specific tools. Early adopters such as CH Robinson have already reported meaningful productivity gains.
We expect more companies to begin reporting quantifiable benefits through 2026.
Broader market considerations
Valuations
The S&P 500 trades at around 22x forward earnings – high, but not necessarily signalling imminent decline. Cheaper opportunities exist in the UK, Europe and emerging markets. Valuations must be viewed alongside earnings growth and return on equity, which remain strong.
Earnings
Earnings expectations for 2026 point to around 15% growth for the S&P 500. Historically, when earnings rise, markets tend to follow.
Financial conditions
Financial conditions in the US remain loose, supporting markets. Inflation expectations remain anchored around 2.3%, suggesting confidence in central banks’ ability to control inflation.
Bonds
Nominal yields across the US, UK and Europe are roughly in line with long‑run GDP‑based fair‑value ranges. We prefer the shorter end of the curve given long‑term fiscal concerns.
UK economy
The UK is growing slowly and relies heavily on government spending. Markets remain relatively calm, with sterling stable. Political developments – such as May’s local elections – could influence sentiment.
US political landscape
The 2026 midterms are approaching, and political manoeuvring is intensifying. Recent geopolitical actions – such as those involving Venezuela and Greenland – reflect complex strategic considerations. While concerning, escalation risks appear manageable.
Portfolio positioning
Key takeaways:
- Geopolitics are impactful but often lead to short‑term overreactions.
- Some equity markets are fully valued, but rotation into cheaper areas is underway.
- Inflation will likely remain structurally higher than pre‑COVID levels.
- We continue to favour quality companies with strong balance sheets and sustainable profitability.
- Markets typically experience intra‑year declines but still finish positive around 75% of the time.
- AI will continue shaping the world in ways we can’t yet fully imagine – much like electricity did in its early years. Initial benefits may seem incremental, but long‑term transformation can be profound.
Q&A session
How will increasing global government and corporate debt affect financial markets?
John: Corporate debt is generally manageable and corporate balance sheets are healthy. Government debt is more concerning, particularly in the UK and France. The most sustainable path is through stronger productivity growth – potentially fuelled by AI. Higher inflation and financial repression are long‑term possibilities, but not immediate risks.
What is your view on gold?
John: Gold had an exceptional year, driven by central‑bank buying and concerns about fiat‑currency debasement. While hard to value and unlikely to repeat last year’s performance, it remains a useful hedge.
Where do you see UK interest rates heading this year?
John: Rates are almost certainly coming down. Market expectations point to around two cuts, possibly bringing Bank Rate towards 3.25% by year‑end. Inflation could fall back to target by spring, giving policymakers more room to ease.
Closing remarks
Myron: Thank you, John. And thank you all for joining us and for your excellent questions.
A full on‑demand recording will be shared by email in the coming days. We’d also really appreciate your feedback via the short form provided. If your question wasn’t answered live, we’ll follow up directly.
We hope you’re leaving with a clearer understanding of what’s moving markets and what this could mean for portfolios in the months ahead. Until next time, take care.
Thanks everyone. Goodbye.
