Our 2026 investment outlook: key highlights

Welcome to the key highlights from our 2026 investment outlook.

In this article, the J.P. Morgan Personal Investing team set out their key investment themes for the year ahead, as well as some financial considerations for the start of a new year.

For the detail and analysis that underpins each theme, you can explore the full 2026 investment outlook guide.

At a glance

The case for investing in equities remains strong. US equities are underpinned by healthy corporate earnings, while emerging markets, such as Taiwan and South Korea, look increasingly appealing.
Bond markets to continue to see more ‘normal’ conditions. This can provide important diversification benefits for investors in balanced portfolios.
The influence of commodities shouldn’t be underestimated. Supply and demand dynamics suggest downward pressure on oil prices in 2026, which could help to keep inflation down.
The fiscal discipline of governments around the world – the balance between taxation and spending – will be a key focus point for markets.
Our optimistic view is balanced by risks in what is quite an expensive market.
Welcoming in 2026 can be a good time to reflect and review your finances, well in advance of tax year end. Post-Autumn Budget, there is now firmer ground on which to set plans for the future.

Theme 1: US equities continue to be compelling

US equities have outperformed most other markets over the past decade, driven by superior corporate earnings growth. Because of this, some metrics indicate the market is expensive compared to historical averages. However, we are not put off by this for 2026 and have positive expectations.

We see the main drivers as:

The ongoing US artificial intelligence (AI) revolution, and
Supportive government policies.

For example, favourable tax treatment of capital expenditure is supportive of companies investing in infrastructure to support the growth of AI. While we are cognizant of valuations that are elevated, they have very limited predictive power for short-term market performance. We are more focused on the delivery of earnings, and expect 2026 to be another strong year.

Theme 2: The case for emerging markets is strengthening

Our outlook for emerging market equities is broadly positive. This centres around several factors.

Firstly, we believe that global financial conditions are now more favourable for these markets, which includes countries such as China, Taiwan, South Korea and India. For example, a weaker US dollar tends to be favourable for emerging markets. Secondly, we believe gross domestic product is set to outpace developed markets meaningfully. This is underpinned by factors such as rising domestic consumption and continued investment in manufacturing, infrastructure and digital ecosystems.

Structural growth drivers are also becoming more important. Factors such as global supply chain diversification, capital expenditure supporting AI, and energy-transition investments are reshaping the corporate earnings mix in emerging markets. Additionally, when it comes to equity valuations, essentially how expensive the region looks, there is a sizeable discount compared to developed market peers.

Theme 3: More ‘normal’ for bond markets in 2026

Interest rates and the level of income paid by bonds now sit at more normal levels after years of being incredibly low. For investors in balanced portfolios providing exposure to both equities and bonds, this means higher levels of income can be enjoyed.

A key factor here is that bonds and inflation are highly interlinked. Bond prices are inversely correlated with bond yields and inflation, meaning when inflation is high, bonds typically suffer. We have seen such price shocks in recent years but they have dissipated, and inflation now sits lower. With bond yields up to around normal levels and stabilising inflation, we expect the normal inverse relationship between bond and equity prices to prevail. This can provide important diversification benefits for investors in balanced portfolios.

Theme 4: Don’t underestimate the influence of commodities

Oil

While the energy mix of consumption and demand continues to evolve, oil remains an important part of our lives. The global oil market is currently navigating a complex landscape shaped by both supply and demand dynamics, as well as geopolitical and policy influences. As a result, oil inventories are expected to rise, signalling a shift toward a more abundant supply environment.

On the demand side, economic growth – which is closely related to the demand for oil – remains tepid. Overall, supply growth is set to outpace demand. We expect this to lead to a global oil glut, reducing price expectations for 2026. Oil prices have broad influence on costs for consumers and businesses. Lower oil prices in 2026, as we expect, can help to keep inflation down.

Gold

Writing here on the cusp of December 2025, it’s safe to say that gold is ‘gathering itself’ after a blistering rally through much of the past two years.

We have a positive view on gold, and foundational to this is central bank buying. Central banks own around 35,000 tons of the metal and have an inelastic approach to buying, i.e. they purchase regardless of price level. This price-insensitive allocation is a massive driver, much differentiated from the investor component of buying that we see in exchange-traded funds (ETFs), gold futures (contracts to buy/sell gold at a set price), or physical gold bars. As central banks reduce US dollar reserves, the preference for gold is expected to be sustained.

What can an allocation to gold provide?

Amid worries spanning US current and future fiscal position; inflation; concerns around an AI bubble; and geopolitical and policy uncertainty, having an allocation to gold can increase portfolio resilience. It is also our expectation that the occurrence of further events that erode broad investor confidence will be an aid to gold.

Theme 5: Fiscal discipline found wanting

Since the pandemic, governments have struggled to restore fiscal discipline. The US can largely get away with running budget deficits, due to the dollar being the world’s reserve currency, but it does not have complete impunity. The UK, however, does not have the same flexibility, and we saw some significant tax increases in the Autumn Budget. In Europe, there is little appetite to tighten spending in France, while Germany is embarking on multi-year fiscal expansion.

We expect 2026 to be politically noisy, and the fiscal picture poses a challenge, with borrowing no longer cushioned by ultra-low interest rates. It will be the tangible outcomes from government policy, the ability to pass laws and the amount of debt issuance that help determine whether these risks move front and centre into bond yields and currencies. Alternatively, we may see them fade into the background, as is often the case.

Theme 6: Risks in an expensive market

We hold a relatively optimistic view for 2026, but there are risks to be aware of. Firstly, the risk that the US Federal Reserve becomes significantly less supportive in its rate-cutting cycle. Its decisions carry substantial weight due to the size of the US economy, the dominance of its equity market and the global role of the US dollar. However, we see this outcome as unlikely.

Other risks include a fear of the US entering a recession, something we do not think will materialise, or US tech stocks reversing their AI optimism. But of course, the main risk could be an exogenous, unexpected shock in an overall expensive market. We remain vigilant and will adjust our perspective if circumstances change. While volatility is to be expected, for now, we believe the environment remains constructive for financial markets.

The Wealth Perspective

Closing out the year and welcoming in 2026 can be a good time to reflect. January offers an opportunity to review your finances, while still being well in advance of April’s tax year end. This means you have plenty of time to assess and implement any changes, all without any last-minute rush. With the Autumn Budget wrapped up, there is now firm ground on which to set plans for the future. It’s good to remember that, if they do affect you, many of the policy changes set out by the chancellor won’t be implemented for some time.

While there has been a lot of noise around financial markets this year, with a news cycle as busy as ever, global equities have delivered positive double-digit returns in the 11 months to the end of November. This serves as a strong reminder that staying invested, even during periods of volatility or negative headlines, can be the key to a sound financial future.

Find out more about financial considerations for the start of a new year

About this update: This video was filmed on 8 December 2025.

Source for Outlook data: MacroBond, J.P. Morgan Personal Investing and Bloomberg.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance and forecasts are not a reliable indicator of future performance. We do not provide investment advice in this update. Always do your own research.