European and UK Equity Capital Markets Review September 2026

• Middle East developments remained volatile and in focus throughout September, with continued military action and restrictions through the Strait of Hormuz keeping energy supply concerns elevated. Higher oil prices and inflation releases contributed to a global bond sell-off. US 10-year Treasury yields ended September at 5.2%, up from 4.7% at August-end, while UK 10-year gilt yields rose to 5.4% from 5.0%, with European government bonds also coming under pressure. Equities, whilst having a more difficult month, remained broadly resilient and near all-time highs, supported by confidence in the corporate earnings outlook and continued AI optimism. UK performance was mixed: the FTSE 250 gained 2.4%, while the FTSE 100 fell 2.4%, weighed down by stronger sterling and weaker mining stocks. Elsewhere, the STOXX 600 declined 2.2%, while the S&P 500 and Nasdaq rose 2.2% and 5.9% respectively, as technology stocks continued their leadership. The Russell 2000 fell 4.6% amid a higher US interest-rate environment.
  
  
• Oil prices remained volatile as markets weighed military developments against intermittent diplomatic progress and restricted but greater flow of oil under escort. Brent crude ended September at $97.88/bbl, up 8.0% over the month, having peaked at $109.29/bbl on 10 September. Attacks on shipping and Saudi energy infrastructure, including damage that forced the closure of the east–west oil pipeline, heightened supply concerns. US–Iran talks at the UN General Assembly briefly raised hopes of improved energy flows. However, Trump subsequently rejected Iran’s proposal to reopen the Strait of Hormuz within seven days in return for lifting the US naval blockade. Higher energy prices fed into inflation prints across geographies, exacerbated by tightening diesel supply across geographies: UK August CPI rose to 3.1% from 2.9%, while US August CPI remained at 3.4%, with energy costs rising 2.1% month-on-month. Eurozone September inflation increased to 3.8% from 3.2%, driven mainly by energy, while core inflation edged up to 2.5%.
  
  
• Central-bank policy remained focused on persistent inflation and the risk of a prolonged energy shock. The ECB raised its deposit rate by 25bp to 2.50%, its second increase this year, while the Fed unanimously voted to increase its target range by 25bp to 3.75–4.00%, its first hike since 2023. By contrast, the BoE held Bank Rate at 3.75%, supported by contained underlying inflation and wage pressures, although three MPC members favoured an increase and the committee warned that policy may need to tighten in future. The Investec Economics team revised its forecasts towards precautionary, short-lived tightening, judging that central banks’ tolerance for looking through the energy shock had been exceeded. It now expects one further 25bp hike from both the ECB and Fed in 2026, alongside 25bp UK increases in November 2026 and February 2027. Assuming a resolution to the conflict in spring 2027 and easing energy prices, the Investec Economics team expects these increases to be reversed, forecasting end-2027 rates of 3.75% in the UK, 3.50–3.75% in the US and 2.25% for the ECB.
  
  
• AI drove technology-market outperformance during September. Meta’s launch of its Muse AI agent fuelled optimism around consumer AI monetisation, combining email, travel and transaction services with paid subscription options. Its shares gained over 20% between launch and 22 September, helping spark a broader technology rally. Nvidia also reinforced confidence in the AI investment outlook, approving a record $150bn expansion of its share buyback programme, taking total authorised repurchases to $235bn and surpassing Apple’s previous $110bn record. Strong AI-driven cash generation supported the announcement. Its shares closed 1.7% higher on the announcement day, with the buyback helping drive the stock to a record high.
  
  
• In Europe, ECM issuance reached $124.8bn in the nine months to September, slightly below the 10-year YTD average but well ahead of 2025. Volumes eased from June’s highs during the summer before rebounding in September, taking Q3 issuance to $30.5bn. In the UK, ECM transaction volumes outpaced 2025, although total funds raised remained subdued in comparison to long term averages. September saw three UK deals priced above $100m. Softcat raised $474m to support its $1.05bn acquisition of GDT, expanding its US footprint and its capabilities across data centres, AI infrastructure, and networking. Meanwhile, Harbour Energy’s $288m secondary placement allowed BASF to monetize part of its holding, demonstrating the UK market's depth and capacity to absorb large-scale shareholder sell-downs. Rockhopper Exploration completed an oversubscribed open offer, raising c.$197m to back its Falklands oil development push.
  
  
• Global IPO activity continued in September but a number of companies decided to delay their plans including Oura, Bamboo, Holtec Nuclear and SB Energy and in the UK the planned IPO of RAC was shelved as CVC looked to buy out other current shareholders. Shein successfully finalised a $1.74bn Hong Kong listing at a $26.5bn valuation, although this was below previous expectations as investors demonstrated pricing discipline. Meanwhile Anthropic is speculated to plan on raising up to $100bn at a $2tn valuation, a capital injection that could be bigger than SpaceX, with a potential $10bn Nvidia anchor investment. The timeline shifted to November amid scrutiny over high infrastructure costs and operational losses. In the UK, Airtel Money launched its London listing ahead of an October 14 debut, valuing the African fintech branch at £5.3bn (~$7.0bn) with backing from the IFC.
  
  
• UK public M&A activity remains elevated, with 29 transactions above £200m announced over the last 12 months, representing £76bn of aggregate equity value at an average headline premium of 40%. September saw six transactions announced across technology, healthcare, energy and industrials, all with cash consideration. These included Bodycote’s £1.64bn acquisition by Veritas Capital at a 24.4% premium, Gamma’s £1.08bn acquisition by Epiris at a 53.0% premium and Spire Healthcare’s £1.03bn acquisition by Toscafund at a 20.2% premium. Technology acquisitions also included Tribal and Eleco at premiums of 66.7% and 74.7%, respectively, while DNO’s £330m acquisition by Capricorn carried a 63.0% premium. These transactions reinforce the theme of undervalued UK equities, with strategic and private-equity buyers recognising value beyond prevailing market prices. Cash proceeds returned to investors also provides capital that can be recycled into new opportunities, supporting future UK ECM activity.
   

• Equity markets entered 2026 strongly before conflict in the Middle East triggered a sharp sell-off in March and early April. Markets recovered through May and June and remained broadly resilient over the summer and into September, despite rising bond yields and energy prices.
• Government bonds sold off in September, pushing yields higher as strong economic data, elevated energy prices and inflation releases reinforced inflation concerns and expectations of higher interest rates. Substantial AI debt issuance also adds to competition for funding. Despite some episodic softness, equities nevertheless managed to remain near all-time highs, supported by confidence in the corporate earnings outlook. Volatility remained benign despite bond market pressures, with the VIX ending September at 16.
• Energy and Technology led market performance, supported by higher energy prices and continued AI optimism, respectively. Within Technology, Nvidia’s $150bn increase in its share buyback programme reinforced positive sentiment around AI, helping drive its shares to a record high. The Philly 30 Semicon index returned 9.9% reflecting broader AI supply chain demand.
• In September, the FTSE 250 rose 2.4%, taking its YTD gain to 9.2%, while the FTSE 100 fell 2.4%, leaving it up 6.8% YTD. The FTSE 100 was weighed down by stronger sterling, which reduced translated overseas earnings, and weaker mining stocks. The FTSE AIM 100 and FTSE Small Cap gained 3.4% and 2.1%, respectively. Elsewhere, the STOXX 600 fell 2.2%, while the S&P 500 and Nasdaq rose 2.2% and 5.9%, respectively; the Russell 2000 declined 4.6%.
   

• The UK’s valuation discount to the US has narrowed YTD from 39% in January to 35.4% in September, although it widened slightly from 35% in August amid renewed AI optimism supporting US equities. The S&P's forward PE multiple has contracted 14% YTD on strong earnings growth.
• UK equities remain attractively valued relative to global peers, with both the FTSE 100 and FTSE 250 trading on lower earnings multiples than European and US indices. Continued M&A interest highlights UK-listed companies’ undervaluation.
• On a growth-adjusted basis, both the FTSE 100 and FTSE 250 trade below their historical median PEG ratios, although other global peers screen more attractively on this measure.
   

• Government bonds sold off in September as Middle East tensions, higher energy prices and strong economic data reinforced expectations of policy rate hikes. Fiscal concerns and competition for funding from AI debt issuance also played a role.
• UK August CPI rose to 3.1%, while core held at 2.6%. US August CPI remained at 3.4%, with core easing to 2.4%. Eurozone September flash inflation rose to 3.8% from 3.2%, driven mainly by energy, with core edging up to 2.5%.
• The ECB raised its deposit rate by 25bp to 2.50%, while the Fed increased its target range by 25bp to 3.75–4.00%. The BoE held at 3.75%, supported by contained underlying inflation and wage pressures, although three members favoured a hike and the committee warned that policy may need to tighten in future.
• Investec expects another 25bp ECB and Fed hike in 2026, plus 25bp UK hikes in November and February, followed by cuts by end-2027 by all three central banks assuming a spring resolution to the conflict allowing energy prices to fall.
   

• Growth optimism moderated in September, with a net 39% of European investors expecting stronger regional growth, down from 50% in August, and a net 86% expecting no recession, down from 97%. Robust growth alongside sticky inflation remained the dominant macro expectation, held by 61% of European investors versus 65% in August.
• Investors remained overweight equities but reduced exposure: the global net overweight fell from 56% to 49%, while cash rose from 3.5% to 3.9%. BAML’s sentiment measure eased from 8.0 to 7.0, with a disorderly rise in bond yields the leading tail risk.
• Germany replaced Spain as Europe’s preferred equity market, at a net 25% overweight, followed by Italy at 18%. The UK moved to a modest underweight, while France remained least preferred, although its net underweight narrowed to 32%.
   

IPO issuance in Europe

• $881m raised from 13 IPOs in September 2026 across Europe, with an average deal size of $68m. There were 6 IPOs greater than $25m, and 2 IPOs greater than $100m including Norwegian retailer Outlet Group ($138m) and Trafigura-backed oil tanker company Volare Shipping ($499m).
• In 2025, there were 48 IPOs priced above $50m, raising $17.7bn in aggregate for the full-year, with an average issue size of $363m (versus 47 IPOs in 2024, which raised $17.9bn, with an average issue size of $381m). In 2026 YTD, there have been 48 IPOs above $50m so far, raising $12.1bn in aggregate, with an average issue size of $251m.
• Aftermarket performance of European IPOs has been varied with some notable underperformers but also some that have performed strongly such that the average is firmly positive.
• Elevated volatility in 2026 has seen shorter execution windows to allow issuers to mitigate market risk and also led some European IPO processes to be delayed.
• There is still a gap to close in terms of European IPO activity to reach 10-year averages, but the medium-term pipeline is healthier than it has been in prior years with a number of flagship assets preparing and monitoring market conditions / execution windows.