Markets: what 2026 is really telling us
8th May 2026
There is a particular type of investor, and you have almost certainly met one, who treats every crisis as confirmation that the world is ending and every rally as the prelude to the next crash. In a year like 2026, this person has been very busy. They have had Iran, oil above $100, a Strait of Hormuz that has opened and closed more times than the average airport departure gate, gold swinging wildly on every headline, and a Federal Reserve sitting on its hands while inflation stays elevated. Plenty of material.
And yet, as of this week, the S&P 500 is sitting at or near all-time highs. The Nasdaq is at record levels. The Nikkei just surged 5.6% in a single session to close at 62,833, a new all-time high of its own.
Markets, in other words, have looked at everything that 2026 has thrown at them and largely said: fine.
That deserves a closer look.
And yet, as of this week, the S&P 500 is sitting at or near all-time highs. The Nasdaq is at record levels. The Nikkei just surged 5.6% in a single session to close at 62,833, a new all-time high of its own.
Markets, in other words, have looked at everything that 2026 has thrown at them and largely said: fine.
That deserves a closer look.
How we got here
The year began with some optimism. Commodity markets were expected to track a broadly stable path, modest demand growth, relatively robust energy supply. That outlook did not survive February.
On 28th February, the United States and Israel launched a joint military operation against Iran. The markets reacted accordingly. Oil surged. Gold spiked. Stocks retreated. The anxious investor community began constructing elaborate narratives about stagflation, energy shocks, and geopolitical meltdown.
Brent crude jumped from around $72 a barrel on 27th February to nearly $120 at its peak, with March recording one of the largest one-month oil price surges on record, a gain of 51%, as fears mounted over supply disruptions through the Strait of Hormuz. To put it in context, the World Bank described it as the largest oil supply shock on record, with an initial reduction in global oil supply of roughly 10 million barrels per day.
Gold, for its part, behaved characteristically erratically. It rose from $5,296 to $5,423 per troy ounce immediately after the strikes, but then sold off more than 6% to $5,085 within days, as a stronger dollar and higher Treasury yields put downward pressure on the metal. If you had bought gold expecting a clean, directional safe-haven trade, you had an uncomfortable few weeks. That is often how these things go.
The year began with some optimism. Commodity markets were expected to track a broadly stable path, modest demand growth, relatively robust energy supply. That outlook did not survive February.
On 28th February, the United States and Israel launched a joint military operation against Iran. The markets reacted accordingly. Oil surged. Gold spiked. Stocks retreated. The anxious investor community began constructing elaborate narratives about stagflation, energy shocks, and geopolitical meltdown.
Brent crude jumped from around $72 a barrel on 27th February to nearly $120 at its peak, with March recording one of the largest one-month oil price surges on record, a gain of 51%, as fears mounted over supply disruptions through the Strait of Hormuz. To put it in context, the World Bank described it as the largest oil supply shock on record, with an initial reduction in global oil supply of roughly 10 million barrels per day.
Gold, for its part, behaved characteristically erratically. It rose from $5,296 to $5,423 per troy ounce immediately after the strikes, but then sold off more than 6% to $5,085 within days, as a stronger dollar and higher Treasury yields put downward pressure on the metal. If you had bought gold expecting a clean, directional safe-haven trade, you had an uncomfortable few weeks. That is often how these things go.
Major index and commodity performance as at 8th May 2026
Looking at the snapshot above, a few things stand out.
The S&P 500 is up 7.18% year-to-date and 29.63% over the past twelve months. The Nasdaq has returned 11.03% this year, and over 43% in the past year. The Nikkei 225 is up 24.33% year-to-date. These are not numbers that scream geopolitical crisis.
Brent crude, as the snapshot shows, is up 68.20% year-to-date, which tells you exactly where the shock has been concentrated. Gold, despite all the noise, is up 8.95% for the year, which sounds reasonable and is probably not what most people expected given the scale of the conflict.
Meanwhile, at the other end of the table, globally, bonds are down 1.13% for the year and have returned just 0.51% over three years. For anyone who has been hiding in bonds waiting for the storm to pass, the cost of that decision has been considerable.
V-shaped recovery?
Markets pulled back in March as energy costs rose after the Iran conflict began, but the S&P 500 subsequently closed above 7,200 on 1st May and now stands more than 14% above its March low and nearly 7% higher for the year.
One market strategist described it as a "teflon market", noting that after a roughly 9% setback, the S&P 500 staged another V-shaped recovery, rallying more than 13% from the 30th March low through month-end. The same strategist offered a fairly blunt explanation for why: "profits, profits, and profits."
That is, frankly, the correct answer. With approximately one-third of S&P 500 companies reported by late April, the blended year-over-year earnings growth rate stood at 15.1%, up from 13.1% expected at the end of March, putting the index on track for a sixth consecutive quarter of double-digit earnings growth. In other words, the companies that make up the index are doing rather well, regardless of what is happening in the Strait of Hormuz.
April delivered the mirror image of March. The S&P 500 closed the month at a fresh all-time high of 7,209, posting its strongest monthly gain since 2020, with the Nasdaq also setting record closes. This happened, it is worth noting, while Brent crude finished the month near $120 per barrel and the Federal Reserve held rates steady while warning that inflation risks remain elevated.
The market absorbed the headline risk and chose to focus on the underlying economic reality instead.
The S&P 500 is up 7.18% year-to-date and 29.63% over the past twelve months. The Nasdaq has returned 11.03% this year, and over 43% in the past year. The Nikkei 225 is up 24.33% year-to-date. These are not numbers that scream geopolitical crisis.
Brent crude, as the snapshot shows, is up 68.20% year-to-date, which tells you exactly where the shock has been concentrated. Gold, despite all the noise, is up 8.95% for the year, which sounds reasonable and is probably not what most people expected given the scale of the conflict.
Meanwhile, at the other end of the table, globally, bonds are down 1.13% for the year and have returned just 0.51% over three years. For anyone who has been hiding in bonds waiting for the storm to pass, the cost of that decision has been considerable.
V-shaped recovery?
Markets pulled back in March as energy costs rose after the Iran conflict began, but the S&P 500 subsequently closed above 7,200 on 1st May and now stands more than 14% above its March low and nearly 7% higher for the year.
One market strategist described it as a "teflon market", noting that after a roughly 9% setback, the S&P 500 staged another V-shaped recovery, rallying more than 13% from the 30th March low through month-end. The same strategist offered a fairly blunt explanation for why: "profits, profits, and profits."
That is, frankly, the correct answer. With approximately one-third of S&P 500 companies reported by late April, the blended year-over-year earnings growth rate stood at 15.1%, up from 13.1% expected at the end of March, putting the index on track for a sixth consecutive quarter of double-digit earnings growth. In other words, the companies that make up the index are doing rather well, regardless of what is happening in the Strait of Hormuz.
April delivered the mirror image of March. The S&P 500 closed the month at a fresh all-time high of 7,209, posting its strongest monthly gain since 2020, with the Nasdaq also setting record closes. This happened, it is worth noting, while Brent crude finished the month near $120 per barrel and the Federal Reserve held rates steady while warning that inflation risks remain elevated.
The market absorbed the headline risk and chose to focus on the underlying economic reality instead.
Where things stand right now
As of this week, the diplomatic picture was still shifting with regards to Iran - each day seemingly bringing contrasting news. Reading between the lines: both sides appear to want a way out. The question is the terms. Markets, based on this week's price action, are beginning to price in a resolution sooner rather than later. Whether that optimism proves warranted is another matter, but the direction of travel appears clearer than it did even a fortnight ago.
On oil specifically, analysts suggest that any reopening of the Strait would likely trigger an immediate drop of $10 to $20 in crude prices due to speculative positioning, though supply chain bottlenecks and lingering production outages would keep the market tight, probably anchoring Brent in the $80 to $90 range rather than a return to pre-crisis levels.
Gold, meanwhile, continues its peculiar year. J.P. Morgan has maintained a year-end price target of $6,300 per ounce, while Deutsche Bank is standing by a $6,000 target. Both banks remain bullish despite the short-term volatility, which is consistent with the broader thesis that geopolitical uncertainty keeps a floor under precious metals even when the headline moves look choppy.
What this tells us about markets generally
Here is the thing about geopolitical events and market performance: they rarely rhyme in the way commentators suggest they will.
The instinctive narrative in February was that this was the kind of conflict that derails everything, inflation, rate cuts, growth. And the economic impact has been real. J.P. Morgan's economic research team noted that under a scenario where Brent prices remain elevated through mid-year, global GDP growth for the first half of 2026 could be depressed by around 0.6% annualised, and that higher energy prices would likely feed through into inflation. But they also noted, with rather good timing: "experience shows that energy price increases, even as large as 40 to 50%, don't tend to materially weigh on sentiment. It would likely take a substantially larger price shock, or a more extensive military conflict, to activate this particular growth drag."
That observation turned out to be prescient.
The S&P 500 has spent, historically, around 29% of its existence trading 10% or more below a recent high. Double-digit pullbacks are not rare events. They are a regular feature of the landscape. The question is never whether they happen, they will, but whether you are positioned to absorb them and remain invested when the recovery comes.
What 2026 has illustrated, again, is that time in the market matters more than timing the market. The investors who rotated heavily into bonds or cash in early March, spooked by oil and geopolitics, have watched equities recover strongly while their defensive positions have returned very little. The iShares Global Aggregate Bond fund, as the snapshot shows, is barely above flat for the year and has returned just half a percent over three years. That is the cost of safety-seeking during equity volatility.
As of this week, the diplomatic picture was still shifting with regards to Iran - each day seemingly bringing contrasting news. Reading between the lines: both sides appear to want a way out. The question is the terms. Markets, based on this week's price action, are beginning to price in a resolution sooner rather than later. Whether that optimism proves warranted is another matter, but the direction of travel appears clearer than it did even a fortnight ago.
On oil specifically, analysts suggest that any reopening of the Strait would likely trigger an immediate drop of $10 to $20 in crude prices due to speculative positioning, though supply chain bottlenecks and lingering production outages would keep the market tight, probably anchoring Brent in the $80 to $90 range rather than a return to pre-crisis levels.
Gold, meanwhile, continues its peculiar year. J.P. Morgan has maintained a year-end price target of $6,300 per ounce, while Deutsche Bank is standing by a $6,000 target. Both banks remain bullish despite the short-term volatility, which is consistent with the broader thesis that geopolitical uncertainty keeps a floor under precious metals even when the headline moves look choppy.
What this tells us about markets generally
Here is the thing about geopolitical events and market performance: they rarely rhyme in the way commentators suggest they will.
The instinctive narrative in February was that this was the kind of conflict that derails everything, inflation, rate cuts, growth. And the economic impact has been real. J.P. Morgan's economic research team noted that under a scenario where Brent prices remain elevated through mid-year, global GDP growth for the first half of 2026 could be depressed by around 0.6% annualised, and that higher energy prices would likely feed through into inflation. But they also noted, with rather good timing: "experience shows that energy price increases, even as large as 40 to 50%, don't tend to materially weigh on sentiment. It would likely take a substantially larger price shock, or a more extensive military conflict, to activate this particular growth drag."
That observation turned out to be prescient.
The S&P 500 has spent, historically, around 29% of its existence trading 10% or more below a recent high. Double-digit pullbacks are not rare events. They are a regular feature of the landscape. The question is never whether they happen, they will, but whether you are positioned to absorb them and remain invested when the recovery comes.
What 2026 has illustrated, again, is that time in the market matters more than timing the market. The investors who rotated heavily into bonds or cash in early March, spooked by oil and geopolitics, have watched equities recover strongly while their defensive positions have returned very little. The iShares Global Aggregate Bond fund, as the snapshot shows, is barely above flat for the year and has returned just half a percent over three years. That is the cost of safety-seeking during equity volatility.
The FTSE 100 anomaly
It is worth noting that the FTSE 100 has, once again, been the index that nobody at the dinner party wants to talk about.
Down 3.08% over the past month, up just 3.48% year-to-date, and returning only 20.13% over the past year versus the S&P 500's 29.63%. Over three years, the gap widens further: 32.37% for the FTSE against 78.12% for the S&P. The Nasdaq has returned 111.88% over the same period.
This is not a new story. The FTSE 100's composition, heavy in energy companies, financials, and consumer staples, light in technology, means it tends to underperform in growth-driven rallies and does rather better in commodity-rich environments. The irony is that with Brent up 68% year-to-date, the energy-heavy FTSE should theoretically be a beneficiary. That it is lagging most other major indices tells you something about the rest of its constituents.
For British expatriates with a home bias towards UK equities, often the default position for those who have not reviewed their portfolios with proper international advice, the numbers above are a reminder of what can be left on the table through structural concentration.
It's also worth pointing out here that there are talks of UK investors being forced to allocate to UK companies in wrappers such as pensions - such central planning of capital has been proven time and time again to be a tactic which is doomed to fail, but when has that ever stopped a government from doing something?!
Our view for the rest of 2026
We will say what we genuinely believe rather than what sounds appropriately cautious: we think the outlook for the rest of 2026 is meaningfully positive, and that the Iran conflict, whether it resolves in May, June, or later in the year, does not change that conclusion materially.
The reasons are structural. Corporate earnings have been strong. The labour market in the US has remained relatively resilient, with unemployment at 4.3% and hiring improving in early spring. Artificial intelligence investment continues to reshape technology earnings. The Nikkei's surge this week was partly driven by AI-related semiconductor stocks (even considering the policy of currency intervention there), and the broader global technology wave has more runway ahead of it.
The question we hear most from clients right now is: "should I be doing something different given everything that's happening?" The honest answer, in most cases, is no. If you have a properly constructed, diversified portfolio with appropriate risk exposure for your situation, the correct response to 2026 so far is to check that nothing has drifted significantly out of alignment and then get on with your life.
The investors most at risk right now are not the ones holding through the volatility. They are the ones who moved to cash in March, or who have concentrated positions in a single geography, or who have been sitting on pension pots back home in the UK that nobody has reviewed in years, quietly underperforming a benchmark that most people cannot name.
The Brigantia view
We have written before about the value of remaining calm during volatility, and we will not labour the point here. But 2026 is a useful case study in why an evidence-based, globally diversified investment approach tends to outperform the alternatives over time, not because it avoids every bump, but because it does not require you to correctly predict what happens next.
You do not need to have forecast the US-Israel strikes on Iran. You do not need to know when the Strait of Hormuz fully reopens. You do not need to know whether J.P. Morgan or Deutsche Bank is right about gold. What you need is a clear financial plan, a portfolio that reflects your actual goals and risk tolerance, and an adviser who will help you stay the course when headlines make that difficult.
That is what we do.
If your current financial arrangements have not been reviewed properly, particularly if you are an expatriate with pension assets, savings, or investments spread across multiple jurisdictions, now is a reasonable time to take stock. Not because of what markets are doing, but because clarity tends to be more valuable than reaction.
It is worth noting that the FTSE 100 has, once again, been the index that nobody at the dinner party wants to talk about.
Down 3.08% over the past month, up just 3.48% year-to-date, and returning only 20.13% over the past year versus the S&P 500's 29.63%. Over three years, the gap widens further: 32.37% for the FTSE against 78.12% for the S&P. The Nasdaq has returned 111.88% over the same period.
This is not a new story. The FTSE 100's composition, heavy in energy companies, financials, and consumer staples, light in technology, means it tends to underperform in growth-driven rallies and does rather better in commodity-rich environments. The irony is that with Brent up 68% year-to-date, the energy-heavy FTSE should theoretically be a beneficiary. That it is lagging most other major indices tells you something about the rest of its constituents.
For British expatriates with a home bias towards UK equities, often the default position for those who have not reviewed their portfolios with proper international advice, the numbers above are a reminder of what can be left on the table through structural concentration.
It's also worth pointing out here that there are talks of UK investors being forced to allocate to UK companies in wrappers such as pensions - such central planning of capital has been proven time and time again to be a tactic which is doomed to fail, but when has that ever stopped a government from doing something?!
Our view for the rest of 2026
We will say what we genuinely believe rather than what sounds appropriately cautious: we think the outlook for the rest of 2026 is meaningfully positive, and that the Iran conflict, whether it resolves in May, June, or later in the year, does not change that conclusion materially.
The reasons are structural. Corporate earnings have been strong. The labour market in the US has remained relatively resilient, with unemployment at 4.3% and hiring improving in early spring. Artificial intelligence investment continues to reshape technology earnings. The Nikkei's surge this week was partly driven by AI-related semiconductor stocks (even considering the policy of currency intervention there), and the broader global technology wave has more runway ahead of it.
The question we hear most from clients right now is: "should I be doing something different given everything that's happening?" The honest answer, in most cases, is no. If you have a properly constructed, diversified portfolio with appropriate risk exposure for your situation, the correct response to 2026 so far is to check that nothing has drifted significantly out of alignment and then get on with your life.
The investors most at risk right now are not the ones holding through the volatility. They are the ones who moved to cash in March, or who have concentrated positions in a single geography, or who have been sitting on pension pots back home in the UK that nobody has reviewed in years, quietly underperforming a benchmark that most people cannot name.
The Brigantia view
We have written before about the value of remaining calm during volatility, and we will not labour the point here. But 2026 is a useful case study in why an evidence-based, globally diversified investment approach tends to outperform the alternatives over time, not because it avoids every bump, but because it does not require you to correctly predict what happens next.
You do not need to have forecast the US-Israel strikes on Iran. You do not need to know when the Strait of Hormuz fully reopens. You do not need to know whether J.P. Morgan or Deutsche Bank is right about gold. What you need is a clear financial plan, a portfolio that reflects your actual goals and risk tolerance, and an adviser who will help you stay the course when headlines make that difficult.
That is what we do.
If your current financial arrangements have not been reviewed properly, particularly if you are an expatriate with pension assets, savings, or investments spread across multiple jurisdictions, now is a reasonable time to take stock. Not because of what markets are doing, but because clarity tends to be more valuable than reaction.
