June 2026 market update
The Iran-US conflict has centered on the risk of disruption to energy supplies in the Middle East, particularly through the Strait of Hormuz, one of the world’s most important oil shipping routes. When investors feared a prolonged disruption, crude oil prices rose sharply. The ceasefire framework has helped ease some of that pressure, although markets remain sensitive to any renewed escalation. Despite this backdrop, markets have still been positive for the year.
Why does this matter for inflation?
Oil and gas prices feed into the economy in several ways. Higher energy prices can increase petrol and diesel costs, raise transport costs, and put pressure on businesses that rely heavily on fuel, heating, or imported goods. If these higher costs are passed to consumers, inflation will rise.
What could this mean for interest rates?
If energy prices stay elevated and inflation expectations rise, interest rates may need to rise. However, if the conflict continues to ease and oil prices fall, the inflation outlook could improve, giving policymakers more flexibility later in the year.
For cash savers, inflation can still erode the real value of money held on deposit over time. The general trend is that interest paid on cash deposits is currently falling.
Market implications for investors
Geopolitical shocks can cause short-term volatility across shares, bonds, currencies, and commodities. Energy companies may benefit from higher oil prices, while airlines, transport firms, and consumer-facing businesses can come under pressure from rising costs.
It is important to remember that markets often move before the economic impact is fully visible. A diversified portfolio is designed to help reduce reliance on any single asset class, region or sector. During periods of uncertainty, discipline and patience are usually more valuable than trying to predict the next headline.
Our view
Rather than attempting to forecast the exact path of events, we believe investors should focus on the factors they can control: maintaining a suitable asset allocation, keeping costs and tax efficiency under review, and ensuring their financial plan remains aligned with their objectives and risk tolerance.
We are always planning ahead in terms of investment solutions, and we have invested heavily in Technology; with market leading software that allow us to plan for Global events, so we are always thinking about the future. We also use cutting edge research software that ensures that the investments we manage are diversified, so the impact of geopolitical issues are minimised.
Need to talk?
If you are concerned about how inflation, cash rates, or recent geopolitical events could affect your investments, please get in touch. We can review your current position and help ensure your plan remains appropriate for the years ahead.
