As we approach Christmas and the end of another eventful year, I would like to thank you for your continued support and trust in us. Your confidence in our advice and our relationship with you remain at the heart of everything we do.
The year overall has been excellent for investors with double digit gains across markets spanning the globe. Notable outperformance this year has included emerging markets, particularly in Asia, US technology, Japan, Germany and the UK.
I am delighted that our asset allocation and portfolio positioning has been very successful this year enabling us to deliver excellent results for our clients across the board.
The year however has not been easy to navigate. There has been continued heightened geopolitical uncertainty which has frequently buffeted markets. This has included Donald Trump’s focus on tariffs as both a political and economic lever, the ongoing war in Ukraine and Russian aggression, the conflict with Israel in Palestinian territories, and closer to home the implosion of the French government weakening the EU. In the UK, the Labour government made a shaky start capped off with a chaotic Budget at the end of November resulting in the overall tax burden increasing to levels not seen since the late 1940s.
From an economic standpoint, Mr Trump’s pressure on the US Federal Reserve to cut interest rates in the face of inflation compromising its independence has worried markets; tighter immigration rules in many parts of the world have added to inflationary pressures; and Trump’s ‘Big beautiful bill’ provided significant stimulus to the US economy with extended tax cuts, enormous additional spending resulting in $5tn more debt, as well as a curtailing of green energy initiatives and promotion of fossil fuels.
More widely, the economic environment has been supportive of equities and bonds. Interest rates have been cut several times during the year around the world and inflation has reduced, albeit it remains higher than official targets in the US, Japan, UK and EU. From a corporate perspective, 2025 is projected to end with a record earnings season for US S&P 500 companies, as well as strong corporate earnings from leading companies elsewhere too.
As we look ahead to 2026, we remain optimistic and buoyant as there are plenty of good investment opportunities. Whilst care is needed with regard to the valuation of some technology businesses where investors fret about a bubble, artificial intelligence and other technological innovations underpin the future of the global economy and will enable productivity improvements which are required to mitigate the high and rising costs of labour in the developed world. In addition, benign interest rates should help support earnings growth in a wide range of business sectors beyond technology which is most welcome.
Of course, 2026 will present many challenges. These will include an ongoing debate about the relations between the US, EU and the UK in areas ranging from economic co-operation to defence spending. Ukraine is potentially an issue to unite or divide western allies. Tensions with China may re-emerge over Taiwan or in respect of trade. The EU and the UK will need to pivot carefully between preserving a strong relationship with the US whilst engaging with China for economic benefits. Nation states in the Middle East, Latin America and significant countries such as India, which are not aligned exclusively with either the West or China will add to potential volatility.
We are ready for both the challenges and opportunities next year and look forward to guiding you through whatever lies ahead with our disciplined prudent approach. As Chartered Financial Planners, we believe we are uniquely placed as an owner-managed genuinely independent business providing both financial planning and investment management underpinned with a bespoke personal service.
On behalf of my team, I wish you and your family a peaceful Christmas and a happy, healthy and prosperous New Year.
Matthew Clark
Please note that the content on this page is based on our understanding and the available information; we cannot be held responsible for any errors, and you should not act on the basis of the information in these articles, nor do they constitute investment or tax advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch via telephone at 01392 875500 or email at info@SeabrookClark.co.uk.