Global markets outlook 2026: Navigating uncertainty, opportunity and innovation

In the second half of 2026, markets are balancing resilient growth against persistent inflation pressures and ongoing global conflict. “Clients are navigating a genuinely complex world across volatility, geopolitical uncertainty and new AI paradigms. It’s not just about your rate view anymore. It’s about how everything connects,” said Claudia Jury, global co-head of Sales & Research at J.P. Morgan.  

As investors strategize for the remainder of the year, J.P. Morgan brought together industry and market experts at the Global Markets Conference in Paris to explore market outlooks and trending topics. “We’ve always featured markets and geopolitics at this event, but this year we’ve expanded into AI, governance, cyber security and the evolving private credit landscape,” said Scott Hamilton, global co-head of Sales & Research at J.P. Morgan. “The conversation evolves because the markets evolve.”

Polling data and perspectives from nearly 600 clients across 400 companies in attendance point to a continued preference for U.S. equities, a wide range of rate outcomes and a heightened focus on energy and security. Here are the most important takeaways. 

Navigating global tensions, trade implications and other risks

Base case predictions are being tested by geopolitical shocks that increasingly show up in pricing as well as headlines. For investors, geopolitics is no longer a background variable; it is influencing portfolios through energy, trade policy, supply chains and security-related fiscal decisions. Amid this landscape, the Middle East conflict U.S.–China dynamics and Europe’s defense agenda are shaping both the macro outlook and the relative attractiveness of asset classes.

Trade policy is also a key channel through which geopolitics is influencing market expectations. In polling, 78% of respondents expected the average effective U.S. tariff rate on imports to settle in the 10–20% range by year-end. This matters not only for growth and inflation assumptions, but also for corporate margins, capex prioritization and cross-border investment confidence — especially in an environment where investors are already sensitive to rate uncertainty.

There are other factors to consider too. “In the very near term, May will be interesting from a Chase card spending perspective as the pace of tax refunds to consumers will moderate,” Dulake said. “Secondly, a medium-term risk is a disorderly move up in bond yields; that’s when credit-rates correlations go to one and this impacts risk markets more broadly. Lastly — somewhat long-term and not unrelated to crowding in the tech sector — is the shape of the AI monetization curve, given all the dependency on hyperscaler cash flows.”

Trading floor insights: Rate hikes expected in the second half of 2026

Market volatility and central bank dynamics are top of mind for traders and investors. All eyes are on the Fed, with J.P. Morgan Global Research anticipating rates to hold steady for the rest of the year. This may change if the labor market weakens, the economic fallout from high energy prices becomes more severe or as Kevin Warsh steps into his new role as Fed chair. “The bar for the Fed to cut rates is going to be very high. For now, the best case for markets is that the Fed keeps rates unchanged,” said Thakur.

Risks and returns in private credit markets

Credit markets are at a crossroads, with both public and private credit lines converging and new risks emerging. “We are seeing a rare mix of elevated yields, strong corporate fundamentals and very strong earnings, and in the public markets, very high credit quality,” said Sanjay Jhamna, global head of credit trading at J.P. Morgan.

The commoditization of private credit has narrowed the performance gap between top- and bottom-quartile managers, creating an unusually tight dispersion that is likely to correct. In this environment, managers focused primarily on growing assets under management are expected to face the greatest challenges over the next two to three years.

Regional dynamics underscore how diverse the private credit opportunity set has become. In Europe, infrastructure is viewed as relatively less exposed to AI disruption risk, while digital and energy dependence remains a strategic constraint given the scale of corporate spending by European investors on U.S. hyperscalers. In Australia, real estate represents a significant share of private credit activity, supported by population growth and a preference for hard-asset collateral, alongside insolvency regimes that tend to prioritize secured creditors.

Against this backdrop, sector selection and underwriting discipline are increasingly critical. In software and other AI-exposed areas, shorter visibility into business models raises the bar for assessing the durability of cash flows and understanding end-customer willingness to pay. Overall, the private credit outlook remains cautiously constructive: while stress and disruption are building, conditions are still viewed as manageable, with capital markets offering a roughly two-year window for issuers to pursue refinancing and structural solutions. High all-in yields, particularly in investment grade, continue to support demand even as investors become more selective.

AI drives global market activity

AI is now a dominant driver of market activity and investment, reshaping earnings trajectories, capital spending and competitive dynamics across sectors. Since late 2022, the AI complex has contributed 80% of cumulative earnings growth and driven 75% of both capex and R&D growth. AI-linked earnings growth is running ahead of non-AI growth (41% AI-related versus 12% ex-AI). “AI is not a theme — AI is the driver. Not just for equity markets, but much broader,” Lakos-Bujas said.

AI-enabled tools are already expanding from R&D into day-to-day decision-making and execution across organizations, including risk, fraud, marketing, documentation, customer service, hedging, prospecting and AML/BSA compliance. As adoption accelerates, the challenge for investors is to separate durable monetization pathways from hype, and to understand second-order effects including disruption risk in downstream software and the potential for job displacement to become a macro variable in the next downturn. In that context, AI is both a growth driver and a key lens for assessing concentration risk, crowded positioning and the resilience of business models under faster-than-historical technology cycles.

The AI cycle is also increasingly inseparable from cybersecurity and operational resilience. Security and cyber resiliency gaps are driving close to $1.5 trillion in incremental tech spending over the coming quarters, reinforcing investment momentum beyond compute. Jamie Dimon, chairman and chief executive officer of JPMorganChase, framed tech security clearly: “Cybersecurity should be taken as seriously as anything in our lives.”

Looking forward: Global markets outlook

The outlook for global markets in 2026 is shaped by resilience and strategic decision-making. Investors are responding to shifting geopolitical tensions and evolving risks, with a focus on preparation, diversification and innovation.

In the face of fast-changing conditions, Dimon’s advice resonates: “When it comes to risk management, roll your sleeves up and focus, stay calm and logical. There may be challenges ahead but what we can do is prepare and put ourselves in the best possible position.”