How will the global market perform in 2026? JPMorgan's perspective on the major asset reshuffle

Against the backdrop of divergent monetary policies, rapid AI expansion, and increasing market polarization, JPMorgan's outlook for 2026 is neither simply optimistic nor entirely pessimistic, but rather points to a "new normal" where resilience and risk coexist.

Source: Golden Ten Data

What is the overall outlook for global markets in 2026? Amid the intertwining of divergent monetary policies, accelerated AI expansion, and structural market polarization, the global market in 2026 stands at a critical point where resilience and risk coexist.

JPMorgan believes that front-loaded fiscal stimulus and the robust balance sheets of corporates and households will support continued global growth, but weakening business confidence, a slowing labor market, and sticky inflation mean that recession risks remain elevated.

The bank expects that, driven by the AI supercycle, the stock market still has room to rise, while interest rates, exchange rates, credit, and commodity trends will show stronger divergence. Investors need to reassess their pace, structure, and risk tolerance in a highly uncertain environment. The following details JPMorgan's views.

Global Market Outlook for 2026

In the coming year, global markets are likely to be defined by the convergence of multiple forces: divergent monetary policies, ongoing AI expansion, and intensifying market polarization. These factors, combined with the evolving US policy agenda, will continue to reshape the global macro and market landscape.

Dubravko Lakos-Bujas, Global Head of Market Strategy at JPMorgan, stated:

"Our outlook centers on a multidimensional divergence: the stock market is splitting between AI and non-AI sectors, the US economy is seeking balance between strong capital expenditure and weak labor demand, and household consumption is also experiencing increasingly pronounced divergence."

Overall, JPMorgan Global Research believes that, supported by factors such as front-loaded fiscal policy, the outlook for global economic growth in 2026 remains resilient. However, at the same time, with weak business confidence and a continuously slowing labor market, downside risks remain elevated.

On the other hand, the tailwinds of 2025 are expected to continue into 2026, including robust corporate and household balance sheets, ample liquidity, and the ongoing spread of AI capital expenditure, all of which will drive earnings growth.

Fabio Bassi, Head of Cross-Asset Strategy at JPMorgan, added:

"Overall, the market environment remains fragile, and investors must move forward in a landscape where risk and resilience coexist."

Stock Markets

JPMorgan Global Research holds a positive outlook for global stock markets in 2026, expecting double-digit gains in both developed and emerging markets.

This bullish view is mainly based on robust earnings growth, falling interest rates, diminishing policy headwinds, and the continued rise of AI. Lakos-Bujas noted:

"The AI-driven supercycle is fueling record capital expenditures and rapid earnings expansion. This momentum is spreading to more regions and broader industries, from technology and utilities to banking, healthcare, and logistics, continually creating winners and losers in the process."

In fact, AI may further amplify the divergence already present in the unhealthy K-shaped economy, and market concentration may reach new highs as a result.

He stated, "In such an environment, even if underlying trends remain intact and fundamentals are solid, broad market sentiment indicators are more prone to sharp fluctuations."

US Stock Market

The style allocation in 2026 is likely to continue the characteristics of 2025, with market crowding, concentration, and a "winner-takes-all" pattern potentially reaching new extremes. For example, JPMorgan Global Research expects the AI supercycle to drive 13%–15% above-trend earnings growth in the S&P 500 for at least the next two years.

Eurozone Stock Market

Driven by improving credit impulse and the gradual implementation of fiscal stimulus, economic momentum in the Eurozone is expected to rebound in 2026. Earnings are expected to grow by more than 13%, mainly benefiting from stronger operating leverage, diminishing tariff headwinds, improved base effects, and a better financing environment.

Japanese Stock Market

The "Sanaenomics" introduced by Japan's new Prime Minister Sanae Takaichi, along with ongoing corporate reforms, is expected to strengthen the Japanese stock market in 2026. Companies may focus more on releasing excess cash, thereby driving capital investment, wage growth, and shareholder returns.

In addition, "Sanaenomics" is expected to revitalize middle-class consumption and strategic investment, providing further support for the market.

Emerging Markets Stock Markets

Against the backdrop of falling local interest rates, accelerating earnings growth, attractive valuations, continued improvement in corporate governance, healthier fiscal conditions, and resilient global growth, emerging market equities are well positioned for strong performance in 2026.

China's private sector may show signs of recovery; South Korea continues to benefit from corporate governance reforms and AI development. In other regions, Latin America is expected to see significant upside driven by strong monetary policy stimulus and key political changes.

Global Economic Outlook

JPMorgan believes that global economic expansion is at a critical juncture. Although GDP growth remains resilient in 2025, demand is gradually shifting toward technology capital expenditure, and stagnant employment growth has led to structural imbalances.

Bruce Kasman, Chief Global Economist at JPMorgan, stated:

"Corporate caution is the main drag on hiring, reflecting concerns about trade conflicts and weak demand in non-tech sectors. The resulting insufficient labor demand is beginning to erode purchasing power, especially in the US, where private sector labor income growth is slowing. Combined with stable inflation and short-term public sector drag, this is putting pressure on consumption."

Based on this, JPMorgan Global Research expects developed market consumption to slow in Q4 2025 and estimates a 35% probability of recession in the US and global economies in 2026.

However, thanks to front-loaded fiscal stimulus, global GDP growth is expected to be boosted in the first half of 2026, improving market sentiment.

"Our baseline forecast is that the health of the corporate sector, loose financial conditions, and fiscal stimulus will help the global economy absorb the current confidence shock that is suppressing labor demand. If correct, as we move through the first half of 2026, employment growth and confidence will gradually recover, supporting a renewed link between labor demand and robust GDP growth," Kasman noted. In addition, a new wave of AI investment may also provide a limited boost to the global economy.

Sticky inflation is expected to remain a dominant theme. As supply shocks related to the pandemic and the Russia-Ukraine conflict gradually fade, inflation hovers around 3% with almost no clear downward trend. Kasman added:

"The upward pressure on global commodity prices related to trade conflicts may be temporary, but we expect higher commodity price pressures to persist at least through the first half of 2026."

Interest Rate Market Forecast

JPMorgan Global Research assumes that in 2026, most developed markets will see economic growth at or above potential, while inflation will continue to decline but remain sticky in some economies.

This may further intensify the divergence in monetary policy outcomes. For example, the Federal Reserve is expected to cut rates by another 50 basis points, while the Bank of Japan may raise rates by 50 basis points. Other developed market central banks are likely to remain on hold or end their easing cycles in the first half of the year.

However, this baseline scenario still faces risks. In the US, a more persistent cyclical weakening of the labor market poses downside risks, while growth upside risks from AI applications provide a hedge. Both could affect the Fed's policy reaction function in different ways. In the UK, term premia around fiscal events may rise again, and political uncertainty is increasing.

Overall, JPMorgan expects developed market yields to gradually rise in 2026. By Q4, 10-year US Treasury, Bund, and Gilt yields may rise to 4.35%, 2.75%, and 4.75%, respectively, with yield curves showing divergence.

Jay Barry, Global Head of Interest Rate Strategy at JPMorgan, stated:

"We expect US Treasury yields to remain range-bound in the coming months, followed by a moderate rebound after the Fed pauses in the spring (UTC+8). Outside the US, we believe Bunds and Gilts will remain in their 2025 ranges and may weaken passively mid-year (UTC+8) as US Treasury yields rise."

In Asia, JPMorgan Global Research remains bearish on Japanese government bonds, expecting a general bear-flattening trend. Barry added, "We have yet to see any clear evidence that the bullish trend is about to reverse, especially as other developed markets may weaken mid-next year (UTC+8)."

Foreign Exchange Market Forecast

JPMorgan Global Research remains bearish on the US dollar for the coming year. Meera Chandan, Co-Head of Global FX Strategy at JPMorgan, stated:

"Our overall outlook for the dollar in 2026 is bearish, but both the magnitude and breadth are smaller than in 2025. The Fed's continued concerns about labor market weakness and a 'mid-smile curve' risk environment favoring high-yielding currencies should generally weigh on the dollar, but robust US growth and sticky inflation limit the downside."

On the other hand, JPMorgan Global Research holds a moderately bullish view on the euro, mainly benefiting from Eurozone growth prospects and German fiscal expansion. However, Chandan noted that unless US data weakens significantly, the euro's gains against the dollar may not match those of 2025.

For the pound, there may be "buy-on-dip" opportunities amid resilient domestic growth, improving global growth expectations, and a favorable environment for carry trades. JPMorgan FX strategist James Nelligan stated:

"The pound's structural drags have not disappeared, so we prefer a tactical buy-on-dip approach rather than a longer-term bullish stance. We believe the pound's strength is more likely to appear in the first half of the year (UTC+8), while in the second half (UTC+8), before the next budget announcement, fiscal concerns may return to the spotlight, increasing the risk of pound underperformance."

In Japan, the rapid rise of USD/JPY has temporarily ended, but the yen is still expected to weaken slightly in 2025, highlighting the difficulty of sustained yen outperformance while rates remain negative. Junya Tanase, Chief Japan FX Strategist at JPMorgan, stated:

"Entering 2026, as the G10 central banks' easing cycles near their end, it will become more difficult to prevent yen depreciation through rate hikes or intervention. In addition, if the initial budget for fiscal 2026 confirms the Takaichi government's expansionary fiscal stance, concerns about fiscal sustainability may further intensify downward pressure on the yen."

JPMorgan Major FX Pair Forecasts

Commodity Forecasts

JPMorgan points out that global oil demand is expanding, expected to increase by 900,000 barrels per day in 2026 and by 1.2 million barrels per day in 2027. However, supply growth in 2026 is expected to be three times that of demand, then slow to about one-third the pace in 2027—at least on paper, this would result in a significant surplus.

However, these imbalances are unlikely to be fully realized in reality, as adjustments may occur on both the supply and demand sides. Natasha Kaneva, Global Head of Commodity Strategy at JPMorgan, stated:

"We expect the market to rebalance through rising demand (driven by lower prices) and a combination of voluntary and involuntary production cuts. Based on this, we maintain our forecast for Brent crude at $58 in 2026 and, for the first time, forecast $57 for 2027, while recognizing that stabilizing prices at this level will still require considerable effort."

For other energy products, increased LNG supply is expected to support lower global natural gas prices. Otar Dgebuadze, a member of JPMorgan's Global Commodities Research team, stated:

"With new projects coming online, we expect medium- to long-term prices to gradually decline from current levels. We forecast the average TTF (European gas benchmark) price at €28.75/MWh in 2026 and €24.75/MWh in 2027, 3–4 euros/MWh below current forward prices."

In precious metals, JPMorgan Global Research remains bullish on gold, mainly benefiting from increased central bank purchases and strong investment demand. By Q4 2026, gold prices are expected to soar to $5,000/oz, with a full-year average of about $4,753/oz.

Gregory Shearer, Head of Base and Precious Metals Strategy at JPMorgan, added:

"Silver prices are expected to rise to $58/oz in Q4 (UTC+8), with a full-year average of about $56/oz, while platinum may remain relatively strong in 2026 until supply rebalancing progresses."

Finally, in the agricultural market, implied volatility has recently increased. JPMorgan agricultural strategist Tracey Allen stated:

"Although there are no imminent signs of shortages or supply-side pressures in the next few planting seasons—except for livestock and, to some extent, cocoa—we still forecast the global agricultural stock-to-use ratio for 2026/27 and 2027/28 to remain near multi-year lows. The decline in available stock driven by low producer margins makes prices more sensitive to supply-side shocks, increasing volatility."

JPMorgan Commodity Price Forecasts