Market outlook 2026

Artificial intelligence is likely to continue to shape the stock market environment in 2026, particularly in the US. However, investors and analysts are likely to take a closer look at the business models of AI companies. A key factor here will be whether the massive investments will also lead to profits for the companies. This increasing differentiation is likely to lead to varying performance among AI stocks. Given the high valuations, investors are also likely to increasingly look for opportunities across the entire AI value chain. 

For example, we see selective opportunities among utilities. The expansion of data centres is leading to a massive increase in electricity demand. Utilities that focus on renewable energies, storage technologies and partnerships with hyperscalers are positioned best. 

However, the AI trend also harbours risks. Expectations for profit growth among technology companies are high. This carries the risk of disappointment. In addition to high valuations, market concentration on US stock exchanges and in global stock indices has also increased. Nine of the ten largest positions in the MSCI World Index are related to the AI boom and together represent more than a quarter of the entire index. This exceeds the combined weight of all companies from Japan, France, the United Kingdom and Canada. 

Although many large technology companies are based in the US, AI exposure is also present in equities from emerging markets. Valuations have also risen here, but less sharply than in the US. In addition, the continuing weakness of the US dollar is likely to give the market a boost in 2026 as well. 

Diversification away from the AI trend can be found on the Swiss stock market. It is also one of the few markets that are still relatively fairly valued. This results in an attractive risk premium. The quality tilt and the high dividend yield of around three per cent make Swiss equities particularly attractive in the low interest rate environment. By the end of 2025, political risks will also have eased significantly. The tariff deal between Switzerland and the US announced in November improves the situation for all Swiss exporters doing business with customers in the US. In December, Swiss pharmaceutical giants also agreed on new prices with the US government. This exempts them from possible pharmaceutical tariffs. Although the lower prices for certain US medicines reduce the profit margins for these products, this is likely to be offset by price increases for other medicines or in other markets. 

Swiss government bonds remain low-yield investments by international standards. Yields on ten-year government bonds are likely to remain in the low positive range for the foreseeable future. Although we do not expect them to slip into negative territory, it should be noted that Swiss government bonds with maturities of between one and three years are already generating negative yields. 

Yields abroad are significantly higher. However, those who wish to hedge currency risk pay so much that, after hedging, there is usually no additional return to be gained. Thanks to the Fed's expected interest rate cuts, currency hedging costs for investments in US dollars are likely to fall slightly over the course of the year. At the same time, however, long-term interest rates in the US are also likely to decline somewhat. For euro investments, we expect currency hedging costs to remain stable. Yields on German government bonds could rise slightly due to fiscal policy spending. However, the upside potential remains limited due to easing inflation. Government bonds, especially after currency hedging costs, therefore remain generally unattractive. 

Corporate bonds are also currently unattractive. Credit spreads are extremely tight. Investors are therefore hardly compensated for the additional risk of holding corporate bonds. 

In our view, this is unlikely to change for the time being. In the investment-grade segment, we expect credit spreads to trade sideways in the coming months. By contrast, spreads on high-yield bonds are likely to widen slightly. However, a significant rise in default rates is not expected. 

The yield potential of bonds for Swiss investors is therefore limited. However, bonds remain a sensible component of a mixed portfolio for diversification. 

Last year, Swiss real estate investments benefited from the SNB's interest rate cuts. Although no further interest rate cuts by the SNB are expected, the low interest rate environment remains. Real estate investments are likely to continue to benefit from this. While interest rates on ten-year government bonds are close to zero per cent, real estate funds continue to offer an attractive investment opportunity with their distribution yield. 

In Switzerland, we prefer the residential sector. This is because high demand, driven in part by immigration, is met with insufficient supply. 

However, real estate funds are now highly valued on average. The average premium in November 2025 was 36 per cent, almost 20 percentage points above the average since 1990. 

Demand from investors is therefore likely to remain intact in 2026. However, returns are not expected to be as high as in the last two years. 

The US dollar depreciated by around 11 per cent on a trade-weighted basis last year. 

A recovery for the US dollar is not expected in 2026. The Fed's interest rate cuts in 2026 are likely to cause short-term US real interest rates to fall to zero. This will also reduce the interest rate differential with many other currency areas, further diminishing the attractiveness of the US dollar. Donald Trump's erratic policies and his pressure on the US Federal Reserve are putting additional strain on the US dollar. The US dollar therefore remains under pressure against the euro and the Swiss franc. 

The euro, on the other hand, is benefiting from the expected revival of the German economy. Even if the planned fiscal policy measures do not increase productivity growth in the long term, they are significant and will support growth in the medium term, not only in Germany but throughout the eurozone. 

The Swiss franc benefits from low inflation, low government debt and political stability – all characteristics that are becoming increasingly rare and thus are solidifying its safe haven status. 

For the EUR/CHF currency pair, we expect the stable interest rate differential between the ECB and the SNB to support the current level. 

Alternative investments offer further sources of return and diversification for 2026. 

Gold performed particularly well last year. The precious metal rose by over 70 per cent in US dollars (just under 50 per cent in Swiss francs). This is the strongest increase since the end of the 1970s. Such a sharp rise is no longer expected in 2026. However, demand for the precious metal remains intact – on the one hand from central banks and on the other from investors. 

In recent years, central banks in emerging markets in particular have been buying more gold to build up their gold reserves, protect themselves geopolitically and become more resilient to possible sanctions. Given the continuing tense geopolitical situation, this trend is likely to continue. 

Persistently high inflation in the US, rising government debt worldwide and doubts about the long-term credibility of the US dollar are also likely to keep gold attractive as a hedge for investors. 

The picture for other commodities is mixed. Oil prices are likely to continue to fall. The US Energy Information Administration expects oil supply to grow faster than demand until 2026. One reason for this is the increase in production by OPEC+. Natural gas prices are likely to continue to rise, especially in the US, as the AI boom increases energy demand and thus drives up prices.

Catastrophe bonds also provide additional diversification in a mixed portfolio thanks to their low correlation with traditional investments. 

For the longer investment horizon, investments in private markets are interesting for institutional investors in order to capture an illiquidity premium and achieve additional diversification, among other things. However, manager selection is key here. The spread in returns between top-performing and less strong managers for investments in private assets is significantly higher than for traditional asset classes.