2026 Stock Market Outlook: What You Need to Know
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2025 had its fair share of ups and downs, but it also created real momentum for the year ahead. Will we see this continue into 2026?
While no one can predict the future, some of the trends that guided markets last year are likely to remain key as we move into the year ahead. Here’s our round up of the global markets - let's start with the United States.
Three Years of Gains, and the U.S. Market Keeps Pushing Forward
The S&P 500 has now delivered its third year of stellar gains, leaving the index more than 90% higher than when the current bull market began in 2022. It’s an impressive run to say the least. Stocks were powered by the continued enthusiasm about tech and of course, the AI boom.
The U.S. is set to remain the worlds growth engine, largely driven by a resilient economy and its AI super powered stocks like Nvidia, Microsoft, Oracle and Tesla.
The Fed is expected to lower rates and with earnings trending higher, it's potentially good news for stocks. That said, global politics are always a concern and trade agreements like the US-Mexico-Canada set to expire could have an impact, as well as the election later in the year.
You can invest in the S&P 500 through our All American ETF. If you prefer single or fractional shares, you can invest in a wide range of U.S. assets.
When investing, your capital is at risk. The value of investments can go down as well as up, and you may not get back what you originally invested. This is not a recommendation to buy, always do your own research. Past performance is not an indicator of future gains.
The UK Starts Strong: FTSE Milestones
After a strong year for UK markets, 2026 has begun with a rather monumental moment: the FTSE 100 has climbed above 10,000 points for the first time in history. It rose more than 21% in 2025 and surprisingly outperformed the S&P 500.
Some of the key sectors that pushed the FTSE to new heights were from rising commodities like gold, defence companies lifted by higher global spending, and well‑known UK brands such as Currys and Next delivering some rock-solid share price growth. More traditional “steady” sectors, like insurance and utilities, saw gains from the uncertainty of the markets that plagued the year.
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It’s also important to remember that the FTSE 100 isn’t a pure reflection of the UK economy: around three‑quarters of its revenue comes from overseas. This means that a weaker pound does not have as much of an effect on the FTSE 100.
Some household brands like Next had a strong year, while Burberry upped its game and returned to growth after back‑to‑back losses. Others struggled, including nation favourites Greggs, Diageo and WH Smith.
Interest rates are expected to fall slowly this year, and if the Bank of England cuts rates more rapidly it could help boost the economy - but economic growth still looks weak. AI adoption is happening at a faster rate and making improvements to many industries.
You can invest in the FTSE 100 through our British Bulldog ETF. If you prefer single or fractional shares you can invest in a wide range of UK shares.
When investing, your capital is at risk. The value of investments can go down as well as up, and you may not get back what you originally invested. This is not a recommendation to buy, always do your own research. Past performance is not an indicator of future gains.
The FTSE 250 also made steady progress, rising around 9% in 2025. Major players in the travel industry like easyJet with good earnings remained strong. The FTSE 250 isn’t the showstopper the FTSE 100 is, but it entered 2026 on firmer footing.
Europe Rallies Into 2026 With Room to Run
The STOXX 600 hit the ground running and climbed by almost 15%. Investors were encouraged by positive news about Germanys government spending changes, and growing trade concerns in the U.S., which pushed some money towards Europe.
European stocks still look cheaper than the U.S., with some potential for growth if things stay favourable. Being less tied to tech and AI, it could potentially hold up well if tech slows, though on the flip side, it may miss out if tech keeps rallying.
AI Remains a Powerful Market Driver
Artificial intelligence continues to dominate the global markets; no surprises there. With U.S. firms leading the AI spending spree, it's expected to reach roughly $3-4 trillion by 2030. The major hyperscalers - Microsoft, Alphabet, Amazon, Meta, and Oracle are expected to spend more than $500 billion in the next year alone, with AI infrastructure driving most of that total. It’s a stark reminder of both the ambition behind the AI race, and the inevitable pressures that come with it.
In saying that, these companies leading the charge are in a much better financial position than tech giants of previous years. This gives the tech run a better foundation than past tech booms.
Europe is also jumping on the bandwagon and benefiting from AI adoption. These improvements are popping up in manufacturing, and services and logistics, as businesses adopt smarter tools – it's a win-win.
Here in the UK, we’re seeing the positive impact as well: companies in healthcare, financial services and industrials are beginning to integrate AI solutions. It’s a clear sign that AI’s strong influence is broadening beyond the tech savvy Silicon Valley and transforming business on global level. AI is here to stay.
You can invest in AI through The AI ETF. If you prefer single or fractional shares you can invest in a wide range with Quilter Invest - check out the app.
When investing, your capital is at risk. The value of investments can go down as well as up, and you may not get back what you originally invested. This is not a recommendation to buy, always do your own research. Past performance is not an indicator of future gains
Final Thoughts
2026 is shaping up to be much like 2025; with steady global growth, easing inflation, and monetary policy changes like interest rates. It’s important to be mindful of the risks, and you should always prepare for stock market fluctuations. The key as always is to stay diversified and invest for the long-term to ride out the inevitable volatility of the global markets.
When investing, your capital is at risk. The value of investments can go down as well as up, and you may not get back what you originally invested. Tax treatment depends on individual circumstances and may change in the future.
Information provided by Quilter Invest is for informational and general educational purposes only and is not investment or financial advice.
Approved by Quilter Invest 13/01/2025
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