Morgan Stanley 2026 Outlook: Global Economy to Experience Moderate Growth Alongside Deflation, Uncertainty Remains High, but US Stocks Will Continue to Outperform Global Markets
BlockBeats News, November 17th, according to Reuters, Morgan Stanley expects U.S. stocks to outperform global markets by 2026 and is optimistic about the performance of global equities relative to credit and government bonds. Its supporting logic comes from the growth in artificial intelligence-related capital expenditure and an improving policy environment.
"Driven by microeconomic fundamentals, accelerated AI capital expenditure, and favorable policies, risk assets are poised for strong performance in 2026," the Wall Street investment bank pointed out in a series of global economic and strategic outlook reports released on Monday. Although the Trump administration's fluctuating tariff policy has led to continued volatility in global financial markets this year, most trade uncertainties are gradually dissipating as 2026 approaches.
The bank predicts that 2026 will see "moderate" global economic growth alongside deflation, but emphasizes that "uncertainty remains high, with outcomes potentially highly divergent," with the "U.S. becoming a key variable."
In addition, Morgan Stanley expects the S&P 500 index to reach 7800 points by the end of 2026, representing about a 16% upside potential from current levels, mainly driven by robust corporate earnings growth and AI-driven efficiency improvements. Under the influence of the Fed's dovish policy, U.S. small-cap stocks will outperform large-cap stocks, and cyclical sectors will outperform defensive sectors. The U.S. dollar index is expected to fall to 94 in the first half of the year, then rebound to 99 by the end of 2026.
The bank also predicts that the price of gold will reach $4500 per ounce in 2026.
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