Markets had a particularly strong quarter, with some matching Q2 returns not seen since 2020. The rebound, following March’s falls, came after investors reached the conclusion that President Trump was looking for a swift end to the war that he and Israel started against Iran. Indeed, the initial ceasefire was followed by a more formal agreement between the US and Iran towards the end of the quarter. However, it would not be unreasonable to label this as fragile at best. Notwithstanding this, markets were buoyed by the prospect of freight travelling normally through the Strait of Hormuz. They were also provided with another strong tailwind in the form of the continued AI spending frenzy.
In the US, there was a clear disparity between the performance of the previously unstoppable Magnificent 7 stocks, most of whom were behind the AI spending (the so-called Hyperscalers), and the recipients of that spending. However, this year has been characterised by concerns about the level of spending involved by these companies and the impact on future profitability from a technology that is still unproven. As a consequence, the performance of the group was muted over the quarter. This contrasted strongly with the recipients of their spending, most notably in the semiconductor sector, which rose 86%. Semiconductor companies are not the only beneficiaries from this spending, and investors turned their attention to those companies involved in the wider build-out of AI infrastructure, such as datacentres. These require construction materials, power, wiring and cooling, as well as servers.
Although we saw strong performance in the semiconductor sector in the US, this was surpassed by the performance of some markets in Asia, notably Korea and Taiwan, being home to some of the world’s major producers of semiconductors: Samsung, SG Hynix and TSMC. Benchmark indices representing these countries rose 74% and 47%, respectively. Japan was also a recipient of the phenomenon, with the Nikkei rising 32%.
With no real exposure to the technology sector, returns from the UK, although positive, were more muted. However, such is the demand around the build out of datacentres, it led to the entrance of Computacenter into the FTSE100, since the company nowadays is heavily involved in equipping these. Investors did have the distraction of a regime change at number 10 to consider, but the possibility of a more left-leaning government doesn’t hugely impact the FTSE, which derives most of its earnings from overseas. Oil and other commodity prices declining probably had a greater (negative) impact given the index’s high exposure to companies.
Bond markets, particularly in Europe, had been spooked in March by the prospect of higher inflation due to higher oil prices, stabilised somewhat in Q2, helping to reverse what had been a disappointing end to Q1. This left all portfolios in positive territory over the quarter.
Rockhold Asset Management June 2026