January 12, 2026 Investment Outlook 2026

The environment for stock markets remains favorable. We expect solid global economic growth, no surge in inflation, and lower interest rates, at least in the short term. Quantitative easing is occurring in many places, driven by expansionary fiscal policies and/or loose central bank policies. Although high and rising debt levels are risky, they are well known and have not yet reached a tipping point for the financial markets. Nevertheless, they are making it increasingly difficult to refinance government bonds, and the yield curve is likely to remain steep. As was the case last year, geopolitical upheavals are unlikely to significantly impact the markets.

Economy
We see the strongest growth in the US, driven by deregulation, the “Big Beautiful Bill,” and support from the Fed, also with a view to the mid-term elections in November. Inflation remains a risk, but the market and the Fed can live with it. It will not become acute in 2026. We also see positive growth prospects for select emerging markets. In Europe, Germany and France in particular will continue to suffer from structural weaknesses, but we do not expect a recession there either. Massive government support and infrastructure investments will prevent a crash.

Interest rates
Globally, short-term interest rates will remain low or will be lowered further. In the US reinforced by a revival of quantitative easing. This is also being driven by political forces, which, however, somewhat undermines the independence of the Fed and will make it more difficult to lower long-term interest rates. Inflation does not rise sharply again in 2026 as oil prices are low and productivity and labor market effects of AI will limit price pressure. Monetary policy will therefore remain a positive framework for the stock market.

Stock markets
Artificial Intelligence (AI) remains the dominant theme. Many are warning of an impending bubble burst. However, comparisons with the dot-com bubble burst at the beginning of the millennium are flawed. The large corporations that dominate the market, driving AI development forward with record-high investments, have solid balance sheets and high cash flows. While the valuation of their stocks may seem high in some cases, it is not irrational. Pessimists should recall that in 1996, Fed Chairman Greenspan described the growth of tech stocks as "irrational exuberance." He was a little too early, though, as the Nasdaq index quadrupled to its peak in March 2000. AI will also have an increasingly positive impact on the growth and productivity of economies as a whole, e.g., in Robotics as Amazon demonstrates. This tends to be underestimated today. We are maintaining our overweight position in the US and in the tech sector for the time being, but without ignoring opportunities in other segments and regions, including emerging markets or in commodities like, e.g., copper.

Gold/crypto
Gold will consolidate at a high level after its massive rise. Bitcoin has been now established worldwide as a new asset class, and it will continue its long-term upward trend, possibly with further massive fluctuations.

Currencies
The Swiss franc is likely to remain the most stable currency, particularly because it will continue to be sought after as a safe haven in uncertain times. The USD may face pressure at times, but it will not plummet again, given the interest rate differential and the robust US economy. The euro held up surprisingly well last year despite the dire situation in the core eurozone countries. However, this was due to the weakness of the USD, and it should not be mistaken as a sign of inherent strength.