2026 Outlook: Positive as it goes!

As 2026 kicks off with important political and geopolitical headlines, investors are looking back to an extraordinary 2025 performance in equities, although the year was marked by nascent trade tensions, geopolitical unease and unideal developments under the new Trump administration. Regardless, the S&P500 printed its third consecutive year of strong, near 20% gains, mostly powered by AI.

The macro and micro environment might have suggested caution: soaring government spending in G7 economies, global trade conflicts, worries regarding Federal Reserve’s (Fed) independence and the legality of the US tariffs, ballooning AI valuations, leveraged technology investments worldwide and global uncertainties often weighed on sentiment.

Yet, over a 6–18 month horizon, the picture has been remarkably supportive for risk assets, argues NFG Partners’ Glenn Coxon, with whom I sit down every quarter to talk about where the markets have landed, and where’s the next stop. This January, he highlights that

• Credit costs have fallen along with major central bank rate cuts,
• CPI remained contained, tariff-led pressures have not materialized,
• Both investor and commercial sentiment remained positive.

Leading economic indicators, on the other hand, show modest upticks, and employment remains resilient despite occasional flip-flops in data. Combine this with bullish technical trends and seasonal patterns, and equity optimism persists and defies the pessimistic Main Street folks —even as global macro trends remain uneven.

The story of equities in 2025 is, at its core, one of resilience and AI led gains. But rotation from US tech toward Asian tech and toward more cyclical European and EM indices offered notable gains to investors. This trend could slow, says Glenn Coxon, rotation could reverse regardless of the bubble fears in technology.

As such, NFG’s Coxon maintains exposure to US equities, but overweighs Nasdaq and other tech-led, high-growth segments, cuts exposure in Europe but remains bullish for emerging markets. The latter offer compelling valuations relative to their risk profile and benefit from both lower borrowing costs and a softer US dollar.

Meanwhile, inflation-linked bonds, or TIPS, are falling out of favour as moderated inflation reduces the need for hedges.

Watch our Market Outlook 2026 video with Ipek & Glenn!

Moderated inflation has paved the way for meaningful rate cuts in 2025 from major central banks.

If we summarize, in 2025:

1. Federal Reserve (Fed) delivered three rate cuts of 25 bps each, totaling about 75 bps of easing this year. The most recent brings the federal funds rate down to 3.50–3.75% as of December.
2. European Central Bank (ECB) cut its key rates by 25 bps in June 2025, bringing the Main Refinancing Operations (MRO) rate to 2.15%,
3. Bank of England (BoE) cut rates by 25 bps in August and December 2025 despite looming inflation risks. The policy rate stands at 3.75%.
4. Swiss National Bank (SNB) cut its policy rate by 25 bps in June 2025, bringing it to 0.00%. This follows a sequence of cuts that began in late 2024 as inflation moved well below target.
5. Reserve Bank of Australia (RBA) cut rates by 25 bps in August 2025 to about 3.60%, and the Reserve Bank of New Zealand (RBNZ) trimmed its cash rate by 25 bps in November 2025 to around 2.25%.
6. Bank of Canada (BoC) cut rates by 25 bps in October 2025 to about 2.25%.
7. Bank of Japan (BoJ), in contrast, raised rates two times last year. The BoJ policy rate stands at 0.75% at the start of 2026.

However, long-term yields haven’t followed short-term interest rate cuts due to rising Developed Markets (DM) debt worries and meagre fiscal discipline.

Take the US for example: bond issuance is heavy and 80% of new supply comes in the form of T-bills.

By issuing T-bills, the US is effectively asking banks to finance the debt. Lower issuance of longer maturity Treasuries and lower policy rates maintain the long-term yields elevated, but the flood of liquidity and fiscal support makes it difficult to envision a conventional recession in the near term.

Further good news is that the Fed’s Quantitative Tightening (QT) is drawing to a close, raising the possibility that Quantitative Easing could return if conditions require. A policy twist that could help pulling the problematic long term borrowing costs, too! The Fed already announced the new RMP (Reserve Management Purchases) program that looks very similar to QE - but aims to purchase short-dated bonds rather than longer dated ones. But the outcome on market liquidity is comparable to QE: it is positive!

And Glenn Coxon has a message for those who are worried that the higher JGB yields could pull the rug from under the global risk markets: 

One of the most popular questions of last year has been: “Is this a bubble?”

• Valuations are stretched in certain sectors, particularly tech, but there is still room for growth. The market is not immune to shocks: slowing revenue growth, leveraged corporate structures or circularity in deals could trigger volatility. That said, other sectors—such as energy, gold and value equities—continue to benefit from structural tailwinds.
• Non-tech sectors will benefit from ample AI-led productivities.
• Energy is a particularly interesting case. Elon Musk has famously noted “Energy tomorrow will be more important than money today.” AI and digital infrastructure are hungry for energy, particularly natural gas and nuclear.

Uranium, which was one of Coxon’s favourite picks last year was up to +123% at last year’s peak.

The US dollar has had a “big, ugly year.”

The US dollar outlook remains bearish, though slightly less so than before. Hedging 50% of US dollar exposure has been a successful strategy, says Glenn Coxon, particularly in a year of volatility with Trump surprises.

Traditional currencies, like the Swiss franc and the euro, have offered interesting opportunities.

The Swiss SMI remained on the backfoot in terms of percentage gains in 2025. The strong franc and trade frictions with the US took a toll on Swiss blue chip companies. But the Swiss Market Index (SMI) outperformed the S&P 500 in USD terms, highlighting how currency diversification can provide a layer of protection when the dollar weakens.

Watch our Market Outlook 2026 Forex & Commodities!

Gold had a stellar year, consistently outperforming risk assets and leaving crypto traders envious. And appetite for hard commodities (including precious and industrials metals) will likely remain in play.

Across all mandates, Glenn Coxon maintains a 10% allocation to gold, a position unchanged for nine consecutive quarters. This allocation reflects weakening faith in the financial system, particularly in a world of large deficits and rising interest costs. A softer US dollar, strong demand from emerging and developed markets – and their central banks, falling real yields, and positive technical trends all continue to support gold’s bullish momentum.

Silver’s rise has been more parabolic and volatile, while copper faces supply-demand imbalances due to industrial needs. The outlook for both is positive.

Crude oil, on the other hand, remains under pressure despite geopolitical headlines. Sanctions against Russia, for instance, have not significantly constrained supply.

Bitcoin has become a measured part of traditional portfolios. Over a 12–18 month horizon, NFG Partners’ decided to opt for a symbolic 1% allocation on high-risk mandates, non-leveraged, as a statement of intent.

Nonetheless, current market sentiment is bearish, as the latest selloff in cryptocurrencies suggests heightened volatility in the medium run.

Don’t forget to have a look at our detailed Crypto Market Outlook to know more!

Looking ahead, 2026 is shaping up as a bullish year for global equities, with strong appetite for US growth and EM stocks.

NFG’s Coxon says his top picks include:

• Gold: Maintains its safe-haven appeal and benefits from persistent deficits and low real yields.
• Commodities: Offer protection against loss of appetite in fiat currencies and sovereign bonds.
• EM Equity: Expected to benefit from softer US dollar, cheap oil and valuation gap.

The broader message for investors is to focus on structural themes rather than short-term volatility. Fiscal spending, central bank policies and energy transitions will continue to create opportunities, and careful allocation across equities, commodities, FX and digital assets will be key.

DISCLAIMER: The content in this article is provided for educational purposes only. It does not constitute investment advice, financial recommendations or promotional material.