Celebrations and all-time highs

Global markets have continued strong runs this week. As I write on Friday morning, the S&P 500, Japan’s Nikkei, and the UK’s FTSE 100 are pretty near their all-time highs. It’s both an exciting and scary time to be an investor.

But here’s the thing. The investment love is being spread around. China has been climbing since September 2024, and the Shanghai Composite Index is up over 3.5% this week, boosted by the tech sector and optimism around policy. Basically, the Government is spending money on growth, the central bank has signalled future interest rate cuts, and AI-led innovation is booming.

Emerging markets have also continued their strong run and are doing better than their Yankee counterparts. As well as India and China, a standout performer here has been South Korea. Its Kospi Index (which I always think sounds like a breakfast cereal) increased by about 75% last year and is up around 9% so far in 2026. Why? Think semiconductors and defense. Samsung, chipmaker SK Hynix ,and Hanwha Aerospace, to name a few.

There’s a vital point here to consider. Diversification. You have to have a tub of Celebrations, not just a Mars bar.

Too many eggs in the US tub?

Most of us probably have a big fat slug of our investments allocated to the US. If we look at the snappily-named MSCI ACWI Index (don’t panic – just a basket of about 2,500 of the world’s biggest companies), about 66% of this sits in the US today. Think of this another way. About £66 of every £100 you invest in this big global basket will be in the US. And about £21 will be in the Magnificent 7 – the tech gang, which includes Nvidia, Apple, and Microsoft. Huge concentration risk.

The big exam question for 2026 is whether this is the best bet?

Trump’s game of Risk

This stock market giddiness, of course, comes against the disconcerting global backdrop, which is Trump’s enormous game of Risk. It’s one thing trying to bossily buy Greenland after a few beers at midnight in your own sitting room, quite another to voice intent on the world stage.

Despite the moves in Venezuela and the White House rhetoric, stock markets and oil prices have remained pretty blasé. Key moves have been US energy shares (goody goody more oil for us to go to Venezuela and get our mitts on), so Chevron has risen by about 6% and Halliburton by about 7% this week.

Defense shares have rocketed. If there’s more argy-bargy in the world, then spending on weapons and aerospace will increase – Rolls-Royce and Babcock have led the FTSE 100 higher, and the VanEck Defense ETF is up 5% over the last week.

And less dramatically (oh, how I love Britain), pies and party food have also shifted the FTSE 100. Greggs fell by 6% yesterday. Sales are OK – we’re still scoffing pies – but they are a touch gloomy about the year ahead, citing low consumer confidence. I find this odd. I’m much more likely to want to cram a jammy doughnut in my face when I’m feeling miserable, but I guess they can’t base their financial modelling on the whims of hormonal middle-aged women! #weird

Conversely, M&S shares were up this week, reporting a bumper Christmas, mostly down to posh sausage rolls and expensive party food, not pants and cushions.

So - sum that all up!?

The world is a big place, and AI is not the only game in town. The US dollar is weaker than it has been for a while, which tempers the returns us Brits make from buying US shares when we translate it back into pounds. And other markets are doing well. So, make sure you spread the love around.

Also. In coming weeks, the tension around Greenland could possibly move markets. If NATO is threatened, then professional investors will want to take some risk off and sell some shares. If this happens and shares come off the boil (probably led by energy, industrials, and financials), we could potentially see gold reach fresh new highs as people seek out safe havens for their money.

Finally, unrest is also escalating in Iran, which will likely see oil prices move higher as disruption threatens global supply.

What could we see next week?

Who knows!? The US buys Greenland; the FTSE 100 hits new highs, led by more gains in defense; gold peaks; Waitrose runs out of Himalayan Salt as the Beckhams de-ice their Cotswolds home; more than 50 readers write in expressing their concern about my sea swimming, and Brad Pitt asks me out. My money’s on at least two of these. (Poor Brad’s very keen!)

Have a great weekend, everyone. I hope our readers in Scotland, the Midlands, and the South West have managed to bunker down OK and avoid the worst of the storm.

Holly