Dear readers,
2026 is likely to be a year of solid growth, with the global economy maintaining roughly the same pace as in 2025 and capital markets continuing to benefit from monetary policy and fiscal support. At the same time, (geo)political risks are likely to remain elevated and volatility spikes are likely to recur. We therefore recommend a cautious but not overly pessimistic positioning. The European economy is likely to receive a slight boost from higher investment in defence and infrastructure, while the US economy is losing some momentum. Asian markets are expected to prove resilient overall, supported in part by Beijing's new five-year plan focusing on AI, high tech and productivity. Massive investments in data centres and energy infrastructure will ensure that artificial intelligence remains a key growth driver in 2026. In the run-up to the US-midterm elections, US-politics will focus on curbing tariff-driven inflation, for example through selective easing of trade agreements. With a new Fed chair from May and a tendency towards pro-cyclical stimulus measures, the environment for risk assets is improving. Markets can thus detach themselves more strongly from the major macro issues of 2025 and refocus on sector- and company-specific stories that are likely to drive returns over the next 12 months. If the Fed's policy becomes more expansionary in the long term, market breadth is likely to increase again. This should benefit sectors and small caps that have suffered from the rise in interest rates in recent years. The independence of central banks remains an important anchor, but has recently become less politically uncontroversial than in the past. As long as inflation expectations and thus US interest rates remain anchored and no political interference massively damages the credibility of monetary policy, the liquidity environment can support valuation levels in the markets. 2026 is shaping up to be a positive year for capital markets, with a more moderate upside potential for equities and gold compared to 2025. The US midterm elections in November are likely to cause uncertainty in the run-up to the vote, so we can expect share prices to follow a similar pattern to the historical trend – a strong start to the year, fluctuations from spring/summer onwards and a recovery towards the end of the year. Structural factors such as fiscal dominance, financial repression and budget deficits support real assets such as gold and equities against the dollar and government bonds. As long as there is no threat of tightening by the Fed and no recession, we remain optimistic on equities – despite high valuations and likely setbacks. A bond crisis scenario remains possible in the long term, but is unlikely for 2026, so the stock market bull run is likely to continue with solid gains.
In the Insights interview, Susette Mantzel, Head of Private Markets Solutions, discusses Berenberg’s private market investments in more detail.
We hope you enjoy reading this issue and wish you a happy end to the year surrounded by your loved ones.
Dejan Djukic
Head of porfolio mangement
Publisher
Ulrich Urbahn
Ulrich Urbahn has been working for Berenberg since October 2017 and is responsible for quantitative analyses and the devel-opment of strategic and tactical allocation ideas, and is involved in capital market communications. He is a member of the Asset Allocation Committee and portfolio manager of the Berenberg Variato. After graduating in economics and mathematics from the University of Heidelberg, he worked for more than 10 years at Commerzbank, among others, as a senior cross asset strate-gist. Mr Urbahn is a CFA charterholder and was part of the three best multi-asset research teams worldwide in the renowned Extel survey for many years.