Morgan presents a constructive outlook for 2026, forecasting global equities to outperform other assets with a 10-25% upside, driven by resilient growth and a supportive policy backdrop.
Artificial Intelligence remains a dominant theme, with rapid AI-related capital expenditures expected to continue and broaden beyond core tech providers, supporting US large-cap and growth stocks.
Persistent sticky inflation is a key global theme that will limit the ability of most central banks, particularly the Fed, to deliver significant monetary easing, with the Bank of Japan being a notable exception by tightening policy.
The forecast includes a bearish outlook for oil (Brent at $58/barrel) due to expanding supply, and a continued bullish stance on gold with a target of $5,000/ounce.
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Concerns Raised
Persistent sticky inflation limiting central banks' ability to ease monetary policy.
A potential recessionary scenario (35% probability) if weak labor demand persists.
Risks to the AI theme, including delayed monetization of investments and market skepticism about high valuations.
Increased debt issuance in credit markets could lead to wider spreads.
Opportunities Identified
Global equities are forecast to offer 10-25% upside, outperforming cash and bonds.
The AI investment theme is expected to broaden, creating opportunities in companies that are adopters of the technology, not just the creators.
Bullish outlooks for specific emerging markets, including Korea, India, and Brazil.
Continued strength in gold, with a price target of $5,000 per ounce.