What’s the overall outlook for global markets in 2026?
The year ahead will likely be defined by the collision of uneven monetary policy, the relentless expansion of AI and intensifying market polarization. These drivers, along with the evolving U.S. policy agenda, will continue to reshape the global macro and market landscape.
“At the heart of our outlook is a multidimensional polarization: equity markets split between AI and non-AI sectors, a U.S. economy balancing robust capex with soft labor demand, and a widening divide in household spending,” said Dubravko Lakos-Bujas, head of Global Markets Strategy at J.P. Morgan.
All things considered, J.P. Morgan Global Research sees a resilient global growth outlook for 2026 thanks to factors including front-loaded fiscal policy support. However, downside risks remain elevated, given weak business sentiment and the ongoing slowdown in the labor market. At the same time, the tailwinds of 2025 — such as healthy balance sheets for corporates and households, ample liquidity and the broadening of AI capex spending — will likely persist in 2026, driving earnings expansion.
“Overall, the market environment remains fragile, and investors must navigate a landscape where risk and resilience coexist,” added Fabio Bassi, head of Cross-Asset Strategy at J.P. Morgan.
US
In 2026, style positioning will likely resemble 2025, with new extremes in crowding, record concentration and a “winner-takes-all” dynamic. Looking at the S&P 500, J.P. Morgan Global Research estimates the AI supercycle driving above-trend earnings growth of 13–15% for at least the next two years.
Eurozone
Activity momentum in the eurozone is likely to improve in 2026, thanks to better credit impulse and the rollout of fiscal stimulus. Earnings are expected to grow by 13%+ next year, supported by stronger operating leverage, reduced tariff headwinds, easier comps and better financing conditions.
The global economy
The global expansion is at an important juncture. While GDP growth has been resilient through 2025, imbalances have formed as demand has rotated toward tech capex and job gains have stalled.
“Business caution is the primary drag on hiring, reflecting trade war concerns and sluggish non-tech demand. In turn, weak labor demand is starting to erode purchasing power, particularly in the U.S., where softening private sector labor income growth is combining with firming inflation and a concentrated near-term public sector drag,” said Bruce Kasman, chief global economist at J.P. Morgan.
To this end, J.P. Morgan Global Research sees consumption downshifting in DM in the fourth quarter of 2025, with a 35% probability of a U.S. and global recession in 2026. However, global GDP growth is expected to receive a boost in the first half of the year thanks to front-loaded fiscal stimulus, promoting a rebound in sentiment.
“Our baseline forecast sees the health of the business sector, supportive financial conditions and fiscal stimulus as the ingredients that will enable the global economy to absorb the sentiment shock currently depressing labor demand. If we are right, job growth and sentiment will pick up as we move through the first half of 2026, supporting the recoupling of labor demand with solid GDP gains,” Kasman noted. In addition, an AI spending wave could deliver a limited boost to the global economy.
Sticky inflation will likely remain a prevailing theme. After unwinding supply shocks related to the pandemic and the Russia-Ukraine war, inflation has hovered around 3% with little sign of moving lower. “Upward pressure on global goods prices related to the trade war is likely to be transitory, but we expect elevated goods price pressures to remain in place, at least through the first half of 2026,” Kasman added.
