May Investment Report: key themes shaping global markets

Welcome to May’s edition of the True Potential Investment Report, where we highlight the key themes and what they could mean for investors. While uncertainty remains, there are signs of resilience across major economies and asset classes.

Key themes at a glance:

• Geopolitical uncertainty continues: Ongoing tensions in Iran are creating uncertainty for the global economy. While there are some signs of progress, disruption to key energy routes means inflation risks remain for now.
• Europe faces rising pressure: Higher energy prices are weighing on growth across Europe. However, increased government spending—particularly in Germany—is helping to support the region.
• Valuations look more balanced: Strong corporate earnings have helped bring equity valuations closer to long-term averages. While the US market still looks more expensive, company performance has remained strong.
• A balanced approach to investing: We currently maintain a neutral outlook across asset classes. Within equities, we see more attractive opportunities outside the US. In fixed income, UK gilts offer value, though political risks remain.

Global economic backdrop

The situation in Iran continues to cast some uncertainty over the global economy, which had previously been in relatively good health. Disruption to key energy routes, particularly the Strait of Hormuz, means inflation remains a risk – especially for economies that rely on imported energy such as Europe, the UK and parts of Asia. While there are signs the conflict could move towards a resolution, the outlook remains uncertain for now.

US outlook

The US economy continues to be supported by recent policy measures, helping to maintain growth. However, households are beginning to feel some pressure from a slower jobs market and higher fuel costs. Despite this, strong corporate earnings, improvements in productivity and continued investment in areas such as AI are providing important support to the wider economy.

European outlook

Europe’s economy is facing increasing pressure from higher energy prices, which could reduce consumer spending and slow growth. There is also the potential for higher interest rates, which may further limit momentum. More positively, Germany’s increased spending on defence and infrastructure is providing support for the economy.

Equities and valuations

While share prices remain high, strong earnings growth has helped bring valuations closer to their long-term averages. The US market still appears more expensive compared with other regions, although company performance has remained strong. Outside the US, earnings may be more sensitive to ongoing geopolitical risks.

Our positioning

We continue to take a balanced approach across asset classes, reflecting the current level of uncertainty. Within equities, we see more attractive opportunities in stocks listed outside the US, where valuations are generally lower. In fixed income, UK gilts offer more value than US Treasuries, although political risks remain, and careful selection is important within alternative investments.

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest.

This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.

Opinions, interpretations and conclusions represent the views of True Potential Investments at the date of publication and are subject to change. Forecasts are not a reliable indicator of future results.

All data sourced from Bloomberg L.P. (27/05/2026)

True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. Registered in England and Wales as a Limited Liability Partnership No. OC356027.

True Potential LLP is registered in England and Wales as a Limited Liability Partnership No. OC380771.