Markets entered 2026 carrying elevated valuations and narrowing breadth. The Iran conflict accelerated a correction already underway, while AI enthusiasm gave way to harder questions about earnings delivery. A ceasefire rally in early April has improved the picture, but conviction remains unproven.

The economic backdrop heading into 2026 is unusual. Growth remains resilient, yet recession probability remains elevated. We are clearly in a late cycle environment, though one where the usual excesses have yet to appear as AI investment offsets traditional headwinds. The easy gains from valuation expansion are most likely behind us.

For cross-border investors managing wealth between the UK and US, this period highlighted both the challenges and opportunities inherent in navigating divergent monetary policies and currency movements. Regional performance differences created distinct investment themes that required careful analysis and positioning.