Guest opinion: The latest investment outlook for 2026 by Tom Becket, Chief Investment Officer, Canaccord Wealth
With a turbulent start to 2026, Tom explains how market movements affect Canaccord’s key asset allocation pillars below.
Surprising market resilience amid geopolitical risks
2026 started brightly for investors with markets soaring. This was followed by a period of volatility in March, which then gave way to one of the fastest, most powerful recoveries on record in April and early May.
The bumpy ride this year reflects renewed geopolitical risks – most prominently the conflict involving Iran – as well as inflation and energy price concerns. While these developments increase uncertainty, we believe the global economic backdrop is more adaptable than suggested.
We see an almost daily struggle in markets between the concerns around the war in the Middle East versus the confidence from powerful corporate earnings.
The global economy: slowing, but resilient
The key macro question is how far the Middle East conflict will slow global growth. Energy prices have risen but remain below the 2022 shock.
The US continues to drive resilience, with balanced labour markets and strong AI-led investment supporting activity and reducing the likelihood of a global recession, despite weaker regions.
However, oil shocks hit growth with a lag, meaning current resilience may reflect timing as much as fundamentals.
For now, the economy is supported by inventory drawdowns, fiscal support, precautionary demand, continued AI investment and expectations of easing energy prices.
Inflation: more volatile, but more contained
Inflation risks are rising as energy and transport costs feed through, but this differs from the post-COVID-19 surge. The current shock is smaller and economies are more resilient, with stronger supply chains and lower energy intensity.
While inflation will increase in the near term, we do not expect a sustained reacceleration.
Some pressures remain – particularly from supply constraints and higher input and freight costs – but these are currently offset by resilient demand and pricing power.
Interest rates: near the upper end of expectations
Central banks face uncertainty, with markets already pricing further tightening in Europe and the UK.
While additional rises are possible, we see limited scope for rates to move meaningfully higher unless there’s persistent inflation. The Bank of England may instead look through near-term inflation.
In the US, cuts are not imminent, but the next move is still likely downward.
Earnings are doing the heavy lifting in markets
The key question is why markets have remained resilient despite geopolitical stress. Both equities and corporate bonds are positive, with US equities leading a strong recovery.
The primary driver has been corporate earnings, which have been exceptionally strong and broad. Growth is no longer confined to large technology firms, with other sectors also contributing, supporting the durability of the cycle.
Some sectors face pressure from higher energy and supply chain costs, but these are currently being offset by strong demand and efficiency gains.
Valuations and positioning: an improved starting point
At the start of the year we suggested that valuations of both bonds and equities were ‘full but fair’. Those views haven’t changed. Equity markets have risen, but so have earnings expectations, leading valuations to be lower than they were late last year. This is positive.
In fixed interest (assets like bonds and gilts), risks around inflation and interest rates exist, but yields have increased to reflect this.
Looking ahead: cautious optimism, not complacency
There is no doubt that the global economy faces meaningful challenges, but there are also reasons for optimism.
For now, fundamentals justify a balanced, disciplined approach rather than a wholescale retreat from risk, but we need to remain patient, proactive and flexible.
Even in uncertain times, we continue to stand by our mantra that ‘volatility is the friend of an investor, not an enemy’.
Learn more
From Canaccord’s office in The Isle of Man, they provide expert investment management to clients, helping them achieve their financial goals. The company is well established in the local area, providing a high-quality personal service, backed by the resources of an international financial services group.
Canaccord works closely with a wide range of clients, including individuals and their families, trusts, business owners, as well as the professionals who support them.
Learn more about the Isle of Man office here
Important information
Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.
The tax treatment of all investments depends upon individual circumstances and the levels and basis of taxation may change in the future. Investors should discuss their financial arrangements with their own tax adviser before investing.
The information provided is not to be treated as specific advice. It has no regard for the specific investment objectives, financial situation or needs of any specific person or entity.
CGWIL is licensed and regulated by the Guernsey Financial Services Commission, the Isle of Man Financial Services Authority, and the Jersey Financial Services Commission. CGWIL is authorised by the Financial Sector Conduct Authority (FSCA) as a financial services provider in South Africa, FSP no. 48055. CGWIL is registered in Guernsey at Dorey Court, Elizabeth Avenue, St. Peter Port, Guernsey, GY1 2HT (number 22761).
