## 2026 Global Market Faces a New Pattern of "Stability and Risks Coexisting"

JPMorgan's latest analysis indicates that next year, the global markets will not follow a black-and-white trend. Against the backdrop of diverging monetary policies, the expansion of the AI supercycle, and severe market polarization, the global economy is standing at a delicate equilibrium—supported by resilience but also hiding recession risks.

### Why will 2026 be a "Year of Fragmentation"?

Global market behavior will be dominated by three forces: asynchronous monetary policies among countries, the ongoing AI investment wave, and the concentration of wealth and opportunities in a few companies. This "winner-takes-all" scenario means disparities within economies will further widen—some companies will see significant gains from AI dividends, while traditional industries struggle to recover.

JPMorgan's global market strategist states that this multi-dimensional differentiation is reshaping the macro landscape. Although the US economy shows strong capital expenditure, the employment market is already showing signs of fatigue; consumer spending in developed countries is clearly stratified—high-income groups continue to spend, while middle- and low-income groups tighten their belts.

### Market Outlook: AI Continues to Drive Growth, but Concentration Reaches Dangerous Levels

**Developed Markets Remain Resilient, Emerging Markets Catch Up**

JPMorgan forecasts that global equities will achieve double-digit growth in 2026. Driven by the AI supercycle, the S&P 500 index is expected to maintain a **13-15% super-trend growth rate** over the next two years. However, the beneficiaries of this growth are mainly in technology, communications, and other AI-driven sectors, while investors in traditional industries may face being "forgotten."

The Eurozone stock market shows signs of a turnaround. As credit conditions improve and fiscal stimulus gradually takes effect, corporate profit growth is expected to **exceed 13%**, mainly driven by operational leverage improvements and the dissipation of trade windfalls. Japan benefits from reforms pushed by Prime Minister Kishida, with companies likely to increase cash distributions, injecting new vitality into the market.

Emerging markets are well-positioned: local interest rates are declining, profit growth is accelerating, valuations are attractive, corporate governance is improving, and fiscal health is stable. China's private sector may show signs of recovery; South Korea continues to benefit from governance reforms and AI investments; Latin America faces significant growth opportunities amid strong monetary easing and policy shifts.

### Economic Growth: Risks Lurk, but No Immediate Explosion

**Employment Market Is the Real Hidden Danger**

While the global economy remains resilient, the key risk lies in employment. Concerns over trade conflicts and weak demand outside the tech sector have led to reduced hiring intentions. This **slowing employment growth** is eroding consumer spending power, especially in the US—wage growth is slowing, and stable inflation coupled with public sector pressures further suppress consumption.

JPMorgan estimates the probability of recession in the US and globally in 2026 at **35%**. However, if forward-looking fiscal stimulus can support the economy in absorbing current confidence shocks, employment and confidence may gradually recover in the first half of the year, with growth momentum re-establishing in the second half. The new wave of AI investments can also provide limited but crucial support.

### Inflation Inertia: Difficult to Dissipate in the Short Term

After the supply shocks caused by the pandemic and the Russia-Ukraine conflict dissipate, global inflation remains stable around **3%**, with little sign of significant decline. While trade conflict-related commodity price pressures may temporarily re-emerge, inflation inertia is expected to remain the main concern in the first half of 2026.

### Interest Rate Markets: The Era of Diverging Central Bank Policies

**Fed vs. Bank of Japan: Moving in Opposite Directions**

In 2026, developed economies are expected to grow at or above potential, but inflation will decline slowly. This will intensify the divergence in central bank policies— the Fed is expected to cut interest rates by **50 basis points**, while the Bank of Japan may tighten by **50 basis points**. Other developed country central banks may either hold steady or end their easing cycles in the first half.

However, risks remain: cyclical weakening in the US labor market could trigger rate cuts, but AI-driven growth may counterbalance this. Fiscal events in the UK could raise risk premiums, and political uncertainties are increasing.

By Q4, the yields on 10-year government bonds in the US, Germany, and the UK could reach **4.35%, 2.75%, 4.75%** respectively. The yield curves will show significant divergence.

### Forex Market: US Dollar Slowly Depreciates, Limited Room

JPMorgan's outlook for the USD in 2026 is **bearish**, but the decline will be smaller than in 2025. Concerns over weak employment and a high-yield environment will weigh on the dollar, but US economic resilience and inflation inertia will limit the downside.

**Euro Slightly Appreciates**, mainly supported by improved growth prospects in the Eurozone and fiscal expansion in Germany. However, if US data does not deteriorate significantly, the euro's appreciation will be moderate.

**Pound Sterling** may present "buy-the-dip" opportunities supported by steady domestic growth, improved global growth outlook, and a favorable carry trade environment. Yet, structural obstacles remain, making the strategy more tactical. The first half of the year could see a strengthening pound, but fiscal concerns may resurface in the second half, increasing depreciation risks.

**Japanese Yen** remains under pressure. As G10 central banks approach the end of their easing cycles, it will become more difficult for the Bank of Japan to curb yen depreciation through rate hikes or interventions. If the new government confirms an expansionary fiscal stance for FY2026, concerns over fiscal sustainability could further pressure the yen.

### Commodity Markets: Rebalancing Supply and Demand, but No Crash

**Oil: Surplus Absorbed, Prices Remain Moderate**

Global oil and gas demand is expected to increase by 900,000 barrels/day in 2026 and 1.2 million barrels/day in 2027. However, supply growth may be **three times** demand growth in 2026, reducing to about one-third in 2027. While this could create a significant surplus on paper, in reality, demand will rise (due to falling oil prices) and production will be actively or forcibly cut to balance the market.

JPMorgan maintains its forecast of **Brent crude prices averaging $58 in 2026 and $57 in 2027**, believing that maintaining this price level will require ongoing effort.

**Natural Gas Softens**, as new liquefied natural gas projects come online, global gas prices are expected to gradually decline. The European TTF gas benchmark price is projected to average **28.75 euros per MWh** in 2026 and fall to **24.75 euros per MWh** in 2027, both below current forward prices by 3-4 euros.

**Precious Metals Shine**: Gold is favored due to increased central bank purchases and strong investment demand, with a forecast of reaching **$5000 per ounce** in Q4 and an average annual price of about **$4753**. Silver is expected to rise to **$58 per ounce** in Q4, with an average price of 56 dollars. Platinum remains relatively firm in 2026, with a gradual recovery expected as supply balances improve.

**Agricultural Products: Increasing Hidden Volatility**

Recent implied volatility in agricultural commodities has risen. Although no significant shortages or supply pressures are expected in upcoming planting seasons (excluding livestock and some cocoa), global stocks-to-consumption ratios remain near multi-year lows. Low inventory levels mean prices are more sensitive to supply disruptions—risk of **inflation inertia** persists in agriculture. Weather disturbances could quickly amplify price swings.

### How Should Investors Respond?

In this new normal of "stability and risks coexisting," simple buy-and-hold strategies are unlikely to be effective. Investors need to reassess timing, structure, and risk tolerance, and adopt fine-tuned allocations amid high uncertainty. The divergence between AI beneficiaries and laggards will continue to widen, and cross-asset trends will become more asynchronous—presenting both challenges and opportunities.