Citi has forecast a further 10% upside for global equities in 2026, maintaining its bullish outlook for the year ahead despite high valuations. The bank sees broad-based earnings growth and AI-related tailwinds as key drivers of continued market strength.
Analysts expect global earnings per share (EPS) to grow by 14% this year, up from an estimated 11% in 2025. All major regions and sectors are expected to contribute positively.
However, Citi cautioned that global equity valuations are now in the 90th percentile historically, meaning companies will need to deliver on earnings forecasts to justify current pricing.
Even so, the macro backdrop is seen as supportive. A soft landing scenario, where inflation cools without triggering a deep slowdown, combined with solid earnings revisions and ongoing investor enthusiasm for artificial intelligence, should underpin equity markets.
Citi said it expects international diversification to remain a theme in 2026, and reiterated its 'overweight' call on emerging markets and Europe excluding the UK.
Favoured sectors include technology, financials, and health care, while consumer sectors are underweighted.