Four senior figures at St. James’s Place outline themes, opportunities and concerns for 2026.
JUSTIN ONUEKWUSI, CHIEF INVESTMENT OFFICER
Artificial intelligence is likely to remain a dominant theme in markets as we move into 2026, but investors will increasingly want to see how those benefits spread beyond a narrow group of mega-cap technology stocks.
The key question is not whether AI continues to grow, but whether its impact becomes broad-based enough to justify today’s high valuations.
From an opportunity set, we continue to see value in looking beyond the most crowded parts of the market. Emerging markets remain attractively priced relative to the US, and a weaker dollar can provide a meaningful tailwind by easing financing pressures and supporting balance sheets.
Over time, tilting portfolios towards cheaper asset classes has consistently improved long-term return potential.
The UK equity market also looks compelling. Valuations are attractive versus global peers, dividend yields are among the highest internationally, and the market’s exposure to defensive sectors such as healthcare and consumer staples can provide resilience during periods of market stress.
HETAL MEHTA, CHIEF ECONOMIST
Some of the major uncertainties facing markets, including trade and tariff concerns, may begin to ease in 2026. This could be supported by AI-related investment, productivity improvements and targeted stimulus in major economies such as the US and China.
However, risks remain. Concerns around inflation have not disappeared, and any perception that central bank independence is being weakened could quickly undermine confidence and market stability.
CARLOTA ESTRAGUES LOPEZ, EQUITY STRATEGIST
Investors will need to think carefully about whether companies with very high valuations can continue to grow quickly enough to justify them. If profitability broadens beyond the largest technology names, we could see a rotation towards companies that use AI rather than simply build it, creating opportunities in smaller companies and international markets.
There is also a growing disconnect between strong equity market performance and bumpy economic backdrop with lingering uncertainty. If enthusiasm continues to run ahead of earnings growth, the risk of a market correction inevitably increases.
GREG VENIZELOS, FIXED INCOME STRATEGIST, ST. JAMES’S PLACE
Bond markets still offer attractive income, particularly in high-quality corporate credit where fundamentals remain relatively strong. However, credit spreads are tight, which means there is less margin for error if economic conditions deteriorate.
Private credit has grown rapidly in recent years, and while issues have so far been isolated, the scale of the market means investors need to remain alert. Stress in this area could spill over into traditional bond markets if investors are forced to raise liquidity quickly.
Investors are likely to punish governments that pursue imprudent fiscal policies or undermine the independence of central banks. Bond markets are highly sensitive to credibility, and that will remain a key theme in 2026.
