Don’t look now, but we’re halfway through 2026.
Regardless of how fast the year appears to be passing, the halfway mark is an ideal time to pause and reflect on the first six months.
When thinking about six months of news, the topical stories we’ve read and heard about can become a bit of a blur, like paints smudged together on the page, making it difficult to discern what truly mattered.
You may recall reading about what we might expect from markets in 2026 after three strong years. In short, historical market performance hinted that we should perhaps prepare for a period of below-average returns.
At that time, the largest concern we had was the stock markets’ heavy reliance on a small group of large technology companies to continue to grow their earnings, whether because of or in spite of their strengthening commitment to AI.
While there was a minor setback and we did see markets decline, its cause wasn’t widely anticipated.
Here’s a brief rundown of the three key stories and how they influenced stock markets and investments.
The Strait of Hormuz
Towards the end of February, the United States and Israel launched military strikes against Iran.
This led to the Strait of Hormuz being closed, causing widespread disruption to the global oil supply. Within weeks, the price of oil doubled. And the ripple effect of this meant that inflation, which had been easing, began climbing again.
Throughout March and April, markets fell and swung sharply.
With a conditional ceasefire in place, the Strait of Hormuz has reopened and oil has (slowly) started to flow, resulting in falling prices. At the time of writing, oil prices are only slightly higher than at the start of the year.
That said, the agreement is fragile. Indeed, the US president, Donald Trump, declared the ceasefire “over” on Wednesday 8 July.
Market returns and inflationary pressures
Although we started the year expecting interest rate cuts, events in the Middle East have created inflationary pressures, meaning the next interest rate change is likely to see an increase rather than a decrease.
Despite markets declining during the period of uncertainty, they didn’t crash. In fact, by mid-2026, US and global markets have seen a 9% increase.
This positive result was thanks to real corporate earnings – in the first quarter, the world's largest companies continued a run of strong profits into a sixth straight quarter. And full-year estimates have now been revised upwards.
SpaceX's initial public offering
The last notable event was the SpaceX initial public offering (IPO) – the largest IPO ever.
Several other large private companies are expected to list soon.
Before long, major stock markets will include companies that had previously only been available to a select group of private investors.
3 key takeaways from the first half of 2026
1. The trigger is rarely the one you’re watching
In January, the risk many investors were focused on was the technology sector and concerns that its spending would disappoint.
Yet, the shock arrived in the form of war in the Middle East.
Since the risks we can predict are already reflected in prices, the risks that affect markets are often the ones no one is discussing.
It’s impossible to prepare for a surprise you haven’t imagined. Instead, build a plan that doesn’t hinge on knowing what will happen next, while ensuring you have enough cash on hand to cover short-term needs.
2. A scary half year can still be a profitable one
In March 2026, you might have been tempted to sell your investments and buy back in when things settled down.
Doing this would have resulted in turning an on-paper loss into an actual loss – worse still, you’d have likely missed the recovery.
The tariff scare of April 2025 taught us the exact same lesson: staying invested through a declining market isn’t comfortable, but it is the price of admission for long-term investors.
In reality, bad news and a rising portfolio sit together more often than you might expect.
3. The anticipated risk arrived, and a diversified portfolio absorbed it
Over the past two years, one common worry revolved around the market's reliance on a handful of giant technology companies. People feared that should those companies stumble, they’d take the whole market down with them.
In the first half of 2026, the “Magnificent Seven” actually underperformed the overall market.
In the end, the risk wasn’t resolved in the crash many investors had feared; in fact, the rest of the market rose to fill the gap – a brilliant example underlining the importance of holding a diverse portfolio.
Looking ahead to the second half of 2026
The second half of the year will no doubt deliver more surprises; inflation hasn’t yet settled and a new wave of strikes in the Middle East could lead to more uncertainty and rising interest rates.
Whatever worries may be on the horizon, at some point, there will be another decline. This is a normal part of investing.
One thing is certain: three good years do not mean we can expect a fourth without interruption.
As ever, we are here to provide help and support as you navigate your investment journey. If you’d like to discuss how recent events affect your financial plan, please get in touch.
