2026 Market Outlook

It was another strong year for financial markets, with many international share markets reaching record highs. Much of this momentum was driven by continued enthusiasm for artificial intelligence (AI), while interest rate cuts also supported asset values. Even so, 2025 wasn’t without volatility – including periods of disruption following President Donald Trump’s sweeping tariffs on major US trading partners.

As we look to 2026, a key debate remains: how much more monetary policy easing global central banks can deliver. Alongside ongoing discussion about the economic implications of AI, recent geopolitical tensions are likely to remain an important influence on markets. That said, many developed economies enter 2026 from a position of relative strength. Here are some key themes we are looking out for in 2026.

AI enthusiasm dominated global equity markets for much of 2025, with companies like Nvidia, Oracle and Taiwan Semiconductor surging to record highs. However, as the year drew to a close, concerns began to emerge in the AI trade with valuations near historic levels.

With valuations elevated, we see opportunities emerging in other markets such as the UK, supported by fiscal discipline and the prospect of further rate cuts. Parts of Europe also look attractive: Germany stands to benefit from a major fiscal package aimed at boosting growth, modernising its economy and strengthening defence amid geopolitical uncertainty.

After a lacklustre start to 2025, the New Zealand economy enters 2026 showing signs of momentum, supported by interest rate cuts from the RBNZ. Growth appears to be improving, unemployment may have peaked, and business confidence is trending higher.

In 2026, we expect a continued improvement in the economy, with the effects of rate cuts flowing through to cheaper lending and an increase in domestic investment. Additionally, the 2026 election could see fiscal packages aimed at building economic momentum.

Heading into 2026, investors face several defining themes, including AI and global trade tensions. Overall, volatility is likely to persist, making a focus on fundamentals essential.

At ANZ Investments, our priority is clear: to position portfolios for resilience to short-term market volatility and for long-term success. 2026 will be about building on the meaningful changes we made in 2025, which included the strengthening of our investment approach, guided by a refreshed set of investment beliefs. These beliefs emphasise long-term thinking, diversification, and clarity of purpose – recognising that every investment should have a role in the portfolio.

Despite the evolving investment landscape, our focus remains on thoughtful decisions to help our investors achieve their financial goals.