In this week’s newsletter:
- UK Mortgage Rates Rise Amid Iran War—What It Means for Borrowers and House Prices
- Best FTSE 100 Dividend Stocks: Lloyds, Shell, and Rolls-Royce Raise Payouts
- UK Government Bond Yields Spike as Iran War Upends Interest Rate Outlook
- Could the Iran War Trigger European Economic Crisis and Rate Hikes?
- UK Pub Industry Outlook 2026: Costs Rise but World Cup Could Boost Sales
- After Taking a Breather, Why Japan Stocks Could Keep Rising
- What AI Means for Software Companies’ Moats
- Does SpaceX’s Sky-High Valuation Make Sense?
- Lindsell Train UK Equity: A Struggling High-Conviction Fund Where We Still See Merit
It’s almost two weeks since the first strikes on Iran and there’s no sign of the dramatic newsflow letting up. It’s clear that, beyond the stock and commodity market volatility, the conflict has had an immediate impact on the UK housing market in the form of higher mortgage rates.
Previously a March interest rate cut by the Bank of England was a done deal. Now the odds are against any rate cuts this year, and the possibility of a hike can’t be ruled out. Housing market sentiment was pretty fragile before and UK chartered surveyors have already issued some gloomy forecasts for the next few months. Spare a thought for those selling houses in the spring and remortgaging ...
Away from the Middle East, football fans will be anticipating the World Cup in June and July, which will this time be staged in North America. Timezones make it trickier for UK football fans, but the UK government—who have been accused of being a rather puritan bunch—have allowed pubs to stay open longer. Morningstar DBRS has looked at the financial strengths and weaknesses of this consumer segment that British people, despite the rise in sobriety and wellness cultures, still have a strong affection for.
And I’ve also updated my monthly dividend screen, sifting through earnings reports to see whether the payouts are higher than last year. It’s been a decent earnings season for FTSE 100 income payers: by my current tally, 13 increased their dividends and 2 cut among the index’s largest payers. In earnings season, Diageo’s cut stood out, as it crashed the share price by 13% on the day by surprising shareholders. For WPP, our analysts say the dividend cut will free up cash of around £300 million and may be a sensible move forward as the advertising company battles AI disruption.
But these UK dividends, although they will be paid in the coming weeks and months, are backward-looking, in that they’re based largely on 2025 calendar year performance.
The last great economic shock of 2020 saw a wholesale axing and cutting of dividends. Could investors see a start of companies reducing dividend payouts in view of “global uncertainty” and “geopolitical tension”? It will be a few months before this story plays out and we’ll know more when Q1 reporting season starts at the end of April. This is usually a lean season for dividend announcements so the second half of 2026 is the most likely time for investors to get some clarity. It may me that the war doesn’t have such an impact on UK companies’ earnings as in other regions. Indeed, it may supercharge oil company and defense company earnings this year.
James Gard, UK Editor
