JPMorgan has kicked off the year with a broadly positive outlook for global equities in 2026, but with a note of caution.
The investment bank said markets may be enjoying a rare moment of calm, but warned this could either herald a sunnier-than-expected year or signal the "eye of the hurricane".
The bank’s economists expect a strong first half, with GDP growth steady or improving across all major regions, supported by early-year stimulus, particularly in the US and China.
Its equity strategists are forecasting double-digit gains across developed and emerging markets, citing solid earnings growth, lower interest rates, and receding policy headwinds. The US, they say, remains the global growth engine, thanks to an ongoing AI supercycle.
Despite this upbeat backdrop, JPM notes that investor expectations are surprisingly uniform. Of the 130 investors it met between October and December, not one predicted a down year in 2026, but nearly all forecast gains of less than 15%.
Against that consensus, the US investment bank recommends turning to SMid-caps, the small and mid-cap companies that have lagged large caps over the past four years.
Valuations look attractive, fundamentals are improving, and the segment offers potential upside even if the wider bullish narrative stumbles.