Macro View: Cautious Optimism for 2026

Goldman Sachs’ 2026 outlook reflects measured optimism toward global equity markets. According to the bank’s latest projections, global stocks are expected to deliver total returns of approximately 11% over the next year, including dividends. The forecast is based on consensus estimates as of early January 2026 and assumes a backdrop of moderate economic growth, easing interest-rate pressures, and resilient corporate earnings.

Rather than signaling a sharp equity rally, the outlook points to a market environment where equities continue to outperform bonds, particularly for long-term investors willing to tolerate selective volatility.

United States: High Targets, Realistic Expectations

The S&P 500 is assigned a price target of 7,600, implying an expected total return of roughly 11% in USD terms. Goldman’s view is supported by continued earnings growth, especially in technology, industrials, and financial services. However, the bank notes that valuations are no longer cheap, suggesting that future returns are more likely to come from earnings expansion rather than multiple expansion.

Europe: Moderate Returns with Currency Tailwinds

Europe’s STOXX 600 is projected to generate a total return of around 7% in local currency, but approximately 13% in USD terms. The difference reflects expectations for euro appreciation against the dollar. European equities benefit from relatively attractive valuations and higher dividend yields, though slower economic growth remains a structural headwind compared to the U.S.

Asia: A Clear Split Between Japan and the Rest

In Japan, the TOPIX index carries a more modest return forecast of about 4% in yen terms and roughly 7% in USD. This conservative outlook reflects expectations of stable but unspectacular earnings growth and a cautious monetary policy stance.

By contrast, Asia Pacific ex-Japan stands out with an estimated total return of 12%. The region benefits from stronger growth dynamics, technology exposure, and domestic consumption trends, positioning it as one of the most attractive equity regions heading into 2026.

Bottom Line: Equities Remain Central, but Selectivity Matters

Goldman Sachs’ projections reinforce the view that equities should remain a core component of global portfolios in 2026. That said, this is no longer a broad-based rally environment. Geographic diversification, currency awareness, earnings quality, and disciplined risk management are expected to play a much larger role in driving returns.

In short, 2026 looks less like a “buy everything” year and more like a market that rewards thoughtful positioning and long-term strategy.