I think Morgan Stanley’s predictions are too bullish. While I expect the next year to continue to rally forward, I don’t think it is as rosy as painted. No one can be completely sure of what events are going to play out next year and the world is increasingly contentious and fragmented with each more obviously looking out for their own interest.
I do think that equities will outperform credit and government bonds as for most years and so most likely to come true. Earnings reports have been strong and definitely many expect rate cuts to happen next year as the Fed chair changes and is expected to align with trump’s wish of rapid rate cuts. This will be significant in driving the US stocks rally and AI definitely will be centre stage as the world capitalise on its potential and with the rapid advancements.
I think metals outperforming energy could go completely wrong considering how expensive metals already are. As uncertainty eases with wars ending and rate cuts, metals might plunge.
S&P, Dow Break Records: Would January Effect Last?
S&P 500 and Dow Jones both closed at record highs.
As January goes, so goes the year. When January closes positive, the S&P 500 is higher 89% of the time, with an average gain of 17% and an average maximum drawdown of 10.5%. When January is negative, average returns fall to -1.8%, with only a 50% hit rate and deeper market drawdowns.
How do you see 2026 unfolding?
Will U.S. equities continue to deliver double-digit gains, or lag behind other global markets?
Will AI leadership rotate toward memory stocks or SaaS companies?
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