What JPMorgan Is Telling Investors For 2026 (The Market Outlook)

The Smart Money Map for 2026 JP Morgan Outlook

Many investors are asking what 2026 could look like and where opportunities with attractive risk adjusted returns may emerge. While we do not believe in trying to predict short term market movements, as no one can do this with consistency, the aim of this article is to bring together institutional research to help investors form their own views.

By understanding where large pools of capital are moving and which themes are gaining traction, investors can better assess where opportunities may lie heading into 2026.

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips

The Year of Selectivity

Starting with JPMorgan, the firm’s Head of Global Research, Hussein Malik, remains constructive on global equities into 2026. JPMorgan expects double digit equity market gains across both developed and emerging markets, with China and India highlighted as key emerging economies that could increasingly challenge US market leadership.

From a macro perspective, the bank assigns a 35% probability to a recession and expects sticky inflation to remain a prevailing theme. Most developed market central banks are forecast to remain on hold or conclude their easing cycles in the first half of the year, setting the backdrop for equity markets in 2026.

The outlook remains mixed. Inflation is currently sitting around 2.7 percent and appears likely to remain sticky, which complicates how the Federal Reserve approaches longer term interest rate decisions.

These decisions have meaningful implications for global equity markets. As a result, we believe 2026 is likely to be a more volatile year, particularly following the strong gains already recorded and elevated market valuations.

What a 35% recession probability actually means

By several valuation measures, the US equity market is trading more than two standard deviations above its long term average, suggesting it is strongly overvalued relative to GDP.
This signals that risks remain elevated. However, history shows that markets can stay expensive for extended periods.

Unless a major catalyst emerges, such as a severe geopolitical shock, a US debt event, or a sharp slowdown in AI related investment, there may be little immediate trigger for a broad market unwind, even though many investors would agree that a pullback would be healthy over the longer term.

A common theme emerging across institutional outlooks is that optimism for 2026 is less about valuation expansion and more about earnings growth continuing as policy rates gradually ease.
JPMorgan, in its year ahead outlook, points to a shallow easing path, with the macro environment expected to remain supportive but more selective in how markets are rewarded.

This view aligns with the baseline outlook from the International Monetary Fund, which forecasts global economic growth of around 3.3 percent in 2026, implying no global recession under its base case.

However, analysts are increasingly cautioning investors to expect larger market swings. While the base case remains constructive, 2026 is widely seen as a year where returns are driven more by underlying earnings delivery and where elevated valuations leave less room for error.

What are some mental frameworks and areas to focus for 2026

• Shift mindset from beta-driven gains to earnings-driven returns
• Build portfolios to tolerate higher volatility and make sure to hold a cash position
• Be disciplined with entry points and expectations
• Exposure to emerging markets like China and India

The Investors takeaway for preparing for 2026

Regardless of whether you are growth focused or value oriented, preparation for uncertainty is critical heading into 2026. We believe it is constructive for portfolios to hold a 10 to 20% cash allocation. This provides flexibility to take advantage of market volatility when opportunities emerge.

Recent market moves highlight why this matters. The Nasdaq 100 fell around 20% between 19 February and 8 April, before rebounding by approximately 53%. Investors with available cash were able to act decisively during that drawdown, rather than being forced to sit on the sidelines.

In addition, emerging markets continue to show stronger growth momentum, particularly China and India. For investors with portfolios heavily concentrated in Australia and the US, gaining ETF exposure to these regions may improve diversification and long term return potential. As markets become more volatile and valuation sensitive, flexibility and diversification are likely to be key advantages.