Your investment outlook for 2026

2025 was one of the most turbulent years for the stock market in recent history.

Regular highs and lows saw indices like the FTSE All-Share fall to as low as -7.94% on 9 April but end the year with record-breaking returns of 18.65%, according to London Stock Exchange (LSE) data.

Now that we are settled into 2026, you might be wondering what to expect from the stock markets in the year ahead and whether you should anticipate more market volatility.

2026 economic outlooks predict steady growth globally, but the UK might fall behind

It is impossible to predict the future. However, some financial institutions provide valuable economic insights based on past and current trends, which can be used to gauge the key themes or events that are likely to affect the stock market.

Despite this, it is important to remind yourself that, when it comes to investing, past performance is not a reliable indicator of future events, so these insights should not be taken as gospel.

Firstly, the global economy is expected to display resilient growth, according to JP Morgan, particularly in AI. They also point out that the slowdown of the labour market and weak business sentiment lead to elevated downside risks.

Global analysis from Morgan Stanley also predicts strong economic growth (reaching 3.2%) and moderate inflation, while also emphasising high uncertainty with a broad range of outcomes regarding AI, monetary policy, tariffs, and immigration.

At the UK market level, Barclays expects slight growth, with interest rates falling gradually. Similarly, Goldman Sachs predicts another mixed year, characterised by materially lower inflation and bank rate cuts to 3%, as well as trend-like growth and an increase in unemployment.

Overall, the outlook looks promising globally and slightly more muted domestically, which might be welcome news following last year’s volatility. But there is also an air of caution, particularly regarding AI investment, geopolitics, and precious metals.

Let’s take a closer look at the key themes that could affect your portfolio this year.

4 key themes that may define stock markets in 2026

1. AI investment is promising, but the threat of a bubble looms

AI will remain central to market performance and economic productivity in 2026, financial institutions like JP Morgan emphasise. However, they also state the need for tech companies to start delivering genuine gains as hype dies down.

There are concerns of a potential stock market bubble – inflated with trillions of dollars of investments – that could burst in 2026 if AI fails to generate significant profits.

Conversely, Goldman Sachs suggests it is important to remember markets are complex and returns from AI investments are unlikely to be uniform; more significant returns might be on the horizon, which could help ease the pressure of an AI bubble.

2. Geopolitics could cause another year of market volatility

In 2025, geopolitical events caused significant market disruption. The Trump tariffs, for example, resulted in a temporary but material stock market dip.

Due to the current political landscape, there is worry that the volatility of last year could be repeated in 2026 – analysis from Morgan Stanley points to the US intervention in Venezuela, unrest in Iran, and tensions surrounding Nato and Greenland, adding real and mounting layers of economic uncertainty.

Political events can cause stock market panic. However, it is also important to note that markets typically recover and continue growing over the long-term, so you shouldn’t let media noise affect your investment decisions.

3. Gold and silver might continue to grow reliably

One of the more interesting market trends of 2025 was the gains made by gold and silver, which saw record highs by year’s end.

While these commodities have fluctuated in value in early 2026, they are expected to continue their overall upward trajectory; JP Morgan expects gold prices to average at $5,055 per ounce by the final quarter of 2026, and investors are optimistic that silver could reach highs of $100 per ounce, according to a CNBC report.

While investors likely flocked to silver and gold in 2025 as safe-haven assets during periods of market volatility, their continued role in 2026 could point to an overarching confidence in economic growth and stability.

Note: If you have invested or are planning to invest in gold or silver, it’s important to consider integrating these commodities into a well-diversified portfolio of various asset classes in different markets and geographical regions to help lower your overall investment risk.

4. Bull market continuation

After strong equity performance in 2025, some institutions believe the broader bull market – conditions where investor optimism, high confidence, and a strong economy lead to increased asset prices – could continue into 2026.

This sentiment is echoed by Morgan Stanley, whose Global Investment Committee projects near double-digit percentage returns for the S&P 500 Index.

If the bull market persists throughout 2026, investors might continue to enjoy a longer period of investment growth, higher portfolio returns, and low interest rates.

Get in touch

These insights offer a glimpse into the stock market conversation, but they are by no means an accurate prediction of what 2026 has in store.

If you’re worried about market volatility in 2026 and how it might affect your wealth, get in touch with your Caliber financial planner today.

Email contact@caliberfm.co.uk or call 01525 375286 to speak to one of our team.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.