J.P. Morgan’s Karen Ward on AI, interest rates and where to invest now

Holly Mackay sits down with Karen Ward, Chief Market Strategist for EMEA at J.P. Morgan Asset Management, to make sense of a noisy world. They cover whether the AI boom can last, why UK interest rates may rise, why Europe could surprise investors, and how an 18-year-old with £500 should get started. Karen also shares how growing up without money shaped her own habits. It’s plain English and a useful dose of perspective if you’re feeling jittery.

Who is Karen Ward?

Karen Ward is Managing Director and Chief Market Strategist for Europe, the Middle East and Africa at J.P. Morgan Asset Management. Her job is to make sense of politics, economic data and news headlines, then work out what it all means for investors. She advises portfolio managers and clients on where to put their money. Before J.P. Morgan, she worked at the Bank of England and in government.

How did her upbringing shape her approach to money?

Karen grew up in a working-class home where money was a constant worry. Watching the early 1990s recession play out on the news and at home sparked her interest in economics. She has always been debt-averse and a planner. Her mum recently found a weekly budget Karen wrote aged around 13. She admits that learning to invest, and to watch money go up and down, didn’t come naturally.

Can the stock market keep going up?

Karen believes it can, though not in a straight line. Stock markets broadly track the size of the global economy, which usually grows a bit each year, so new record highs shouldn’t alarm investors. She argues that today’s political chaos is driving more spending, not less. Governments are investing in defence, energy and resilience, while companies are spending on new technology. That spending is fuelling growth and supporting markets.

Is debt a problem for the economy?

According to Karen, UK households and businesses are in good shape. Household debt is at its lowest since 2002 and corporate debt at its lowest since 1998. The real concern is government debt, which is rising quickly in both the UK and US. Governments fund their spending by issuing bondsA type of asset that represents a loan, usually issued by a government, company or agency that wants to raise money to fund its operations.. When they borrow heavily, bond yields The annual return an investor expects from a bond investment.rise, and that can push up interest rates The amount that a lender charges someone for taking out a loan or a mortgage. It's calculated as a percentage of the amount borrowed - for example, 3%.and mortgage costs for everyone.

Will UK interest rates go up?

Karen expects the Bank of England could raise interest rates, possibly in November. Rising oil prices are pushing up inflationTerm used to describe how quickly the prices of goods and services is rising over a period of time. In periods of high inflation, prices are increasing rapidly, whereas low inflation means prices are increasing by only a small amount., which she thinks could top 4% early next year, twice the Bank’s 2% target. The Bank faces a tricky balance. It wants to show it is serious about inflation, but a weak economy and soft jobs market mean higher rates and mortgage costs could cause an unnecessary slowdown.

Is AI a bubble?

Karen’s honest answer is that nobody knows yet. Big tech firms have built the chips, data centres and models. Now businesses and consumers are testing whether AI is truly transformative and, crucially, whether they will pay for it. If AI delivers strong earnings for years, tech stocks could look cheap today. If it doesn’t, valuations could disappoint. She believes saying “I don’t know” is itself useful when deciding where to invest.

How should investors manage AI risk?

Around half of the S&P 500An index that tracks the performance of the 500 largest publicly traded companies in the United States. It's often used as a benchmark for the overall global stock market. and half of the emerging marketsA country with an economy considered to be at an earlier stage of development than a more established country - e.g. India compared to the USA. index are linked to AI in some way. Karen wouldn’t want half her money riding on one uncertain theme. She suggests spreading risk into areas with clearer prospects, such as financials and energy companies. Within tech, she warns against relying heavily on a few big names, because winners and losers often emerge late and aren’t always who you’d expect.

Are UK and European shares worth another look?

Karen likes European shares, including the UK, even though few investors agree. Europe has lagged the US for 15 years, but she argues this was down to policy choices rather than weaker companies. The US cut taxes and borrowed heavily, while Europe focused on austerity and tighter regulation. With Germany now spending more and policy shifting towards growth, she thinks Europe could surprise investors. Markets tend to move on surprises.

How should an 18-year-old start investing?

Karen suggests working backwards from when you might need the money. Keep an emergency cash buffer first and plan for any big short-term costs. Money you can leave for 10 years or more can go into the stock market, where it has the best chance of growing. Keep it simple with a global equity fund, consider active funds to avoid heavy tech weighting, and resist checking your app every day.

Why are UK savers holding so much cash?

Karen’s research found the UK has saved more than £1 trillion since the pandemic, with around 60% in cash. She points to high risk aversion, a heavy reliance on property for retirement and overly optimistic expectations of what the state will provide. Cash has its place for short-term needs. But money you won’t touch for several years could work much harder through the power of long-term compounding.

Why does diversity matter in asset management?

For Karen, the biggest danger in investing is groupthink. When everyone around the table agrees too quickly, bad decisions go unchallenged, even as they lose money. Diversity of background, culture, wealth and attitude to risk brings different perspectives and healthy challenge. The aim is to get the best ideas heard and ensure talented people feel confident speaking up. Better debate leads to better investment decisions for clients.

What should worried investors do right now?

Karen understands why rapid political and technological change makes people anxious. Her advice is to separate gut reaction from analysis. She likes to grab a pen and paper, write down what’s happening and think through the likely outcomes before acting. In her view, all this change is driving spending and growth. Stepping back from the news and keeping a cool head helps make sure your hard-earned money works for you.