Resilience endures amid disruption and shocks. The first half of 2026 has seen a host of events with the potential to disrupt global economies and markets in a world that appears increasingly fragmented. Yet economic data and corporate results suggest the global economy remains resilient.
Central banks on hold. Central banks appear reluctant to continue the easing path we expected as the start of the year, but we think the market has overshot rate hike expectations.
The AI investment boom is still being felt. Earnings growth has been strong so far in 2026, led by the technology sector. Demand for chips and power from large data center investments is expected to continue to support semiconductors and hardware companies.
Our 2026 Outlook, “Resilience and rebalancing,” argued that firmer global growth would favor non-US equities and weigh on the US dollar. We believe recent events have delayed but not curtailed this story. In a world undergoing immense disruption, we believe resilience endures – and provides a favorable investment environment.
Our outlook reflects these two key themes:
In the first half of the year, the global economy has contended with various forces of disruption, including the rise of artificial intelligence, geopolitical fractures, the closure of the Strait of Hormuz, and an upset to energy and commodity supplies.
Private-sector leverage has fallen since the Global Financial Crisis, in our analysis. Meanwhile, previous rate cuts in the US and UK, alongside looser fiscal policy in Europe and Japan, are supportive of a measured re-leveraging through stronger investment and spending, in our view.
The growth-inflation backdrop is less supportive than we expected at the start of the year, but not weak enough to prevent global equities from delivering positive returns in 2026, in our view.
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