Goldman Sachs expects global equities to post lower—but still appealing—returns in 2026, supported by resilient economic growth, easing inflation pressures, and ongoing policy support.
In its latest Global Opportunity Asset Locator report, analyst Christian Mueller-Glissmann said the bank remains cautiously pro-risk heading into 2026. He cited a favorable baseline outlook that includes solid global growth, further disinflation, and continued support from policymakers.
However, Goldman Sachs noted that some of the powerful tailwinds that boosted markets in recent years are beginning to fade. Mueller-Glissmann pointed to diminishing support from monetary policy, meaning fiscal and regulatory easing are likely to play a larger role going forward. At the same time, artificial intelligence tailwinds are expected to transition from heavy capital spending toward broader adoption across the economy.
The bank also highlighted elevated equity valuations and compressed risk premia, conditions it described as typical of a late-cycle environment. Even so, Goldman believes stocks should continue to benefit from improving economic momentum.
“Equities tend to perform well amid stronger growth, policy easing, and declining inflation,” the firm said, adding that being underinvested late in the cycle can prove costly for investors.
Goldman Sachs expects earnings growth to be the main driver of equity gains in 2026, with scope for valuation expansion if investor optimism persists. Strong corporate balance sheets could further support shareholder returns and increased capital markets activity.
Still, the bank warned that the macro environment could become less supportive in the second half of the year if U.S. recession risks increase. Despite this, Goldman said it favors equities over credit, arguing that credit returns are limited by tight spreads, while stocks can still deliver attractive performance through earnings growth.
From a regional perspective, Goldman Sachs is overweight Asia excluding Japan, maintains a neutral stance on the U.S. and Japan, and remains underweight Europe.
