PERSPECTIVES ECONOMIC AND ASSET CLASS OUTLOOK - MARCH 2026

Letter to Investors

Investment discipline beats “drama”

We continue to believe that 2026 will be a dynamic and generally constructive year for investors.

Geopolitical risks (for example around Iran), further changes to US tariffs, and the impact of artificial intelligence (AI) obviously all have the potential to weigh on market sentiment. But the global macroeconomic environment remains supportive, despite lingering worries about inflation: growth remains solid in the US, Europe and other major economies.

 Financial markets have also proved resilient so far in 2026: price movements have been observed more at an individual sector level than at an overall index level, and temporary setbacks have not developed into a sustained market correction. 

We expect positive overall market trends to continue, albeit likely accompanied by periods of heightened volatility. We called our annual outlook for 2026 “Investing in tomorrow – Opportunities and Risks” and this title still captures the central point: there are risks, but there will also be tremendous opportunities in a rapidly changing global economy. 

This report contains our latest macroeconomic and asset class forecasts for 2026. As these show, equity markets are predicted to eventually go higher in 2026. Expect equity rotations (as recently seen from growth to value stocks, from software to hardware companies, and to some extent from the US to emerging markets) to continue. But we would not see these as a reason to abandon market segments that are rotating out. Rather, such rotations are likely to offer opportunities to reduce existing concentration risks in portfolios and will open-up new areas for investment. In the corporate bond market, inflation, fiscal and other policy risks have not gone away and we would therefore continue to prefer high-quality securities to high-yield debt: although the latter will offer some interesting opportunities, they will be more exposed to changing earnings expectations. Gold may continue to represent a useful option for portfolio hedging. 

As we said in our annual outlook, “discipline beats drama” for investment. This remains very much the case: effective portfolio diversification is essential and needs to be complemented by active risk management. Staying invested remains key. We are always available to discuss the most effective ways to invest in what promises to be an interesting and productive year ahead.

Christian Nolting
Global CIO Deutsche Bank