| Inflation, trade tensions and geopolitical risks will continue to shape global market conditions in 2026 | IMF predicts global growth of 3.1% this year but some regions and sectors may outperform others | Diversification will be key in an evolving landscape – balance suitability with long-term growth opportunities |
After a year marked by uncertainty, many investors are likely to be approaching 2026 with cautious optimism. Despite trade-related shocks, geopolitical tension and stubborn inflationary pressures, markets demonstrated resilience last year. The sharp sell-off following ‘Liberation Day’ tariff announcements was followed by a strong rebound, supported by solid earnings, easing policy expectations and continued enthusiasm for AI-driven innovation.
In a world where headlines can move markets within minutes, one message continues to ring true: staying calm, selective and focused on long-term goals remains fundamental. As we look ahead, several themes look likely to define the year ahead.
Challenges and opportunities
2026 is set to bring a familiar blend of challenges and opportunities. Inflation in several major economies remains above target, keeping central banks cautious and policy finely balanced. In the UK, expectations are for inflation to return to target in 2027. Persistent inflation will retain pressure on consumer-focused sectors, while lower borrowing costs may offer support to parts of the equity market.
Meanwhile, investment in AI infrastructure and data capabilities continues at pace. While some questions remain over whether the momentum is sustainable, ongoing innovation may still present meaningful avenues for growth.
Rate cuts remain on investors’ radar, though central banks may act more conservatively than markets hope.
‘A landscape marked by greater protectionism and fragmentation’
The International Monetary Fund (IMF) expects the global economy to grow by 3.1% in 2026, following growth of 3.2% last year. While growth remains positive, it is tenuous, with uncertainty around tariffs, trade and wider geopolitical risks weighing. The IMF believes this fragile growth is a reflection of the ‘world adjusting to a landscape marked by greater protectionism and fragmentation.’
However, supportive fiscal policy, technological investment and favourable financial conditions continue to offset some of these pressures. With an uneven recovery likely, certain regions and sectors may offer stronger long-term potential than others.
Investing with clarity and confidence
Diversification remains central to navigating the year ahead – balancing exposure across regions, sectors and asset classes in line with your goals, timeframe and risk tolerance. As the world evolves, opportunities naturally present; with careful planning and a measured approach, we can help position your portfolio.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for guidance only. Some rules may vary in different parts of the UK.