2026 Market Outlook

The Chiswick Calendar is pleased to share Killik & Co’s guest blogs on how best to plan and save to acquire the wealth to achieve your goals.

Killik & Co is Chiswick’s local wealth manager, based on Devonshire Road, recognised as a 5-Star Wealth Manager at the 2025 Investors’ Chronicle and Financial Times Celebration of Investment Awards.

Need to know:

• The technology sector may take a breather in 2026, but we don’t foresee an AI bubble.
• As AI diffuses into the wider economy, the broader market should be a beneficiary.
• Expect volatility, but earnings growth and lower rates should be supportive of the market.

It is often said that markets climb a wall of fear and 2025 was no exception. The broad indices delivered another positive year (now three years in a row) against a backdrop of rolling pessimism, in which the CNN Fear & Greed Index spent 20% of the year at ‘Extreme Fear’.

A global race to lead in AI.

If 2025 was all about the race for AI dominance, investors are now increasingly scrutinising the unprecedented capital requirements, as industry giants move from pilot projects to the large-scale physical deployment of the data centres required to power AI.

OpenAI – which was the early leader in this race – has drawn scepticism given the level of its capital expenditure commitments to 2030, estimated to be as high as $1.4trn. Given this is a business that will likely exit 2025 with a revenue run rate of $20bn, investors will continue to question the company’s ability to deliver on its promises.

Adding to OpenAI’s difficulties is the emergence of Alphabet’s Gemini 3 as a serious (and well-funded) competitor, which means that OpenAI is no longer in a race of its own.

This intensity of competition with AI is of course good news for the users, and as the technology diffuses into the wider economy, we expect the industrial, financial and healthcare sectors in particular to benefit.

However, this does not mean that the AI technology story (4th Industrial Revolution) is over for investors. While there are certainly pockets of overvaluation within the sector, valuations in the main are anchored by strong earnings and we are a long way from the dizzy valuations reached in March 2000, that preceded the internet crash.

Therefore, whilst it wouldn’t surprise us if the tech sector took a breather in 2026 after such a strong run, we continue to believe that the AI revolution has further to go and that talk of bubbles is premature.

Whilst a broader rebalancing would be positive for the longer-term health of the market it could make for a volatile environment, and it is worth noting that the market’s performance during US mid-term election years is historically the weakest.

Against this backdrop we expect the US economy to continue to show resilience, with GDP growth of 2.5% possible in 2026, helped by lower rates and strong (AI led) productivity growth.

The economic outlook for the UK and Europe has softened.

The outlook for the UK and European economies is less positive, but nonetheless we expect the broader indices to benefit from the higher exposure to non-tech sectors such as pharmaceuticals, financials and in the case of the UK, commodities.

We also expect Emerging Markets to continue their recovery in 2026, given the relatively attractive valuation (MSCI Emerging Markets Index, forward PE of 13.2x vs. MSCI All Country World Index ACWI 19.1x) and the tailwind of lower US rates and a weakened US dollar.

The global political backdrop remains unsettled.

As for things that could go wrong, we again expect a global landscape of controlled disorder to remain, as the post WWII order continues to be challenged and whilst a ‘deal’ between Ukraine and Russia is always possible, Venezuela has now also joined the list of potential global flash points.

The US Supreme Court’s decision on the validity of the Trump Tariffs, and the announcement of a new Federal Reserve Chair (both due early in the New Year), are also events that have the ability to move markets.  This sits alongside the bond market’s tug of war with fiscal discipline and ongoing concerns emanating from the opaque world of private credit.

The good news is we have been here before, and while there are always reasons to be negative, earnings and interest rates (read Federal Reserve) drive markets and the current consensus is for double digit earnings growth from the S&P 500 in 2026 (and 2027).

Alongside productivity gains and falling rates in the US (and UK), we expect this to be supportive of a continued Bull Market in 2026 – although much like 2025, the trajectory could at times be choppy and laboured, which means diversification will be critical.

Against this backdrop it will be as important as ever, to remain focussed on the long term and to avoid trying to time markets, as games are won not by those who swing hardest, but by those who never stop holding the bat.

The Bottom Line

Don’t be distracted by short term noise and remain focused on the long-term.

Killik & Co

Killik & Co is an award-winning, independently owned wealth manager that has been helping families save, plan and invest for over 35 years. We opened House of Killik Chiswick on Devonshire Road in 2023 – a welcoming space for local residents to explore their financial ambitions.

Whether you are thinking about retirement, supporting the next generation, or simply want to make your money work harder, we provide clear, straightforward guidance across investing, pensions, tax planning and more. There’s no need to book ahead, and there’s no charge for an initial conversation – just drop in and see us on Devonshire Road, or email chiswick@killik.com.

 Published on 2nd January 2026 at 12:00pm. The value of your investments may go down as well as up. Tax treatment depends on individual circumstances and may be subject to change in the future.

Killik & Co

Killik & Co is an award-winning, independently owned wealth manager that has been helping families save, plan and invest for over 35 years. We opened House of Killik Chiswick on Devonshire Road in 2023 – a welcoming space for local residents to explore their financial ambitions.

Whether you are thinking about retirement, supporting the next generation, or simply want to make your money work harder, we provide clear, straightforward guidance across investing, pensions, tax planning and more. There’s no need to book ahead, and there’s no charge for an initial conversation – just drop in and see us on Devonshire Road, or email chiswick@killik.com.

The value of your investments may go down as well as up. Tax treatment depends on individual circumstances and may be subject to change in the future.

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