Key market themes in 2026 

As we enter 2026, our multi-asset solutions team has come up with five key themes that we believe will shape markets over the course of this year.

Now, the first one is around central banks, where the U.S. Federal Reserve stands to diverge from many other major central banks. Those like the Bank of Canada, the European Central Bank looks set to be on hold for the majority of this year, whereas the Federal Reserve is likely to cut rates a couple more times and in fact may have an even more dovish, Fed chair coming in and midyear that may in fact lead to further rate cuts.

What does that mean for markets? Ultimately, a more dovish Federal Reserve means high valuations across riskier parts of the market will be well supported, with lower interest rates from the Fed. At the same time, a weaker U.S. dollar is likely to see a continued anchor from that. Those lower rates in the U.S.

The second theme that we outline is that AI investments are likely to face their return on investment, their ROI moment this year. So, we've seen that certainly AI investment across the economy, has reached trillions of dollars, and the hyper-scalers, those very large cap U.S. players in the artificial intelligence space continue to invest massive amounts of CapEx, and we get many reports on that each and every quarter. This year, and we began to see this towards the end of last year, investors are going to begin to pay a little more attention to the quality of those investments. Is there really an over investment that's taking place? Which players are likely making smarter investment choices? Which ones are not? Where is there likely to be a return on that investment? 

Across the economy, we're also likely to see the market pay close attention to how various users of artificial intelligence are driving the bottom-line gains with that use, in terms of productivity gains. So, we think the market will continue to like the AI theme, but it's going to begin to differentiate a little bit more between the winners and losers.

The third theme that we talk about is some persistent K-shaped dynamics, when we look at the global economy. A K-shape means some data series and economic statistics are heading firmly upwards, whereas other ones are diverging and heading lower.

A great example the labour market tends to be more so on a downward trajectory, whereas indicators like the equity market heading higher. What does that mean? That means that segments of the consumer base are experiencing this economy in very different ways. If you're an asset owner, if you own equities, if you own stocks in your portfolio, you have stronger consumer confidence, you're spending more.

If not, you are in that bracket that is actually having to curtail spending. For now, the upper end of that K is one that's really kind of dominating the market. It's dominating the total economic picture. But it does mean along the way we're likely to see some negative data points. And that's likely to cause some volatility for markets as the year progresses.

Our fourth theme is investing and diverging investment themes in a multipolar world. So, over the last year or so, we've certainly seen that that unipolar world where there's a consensus around kind of following U.S. leadership has begun to devolve. And that's created some risk. But it's also created a lot of opportunities, as we saw last year. What that's meant is in certain markets, you've seen different areas really outperform even the core that we're all talking about, AI stocks in the U.S. 

Well, you can look at different parts of the world. In Europe, for example, defense stocks outperform to the upside. In Canada, metal stocks outperform even that AI theme. To the upside in China, was robotics. So, there are many themes that are playing out globally, it means that a globally diversified portfolio is beginning to actually perform better in a world that's kind of devolving from that unipolar consensus to this more multipolar, scenario, where different countries are kind of having to go at their own and find a niche in the economy and within the global order for themselves.

And the final theme is really, how do all these pieces kind of make it, and the divergence of the other four themes, make active management matter once again? So, plenty of risks that we've outlined. Certainly some of these themes globally, the idea that AI is going to create winners and losers, these are all best expressed through active management, selecting those winners versus the losers, something that skilled active managers can do.

We think that this is going to be a year where active management begins to prove its worth once again.