- Asia markets have continued the S&P 500 optimism, rising today on hopes of the Middle East war ending
- Gold and oil have also risen slightly – suggesting not all markets have consensus in their optimism
- The IPPR reveals that the UK is lagging G7 peers when it comes to business investment
- The latest British Chambers of Commerce business confidence survey shows a dip even before the Iran war
- And Apple hits 50
Emma Wall, Chief Investment Strategist, Hargreaves Lansdown
“Markets paint an optimistic picture this morning – choosing to believe the optimism from the White House that the war in Iran will be over in a couple of weeks. US President Donald Trump yesterday announced that he saw the war ending within a couple of weeks, and that he would be addressing the nation with further details later today.
This was enough to propel the S&P 500 into a relief rally, up 2.9%, the best day for the market since May last year. Asian markets have continued the optimism early today, with the Hang Seng in Hong Kong up nearly 2%, and the Nikkei in Japan jumping 4.56%. European futures are also looking positive, with markets in the UK, France, Germany and Italy set to open up.
Not all markets share the positive outlook however – both gold and oil are up marginally suggesting that while the prospect of the war being over is a welcome one, rhetoric is easy to come by, but foreign policy harder to execute.
Trump’s comments suggest that the US will call victory soon and remove their presence from the region, despite no deal being reached with Iran. While this is expected to provide an immediate boost to stocks, energy disruption would continue for some months, and likely impact both inflation and economic growth. We think the Bank of England holds rates during this period.
UK lags G7 peers when it comes to business investment
The Institute for Public Policy Research (IPPR) has revealed that UK businesses invest around 11% of GDP annually, less than all the other G7 nations bar Canada. This lack of investment is expected to impact both productivity and the growth potential of businesses and the economy. It is particularly acute in the manufacturing sector, where we are nearly 50% behind the rest of the G7. This productivity lag is a long-term trend for the UK, which has struggled to keep pace with peers following the global financial crisis, compounded by Brexit. Budget uncertainty over the past two years has also slowed business decisions, as have rising energy and labour costs – even before the war in Iran.
…and British businesses confidence is wobbling
The double whammy of energy and labour costs rising has also impacted business confidence, the British Chamber of Commerce quarterly economic survey reveals. Surveyed before the outbreak of war in Iran, businesses were divided on whether the next 12 months would prove positive; as today’s minimum wage and national living wage hikes came into effect, and policy uncertainty weighed on investment decisions.
In recent years, UK businesses have faced rising energy and input costs, an increase in employer NICs contributions as well as wage increases. Despite these domestic headwinds it is worth noting that the FTSE 100 had one of its best years on record in 2025 – rallying more than 20% and outperforming even the S&P 500. The international nature of the UK stock market, which gets 70% of its revenues from overseas, as well as sector biases towards banking, defence and oil and gas firmed helped buoy the market. A reminder to investors that while domestic policy matters for GDP growth and economic stability, global factors play a much biggest part in determining asset price returns.
Apple turns 50
And briefly, to end on a positive note, Apple turns 50 today. For those who had the foresight to invest in the stock when it first IPO’d in 1980 – and held onto their shares through the various splits – you would be sitting on a return of more than 249,000%. Through recession, global financial crisis, several periods of extreme inflation, a pandemic, significant geopolitical unrest, this company – laser focused on brand, product and marketing – has survived and thrived. Of course, past performance isn’t always a guarantee of future success, and Apple still has some work to do if it’s to keep pace with the frontrunners in the AI race. But it’s a timely reminder that the best course of action in times of uncertainty and volatility is to stay the course, and keep your money invested.”
