As we look ahead to 2026, the macro environment remains supportive. Inflation is moderating, financial conditions are easing across many major economies, and corporate earnings remain resilient. Central banks are unlikely to move in unison, with the US Federal Reserve expected to ease gradually, while Australia still faces the possibility of further rate rises due to persistent inflation and a tight labour market. These differences in policy direction are likely to influence global market sentiment throughout the year. 

Several opportunities stand out. Falling interest rates in major economies should support activity and benefit sectors that are sensitive to financing costs. Corporate earnings have held up well despite softer patches in economic data, and credit markets continue to offer attractive yields, particularly in higher-quality segments. Investment linked to artificial intelligence remains one of the defining forces shaping markets. AI is becoming increasingly capital intensive, driving demand for infrastructure, hardware, software and energy systems. While financial benefits may emerge unevenly, the growing breadth of the AI ecosystem presents opportunities across a range of industries, not just among the largest US technology companies. 

At the same time, a number of risks warrant attention. Valuations across major sharemarkets remain elevated, leaving limited room for disappointment if earnings growth slows. Policy uncertainty, especially around US tariffs and fiscal settings, may continue to affect global trade flows, inflation dynamics and currency markets. Bond markets may again respond sensitively to shifts in inflation expectations and fiscal pressures, even if yield movements were more orderly through 2025. Labour markets in some regions appear to be softening slightly, raising questions about the durability of household spending and broader economic growth.

In this environment, diversification remains essential, although it may need to be applied more deliberately as traditional relationships between asset classes become less predictable. Structural forces such as artificial intelligence, geopolitical realignment and evolving fiscal priorities are likely to shape investment outcomes for many years. A disciplined, fundamentals-driven approach, supported by thoughtful portfolio construction, remains the most effective way to navigate uncertainty. Although periods of market fluctuation are likely, moderating inflation, resilient earnings and continued innovation provide a constructive foundation for long-term investors as 2026 unfolds.