WeekWatch - 09/11/2026
Stock Take
The Democrats, data centres and the AI sell-off
The Democratic victory in the US midterm election was a major catalyst behind a sharp sell-off for US stocks, led by the tech sector. On Thursday, the tech-focused Nasdaq 100 fell more than 6%. This was its worst performance since the beginning of the Covid pandemic. The broad-based S&P 500 dropped 4.4%. It was a similar story in Asia, with markets in Taiwan and South Korea falling by 9% and 8.8%. Asian chip makers are particularly vulnerable because they supply much of the advanced technology used in the AI boom. By Friday, there had been a partial recovery in US stock markets for some tech shares. However, they remained lower over the week.
Investor concerns centred on the implications of the election results for the planned expansion of AI infrastructure. Some newly elected Democratic state governors campaigned before the midterms against the construction of AI data centres. These are essential for powering, processing and distributing AI services. There are also environmental challenges as AI data centres require significant amounts of electricity and water to operate. Local communities where AI data centres are planned have expressed concerns that they will create few jobs.
Carlota Estragues Lopez, Equity Strategist at St. James's Place notes that regulating AI, especially AI safety, is one area where many Republican and Democrat politicians agree. “AI safety is one area that has gathered bipartisan support. The current AI infrastructure buildout is unlikely to slow meaningfully, given the scale of investment already committed and the size of the development pipeline. However, tighter regulation could raise the cost of future development by introducing additional requirements for new AI models and infrastructure."
Any slowdown in data centre construction may halt the expansion of AI by reducing demand for the high-end chips and other inputs used in AI processing. There are further investor concerns about the level of AI capital expenditure and when those investments will generate profits.
Will the AI shake-out hurt Anthropic’s IPO?
Anthropic, the parent of AI assistant Claude, is planning to launch its initial public offering (IPO) in the second half of November. It is looking to raise up to $100 billion. Prior to the midterms and the AI sell-off, many analysts had thought Anthropic might achieve a value of $1.5 trillion. Some investors now think a valuation of $1 trillion may be more realistic if it does list. By comparison, the tech-focused Nasdaq saw its value fall by $2.5 trillion in Thursday’s sell-off.
Investors will be keenly watching to see what happens to this sector bellwether’s IPO. The company could go ahead with its listing, possibly raising less than the $100 billion expected. It may also decide to postpone the listing and hope that market conditions improve. The size and high-profile nature of Anthropic’s IPO will have implications beyond the AI sector. This reflects the links with some of the largest listed companies in the world, such as Google and Nvidia.
The Bank of England hikes rates. More to come?
The Bank of England (BoE) raised interest rates by 0.25%, its first increase since August 2023. All nine members of the rate-setting Monetary Policy Committee voted for a hike, with one vote for a 0.50% hike. Analysts expect another 0.25% rise either in December or early next year.
The BoE’s caution is being driven by the higher energy prices seen since the start of the Iran war. UK motorists are now paying 30% more per litre at the pump for unleaded fuel, and 40% more for diesel. Inevitably, this feeds through into higher household and business expenses.
Interest rate adjustments by central banks are always a trade-off. Too much or too little can end up delivering the opposite to what was intended. The BoE (as well as the European Central Bank and US Federal Reserve) will want to avoid raising rates too much in response to the energy cost spike. This is due to fears it would overly discourage spending by consumers and investment by businesses (to the extent that it brings inflation down too fast and too far).
The emphatic Democratic victory in the US could breathe life into peace negotiations with Iran. A subsequent fall in energy prices could reduce the need for further short-term interest rate hikes.
Wealth Check
Government launches consultation on guided retirement
The government has launched a consultation on its plans to reintroduce private pensions that provide an income for life.
Aiming to narrow the gap between private and public sector pensions, the government will require pension schemes to offer people approaching retirement the option of a secure income for the rest of their lives.1
Under the proposed guided retirement scheme, pensions would pay an income for life, protected from inflation. This would remove the need for people to make complex financial decisions about their savings.
Most people entering retirement don’t have enough money to ensure a sustainable income throughout their later life. Guided retirement aims to address this challenge.
The government is working on guided retirement with the Financial Conduct Authority and the Pensions Regulator. The consultation will run to 22 December.
Seven in 10 consumers don’t consider protection cover
Around seven in 10 people (72%) have never explored buying protection insurance, according to a new study.
It means millions of households do not have a financial safety net in place, should an unexpected event occur, such as the death, serious illness or job loss.
The report, from the Association of Mortgage Intermediaries, is based on a survey of 3,000 consumers and almost 300 advisers.2
Among those consumers who start the process of buying protection, the study found cost, uncertainty about the need or value of policies, and a perception that products were unsuitable, were among the main reasons they abandoned the process and didn’t buy cover.
Just 11% of consumers who started the process went on to complete a purchase.
Sources
1UK government, New plans “resurrect” genuine pensions for millions of private sector workers – November 2026
2Association of Mortgage Intermediaries, Protection Viewpoint 2026 – November 2026
In The Picture
UK stock market – a welcome outperformance
UK shares have outperformed both global equities and European shares over the past five years. This may seem surprising in light of a sluggish economy, political uncertainty and an absence of highly valued tech companies.
The UK stock market is often described as “old economy,” reflecting its exposure to the financials, consumer, energy and healthcare sectors. Yet this proved beneficial in the higher interest rate environment after 2021. Banks benefited from rising interest margins. Energy companies generated strong earnings as commodity prices rose.
A further key driver is that many UK equities trade on relatively low valuations. A modest rerating of UK shares, more corporate activity, healthy dividend growth and a buoyant level of share buybacks have also contributed to the UK’s outperformance over the period. In contrast, the pound was relatively flat against the dollar over the period and so the translation effect from a stronger dollar into sterling was not that significant.
The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
Past performance is not indicative of future performance.
The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James's Place.
Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.
“FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
© S&P Dow Jones LLC 2026; all rights reserved
Source: MSCI. Certain information contained herein, including without limitation text, data, graphs, charts (collectively, the “Information”) is the copyrighted, trade secret, trademarked and/or proprietary property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or any third party involved in making or compiling any Information (collectively, with MSCI, the “Information Providers”), is provided for informational purposes only, and may not be modified, reverse-engineered, reproduced, resold or redisseminated in whole or in part, without prior written consent.
Source: Bloomberg. BLOOMBERG®” and the Bloomberg indices listed herein (the “Indices”) are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the Indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by the distributor hereof (the “Licensee”). Bloomberg is not affiliated with Licensee, and Bloomberg does not approve, endorse, review, or recommend the financial products named herein (the “Products”). Bloomberg does not guarantee the timeliness, accuracy, or completeness of any data or information relating to the Products.
SJP Approved 09/11/2026
