The third quarter (Q3) was marked by ongoing geopolitical and macroeconomic tensions, as the war in the Middle East continued to raise energy prices and the US announced a new wave of trade tariffs.
Market returns were relatively low across the quarter and some global indices fell, but the UK performed well.
Inflation also remained elevated in many regions, and economic growth was broadly positive across the board.
Keep reading for an in-depth view of global investment markets over Q3 2026.
UK
The UK had a solid Q3, with the economy continuing to grow and markets outperforming most peers. However, inflation rose to its highest levels in five months.
The latest data from Trading Economics shows the UK economy expanded by 0.5% in Q2 2026, revised up from the previous estimate of 0.4%, following growth of 0.6% in Q1. Growth was largely driven by the services sector, alongside information and communication.
Meanwhile, the Office for National Statistics reports that inflation rose to 3.1% in the 12 months to August 2026, up from 2.9% in July. Transport made the largest upward contribution to the increase.
The Bank of England held the base rate at 3.75% at its September meeting. The Bank said the conflict in the Middle East and uncertainty around energy supplies make the outlook particularly difficult to predict. It also warned that inflation could rise further as higher energy prices feed through into the wider economy.
UK markets also performed relatively well in Q3. According to JP Morgan’s market review, the FTSE All-Share returned 2.4% over the quarter, making it the second-strongest-performing major market. UK equities benefited from greater exposure to financials, energy, and commodity-related sectors, as well as relatively attractive valuations and strong dividend support.
Europe
Europe experienced a mixed quarter, as inflation rose again and markets struggled, but economic growth was strong.
Figures from Trading Economics show that annual inflation in the eurozone rose to 3.2% in August 2026, up from 2.9% in July and matching the two-and-a-half-year high recorded in May. The increase was largely driven by a surge in energy prices amid the ongoing conflict in the Middle East. Inflation rose across most of the euro area’s largest economies, with the Netherlands the only exception.
Growth figures were more positive. The latest data shows that the eurozone economy expanded by 0.6% in Q2 2026, following growth of 0.1% in Q1. The Q2 figure was also revised up from the initial estimate of 0.4%, making it the strongest quarterly growth since Q2 2022. The revision was driven largely by a sharp upward adjustment to Ireland’s GDP.
Despite the stronger economic growth, European markets had a challenging third quarter. According to JP Morgan’s market review, the MSCI Europe ex-UK Index fell by 1.3% in Q3 2026.
US
In the US, inflation remained high, while growth and equity returns were strong.
Data from Trading Economics shows that annual US inflation remained at 3.4% in August 2026, unchanged from July.
The BBC reports that the Federal Reserve raised interest rates at its September meeting, marking the first increase in more than three years. Rates rose to 3.75% – 4%, up from 3.5% – 3.75%, as the Fed sought to contain rising prices. The decision came despite opposition from President Donald Trump, who had called for rates to be cut.
Economic growth remained solid. The latest figures show that the US economy expanded by 2.2% in Q2 2026, following growth of 2.5% in Q1.
US equities also performed strongly in Q3. According to JP Morgan, the S&P 500 rose by 2.3% over the quarter.
Asia
Asian markets delivered mixed results in Q3.
JP Morgan’s market review shows that Japan’s TOPIX was the standout performer, returning 3.8% over the quarter. Strong earnings growth and ongoing corporate reforms all boosted Japanese equities.
By contrast, the MSCI ex-Japan Index and MSCI Emerging Markets Index both fell by 0.2% over the quarter.
Turning to inflation, Trading Economics reports that Japan’s annual inflation rate held at 1.9% in August 2026, unchanged from July and remaining at its highest level since December 2025.
In China, data from Trading Economics shows that annual inflation rose to 0.8% in August 2026, up from July’s six-month low of 0.5%.
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