Welcome to The Davy Wealth View for the second quarter of 2026.
The shocks keep coming. Last year, it was tariffs and AI (artificial intelligence). This year began with the military extraction in Venezuela, US threats over Greenland, and then the joint US-Israel attack on Iran. The latter has brought with it the closure of the Strait of Hormuz and the loss of one fifth of global oil shipments.
At the time of writing, we have a ceasefire, but the stand-off over the Strait continues. There is a long-standing relationship between energy prices and the economic cycle, as well as the market cycle. Nothing is linear though, it depends on whether the energy movements are demand-driven or supply-driven, and the underlying health of the economy matters too.
At the same time, there are worries about the health of the stock market. Before the attacks on Iran, we had seen considerable churn in individual stocks and sectors, as investors alternate between excitement and fear over AI. There are also concerns that private debt associated with these industries may be entering a mini credit crisis.
In our outlook for the second quarter, we examine the underlying strength of the US and European economies, and how much damage the energy shortages could do to growth and inflation. We investigate the recent rotation in the stock market and ask whether value has emerged in afflicted sectors. Lastly, we look at the controversial defense sector through the lens of responsible investing.
Should you have any questions in relation to the content within The Davy Wealth View, and what it means for your portfolio, please contact your Davy UK Wealth Manager.
Donough Kilmurray
Chief Investment Officer
Warning: Past performance is not a reliable guide to future returns and future returns are not guaranteed. The value of investments and of any income derived from them may go down as well as up. You may not get back all of your original investment. Returns on investments may increase or decrease as a result of currency fluctuations.
Warning: The information in this article is not a recommendation or investment research. It does not purport to be financial advice and does not take into account the investment objectives, knowledge and experience or financial situation of any particular person. There is no guarantee that by putting a financial or investment plan in place, you will meet your objectives. You should speak to your adviser, in the context of your own personal circumstances, prior to making any financial or investment decision.
Warning: Forecasts are not a reliable indicator of future performance.
