Global investment banking giant Goldman Sachs has released its outlook for worldwide stock markets, projecting a continued upward trajectory for equities in 2026. However, the pace of this growth is expected to moderate compared to the gains anticipated for the coming year.
Detailed Forecast for Global Indices
The firm's strategists have set a specific target for the MSCI All Country World Index (ACWI), a key benchmark for global stocks. They forecast the index to reach 1,150 points by the end of 2026. This represents a significant level, though the projected increase from the end of 2025 is more measured. The analysis suggests that while the bull market will persist, investors should prepare for a period of more tempered returns following a potentially stronger 2025.
Primary Drivers of the 2026 Market Outlook
Goldman Sachs identifies corporate earnings as the central engine for equity appreciation in 2026. The expectation is that company profits will continue to expand, providing fundamental support for stock prices. This earnings growth is seen as the dominant factor, potentially outweighing other market influences.
Another critical element in the forecast is the anticipated shift in monetary policy from major central banks, particularly the US Federal Reserve. The analysts at Goldman Sachs base their 2026 projection on the assumption of modest interest rate cuts by the Federal Reserve. This easing cycle is expected to create a more favourable liquidity environment for equities, even if the rate of growth slows.
Context and Comparative Analysis
This forecast for 2026 is part of a broader, medium-term optimistic view on equities from Goldman Sachs. The report implies that the double-digit percentage gains some markets might experience in 2025 are unlikely to be replicated in the following year. The shift to a slower pace reflects typical market cycles where periods of rapid expansion are often followed by consolidation or more gradual growth.
The reliance on earnings highlights a transition from markets driven by valuation expansions (higher price-to-earnings ratios) to markets driven by actual profit growth. This is generally considered a healthier and more sustainable foundation for a bull market. The note from Goldman Sachs serves as a guide for investors to manage expectations and align their portfolios for a maturing phase of the economic and market cycle.
In summary, while the direction for global equities in 2026 remains positive according to Goldman Sachs, the journey will likely be at a more leisurely speed. Investors are advised to focus on companies with strong and resilient earnings potential as the primary source of returns in the latter half of the decade.
