In its 2026 market outlook report, Morgan Stanley points out that after much policy and macroeconomic uncertainty in 2025, the global investment environment is gradually shifting towards a relatively favorable state. The report argues that with a rare convergence of monetary, fiscal, and regulatory directions, coupled with the continued expansion of AI investment, market focus is shifting from macroeconomic risks back to the performance and narratives of various asset classes themselves. Against this backdrop, Morgan Stanley believes that 2026 will be a year in which risk assets regain dominance, with the US market being the most prominent example.
Benefiting from the AI wave in 2026, related investment concept stocks are worth paying attention to.
Morgan Stanley points out that the market environment has improved significantly in 2026 compared to the previous year. With global inflation cooling and economic growth gradually moving towards sustainable levels, businesses and the overall economy have the opportunity to benefit from productivity gains driven by AI.
The report also points out that it is uncommon for fiscal policy, monetary policy, and deregulation measures to work together simultaneously, usually only during economic downturns. However, this time it happened against the backdrop of continued economic expansion, allowing the market to shift its attention from macroeconomic risks to the assets and industries themselves, especially the narrative related to AI investment.
2026 stock market forecast: US stocks will continue to lead.
Regarding the stock market, Morgan Stanley points out that the US stock market is expected to continue to outperform other major global markets, and further predicts that the S&P 500 index has the potential to rise by about 14% in the next 12 months, significantly outperforming the expected performance of Japanese and European stock markets.
Morgan Stanley believes that U.S. corporate profit and cash flow growth will benefit from a number of factors, including a market-friendly policy mix, expected interest rate cuts by the Federal Reserve, a combined reduction of approximately $129 billion in corporate taxes between 2026 and 2027, as well as improved operating leverage, a recovery in pricing power, and efficiency gains driven by AI.
In contrast, European stock markets suffered from weak economic growth and structural challenges, resulting in limited overall momentum, while Chinese stock markets continued to face headwinds from slow progress in reflation. The Japanese market, however, received relatively positive reviews due to fiscal and regulatory reforms, coupled with domestic capital inflows.
2026 Forex Market Forecast: The US Dollar's Trend Will Be Volatile
Regarding the currency market, Morgan Stanley points out that the US dollar's performance in 2026 may exhibit a "weak first, then volatile" pattern. The US dollar is expected to continue its weak trend in the first half of 2026, but with changes in interest rate differentials and adjustments in risk premiums, it may rebound around the second quarter, symbolizing that this wave of dollar downtrends is nearing its end.
The report also noted that European currencies performed relatively strongly in 2025, but may weaken in 2026 as the European Central Bank and the Bank of England begin cutting interest rates.
2026 Bond Market Forecast: Optimistic about the Performance of Government Bonds in the First Half of the Year
In the fixed income market, Morgan Stanley suggests that government bonds may see a rebound in the first half of 2026 as central banks shift their policy focus from curbing inflation to policy normalization.
Taking the US as an example, the report expects the 10-year US Treasury yield to decline by mid-2026, before rebounding to slightly above 4% by the end of the year as the market adjusts. The yield curves in Europe and the UK may also steepen, but the magnitude of the change is expected to be less than in the US.
The performance of the credit market in 2026: AI financing demand becomes a key variable.
Morgan Stanley points out that the core theme of the credit market in 2026 will revolve around the massive financing needs of the technology industry and AI infrastructure. The report estimates that future capital expenditures related to data centers could reach $3 trillion, but the actual investment rate is currently less than 20%.
In this context, debt issuance in the technology sector is expected to increase significantly, potentially widening investment-grade bond spreads. In contrast, high-yield bonds, less affected by the AI financing boom, may outperform.
In addition, Morgan Stanley also pointed out that the credit market will continue to support M&A activity in 2026, and the scale of M&A will still have room for growth in the coming years.
2026 Commodity Market Forecast: Bullish on Metals but Conservative on Energy
In the commodities market, Morgan Stanley expects gold to remain strong in 2026, mainly due to support from real demand and a rate-cutting environment.
Among base metals, copper and aluminum are considered relatively promising due to supply constraints. In the energy sector, Morgan Stanley expects Brent crude oil prices to fluctuate around $60 per barrel, with weak demand and increased supply putting pressure on prices, but geopolitical and logistical factors may still provide some support.
Regarding agricultural products, the report mentioned that soybean and corn prices may face upward pressure due to weather factors and tightening credit conditions in Brazil.
This article, Morgan Stanley's 2026 Outlook: Policy Environment Changes and Increased AI Investment, Market Focus Returns to US Stocks, first appeared on ABMedia ABMedia .
