The global economic landscape continues to evolve, shaped by shifting trade dynamics, changing geopolitical influence, and rapid technological advancement. While 2025 presented certain challenges, many regional stock markets achieved strong returns. With a generally favorable macro backdrop, 2026 is expected to maintain positive momentum, though market fluctuations are likely to persist. Even as some uncertainties ease, vigilance remains essential, particularly given unresolved international trade relations. The growing adoption of artificial intelligence (AI) could unlock fresh avenues for expansion, prompting businesses to boost capital expenditures and potentially stimulating both consumer and government spending. n nIn the United States, the current administration’s tariff policies have largely taken effect. Although the early-April announcement of “Liberation Day” caused ongoing disruption at home and abroad, most U.S. trade partners have mitigated the initial steep tariff increases through renegotiated agreements. Financial markets appear to have absorbed the implications of this new trade environment, with average tariff levels still notably above those seen in January 2025, when the administration took office. n nU.S. economic growth is expected to be bolstered by ongoing tax reductions and higher outlays on defense and security under the One Big Beautiful Bill Act. Additional support may come from three anticipated Federal Reserve rate cuts by the end of 2026 and proposed deregulation in the financial sector, all contributing to a more favorable climate for investment and consumption. What stands out is that these fiscal and monetary stimuli are being introduced during a period of robust economic performance, not during a downturn. The labor market also shows signs of near-full employment. Despite long-term concerns such as inflationary pressure and mounting government debt, these measures are projected to provide meaningful support to the economy in 2026. n nEurope may also experience a cyclical boost, exemplified by Germany’s EUR500bn special infrastructure fund. Planned spending on transportation, energy, and climate initiatives could generate short-term economic uplift. However, achieving lasting growth will depend on enhancing structural flexibility to support innovation and attract long-term capital. In this regard, further reforms are urgently needed. n nEquity markets are viewed favorably for the coming year, driven by strong demand for AI-powered solutions, which are expected to sustain high levels of corporate spending. Winners will extend beyond major U.S. tech firms to include construction firms building data centers, utility providers facing higher electricity loads, and suppliers of industrial and raw materials. As a result, earnings growth projections across major global regions remain solidly in double digits. n nNonetheless, risks remain. For example, the high energy demands of advanced AI systems could be constrained by potential global power shortages, tempering investor optimism. Market corrections at the index level are still possible, and not all stocks will perform well. n nInvestors are advised to maintain discipline by focusing on company fundamentals rather than speculative trends, while taking advantage of diverse asset classes. Diversification remains a cornerstone of sound strategy. In addition to equities, corporate bonds – including both investment-grade and high-yield options – may offer value depending on risk tolerance. Assets such as gold, private equity, and infrastructure projects also warrant attention, as discussed in the “Alternative Investments” section of this outlook. n nOverall, capital markets are poised for a dynamic 2026 with numerous compelling prospects. The key question is whether optimistic projections can withstand ongoing economic and geopolitical headwinds. Disruptions to global supply chains or renewed trade tensions could temporarily affect corporate profits and heighten market instability. n nIn such a complex environment, proactive risk management is crucial. Investors should align their responses with their long-term strategies. Maintaining consistent exposure through a well-defined asset allocation is vital, as timing the market often leads to missed opportunities during peak performance periods. n
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Investing in tomorrow – Opportunities and risks n nThe global economy is in constant flux. Trade flows are shifting, regions are gaining or losing influence, and new technologies are also reshaping the economic map. 2025 has been challenging in some respects, but many local equity indices did deliver very good performance. Given the positive macro environment, we expect 2026 to be another constructive year, albeit with continuing market volatility. Although we anticipate a reduction in some uncertainties, it will definitely not be a time for complacency – especially as global trade relations are far from settled. The continued rise of artificial intelligence (AI) may open up new growth opportunities, which should encourage companies to increase their investment activity, potentially giving fresh impetus to both private and public consumption. n nThe US administration’s tariffs agenda appears to have now been largely implemented. While the disorientation that followed the declaration of “Liberation Day” in early April still lingers globally and domestically, most US trading partners have managed to significantly reduce initial steep tariff hikes through renegotiation. Overall, markets seem to have priced in the effects of the new environment, with overall tariffs still considerably higher than in January 2025 when the current administration began its tenure. n nUS growth is likely to be supported by the continuation and introduction of extensive tax relief measures, as well as increased spending on security and defence under the One Big Beautiful Bill Act. The three interest rate cuts expected from the Federal Reserve by the end of 2026 and planned deregulation in the banking sector should also further improve the investment and consumption environment. What makes these government stimuli remarkable is that they come at a time when the US economy is not in recession but is already growing robustly. The US also appears to be close to full employment. Despite the long-term risks such an environment may pose – including inflationary pressures and rising public debt – we expect fiscal and monetary measures to deliver noticeable economic support in 2026. n nWe also anticipate that policy will deliver a cyclical impulse in Europe, for example due to Germany’s EUR500bn special fund. Planned investments, particularly in infrastructure and climate neutrality, could trigger a short-term upswing. To achieve sustainably higher growth, however, improving domestic economic flexibility remains crucial to foster entrepreneurial initiatives and create an investment climate that enhances productivity. In my view, urgent action is still needed here. n nWe maintain a broadly constructive outlook for equity markets in 2026. This will be partly due to strong demand for new AI-based applications, which should continue to drive substantial corporate investment flows. Beneficiaries will not only include US “Big Tech” but also a wide range of sectors – construction (thanks to new data centres), utilities (via higher electricity demand) and industrial and basic materials along the supply chain. Our earnings growth forecasts for companies across all major regions are therefore firmly in double-digit territory. n nAs outlined in our annual outlook themes, investors should also consider potential risks in equity markets. In the area of highly energy-intensive AI applications, for instance, a global power shortage could dampen investor expectations for progress. Not every stock will be a winner in 2026, and short-term corrections at index level remain possible. n nInvestors should therefore continue to act with discipline. This means focusing on fundamentals rather than chasing perceived trends, while utilising the broad spectrum of investment opportunities. Diversification remains key. Alongside equities, corporate bonds may be attractive – depending on your risk appetite, both investment-grade and high-yield segments. Gold and some non-traditional investments, such as in private equity or infrastructure, also merit consideration. We explore these in detail in the “Alternative Investments” section of this annual outlook. n nOverall, we expect a dynamic year for capital markets in 2026 with numerous compelling opportunities. The central question will be whether constructive forecasts can hold up amid a backdrop of economic and geopolitical challenges. Further disruptions to global trade flows or a renewed escalation of tariff tensions could, for example, temporarily pressure corporate earnings and increase market volatility. n nIn a complex and uncertain environment, investors would therefore be well advised to actively manage risks. This will enable them to respond to market developments in line with their personal investment strategy. Staying invested with a defined strategic asset allocation will be key, as attempts to perfectly time market entry and exit points can often result in missing the best-performing days and weeks. n nI hope you find our annual outlook insightful and full of stimulating ideas for your portfolio. We are always available to review and discuss these ideas and look forward to hearing from you.