After a good 2025, the groundwork has been laid for strong economic growth this year as well. The headwinds the market currently faces are largely familiar from last year, but at the same time, new tailwinds have emerged.
Last year was strong in both the equity and fixed income markets, although in a new way compared to previous years. This was particularly evident in the equity markets, where winners were found in new areas and new themes. Unlike in previous years, the Helsinki Stock Exchange performed strongly also on a global scale, driven especially by large Finnish companies.
Strong results were also seen elsewhere during the year. The European stock market performed well overall, and emerging markets, led by South Korea and Taiwan, also rose strongly during the year. Measured in index returns, the USA nearly reached Europe’s level, but the depreciation of the dollar, especially in the early part of the year, weighed on the euro investor’s dollar-denominated returns throughout the year.
The markets have entered the new year from a relatively similar situation as a year earlier. But what three market themes should investors keep an eye on in 2026?
Global growth prospects remain strong as we head into 2026. The USA has traditionally been a very consumer-driven economy, and its growth still relies heavily on consumption. Private investments, particularly in new data centres established around the theme of artificial intelligence, have emerged as another engine of growth alongside private consumption. The markets anticipate investments this year as well, and possibly even more and on a broader front than before – not just around the theme of AI.
In Europe, growth is particularly driven by investments in the defence sector and infrastructure. Consumers’ purchasing power is also at a good level, having improved due to last year’s slower inflation and a strong labour market.
Growth is also expected to continue in Asia, although the outlook in China is still not rosy. The worst phase of China’s real estate market crisis seems to be over, but consumers are still in saving mode. This has not yet been reflected on a broader scale across all emerging markets, however.
Last year, politics and the trade war had negative effects on the economy. In 2026, the trade war is expected to play a generally smaller role, and the markets anticipate more economy-supporting measures than last year. Last summer, a comprehensive legislative package was agreed on in the USA, and its positive effects are starting to become visible this year.
Monetary policy is easing globally, which markets expect will have positive impacts on economic growth, especially in Europe. Tariffs are still a wild card, however, and may disrupt the economy again in 2026.
The headwinds, on the other hand, are largely familiar from last year. In the USA, the employment situation has continued to deteriorate, which at worst could lead to a decline in consumer demand. A longer decline in the equity markets, for its part, could create a negative spiral that would also, through consumers, affect economic growth, since a declining equity market would in all likelihood weaken consumption. The loss of trust in government bond markets globally could, however, suddenly raise interest rate levels.
Breaking a long-standing pattern, the biggest winners in the equity markets were found outside the USA last year. In addition, value companies performed strongly for the first time in a long while, and small caps perked up at the end of the year. If growth prospects remain positive, the markets expect the rotation to continue this year, too.
In the fixed income markets, the new year largely looks like a repeat of last year, and expectations are similar. There are cross-currents in interest rate risk and credit risk levels. For the investor, key priorities are active credit risk selection and quick responses in potential volatile situations.
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