Investors expect global stock markets to keep rising in 2026, despite concerns about the potential bursting of the AI bubble and worries over chaos at the US central bank. While analysts and investors voice caution about tech valuations and the influence of President Trump on the Federal Reserve, the overall economic picture appears relatively positive.
A survey of 440 investors, economists and analysts by Deutsche Bank found that 57% believe a plunge in technology valuations or waning enthusiasm in AI is a top risk to market stability in 2026. The second biggest fear is that President Trump appoints a new Federal Reserve chair who pushes for aggressive interest rate cuts, causing market turmoil. Respondents’ third most significant concern was a crisis in the private capital markets.
However, the consensus among major financial institutions is for continued global economic growth in 2026. UBS has predicted that “supportive economic conditions should underpin global equities, which are expected to rise by about 15% by the end of 2026”, with gains likely in the US, China, Japan and Europe. Deutsche Bank has a year-end S&P 500 target of 8,000 points (+17%), while Oppenheimer Asset Management is even more bullish, forecasting an 8,100-point year end.
The outlook for the UK stock market is also positive, with analysts forecasting 14% profit growth from the FTSE 100 in 2026 and dividend payments expected to set a new record. UK government bonds (gilts) could also perform well if the Bank of England cuts interest rates more rapidly than other central banks.
While the rise of artificial intelligence is expected to shape long-term macroeconomic outcomes, investors will be watching closely to see whether tech giants can justify their lofty valuations and deliver the productivity growth that policymakers are hoping for. Failure to do so could lead to a correction in tech stocks.
Overall, the global economy is expected to avoid a downturn in 2026, with Goldman Sachs analysts forecasting “sturdy global growth of 2.8%”. However, experienced voices warn that the consensus view could be wrong, with the risks of a policy misstep accumulating as imbalances build beneath the surface.
