From the AI bubble to Fed fears: the global economic outlook for 2026
The Guardian••general
Key Points:
- Despite concerns about a potential AI bubble burst and instability at the US Federal Reserve, investors and strategists broadly expect global stock markets, including the S&P 500, to rise throughout 2026, though volatility may increase due to geopolitical tensions and inflation risks.
- Key risks identified by investors include a sharp decline in technology valuations linked to AI enthusiasm fading, disruptive Fed policy changes potentially triggered by a Trump-appointed chair favoring aggressive interest rate cuts, and stress in private credit markets.
- The UK stock market is expected to continue its strong performance following a record-breaking 2025, with analysts forecasting 14% profit growth for the FTSE 100 and record dividend payments, while UK government bonds may outperform if the Bank of England cuts rates faster
