Outlook 2026: Bob Homan (ING Investment Office)
This text was originally written in Dutch. This is an English translation.
By Bob Homan, Head of ING Investment Office
What are the prospects for 2026?
'The economic outlook for 2026 is not bad in itself. Global growth will remain reasonable, but we expect a lean year for investors. In Europe, we foresee a slight acceleration in economic growth compared to the current pace. This is mainly due to the introduction of additional fiscal stimulus measures. However, we believe that this stimulus will ultimately fall short of expectations. In the US, too, we expect the economy to pick up slightly towards the end of 2026. For China, we assume stable growth of around 4.5%.
On balance, this results in a reasonable growth picture, in which corporate profits can increase. The consensus expectation for global equity earnings growth is 13%, but we consider this to be on the optimistic side. We are sticking to around 10%. On the interest rate front, we expect the Federal Reserve to cut interest rates further and the ECB to leave interest rates unchanged. Long-term interest rates may rise somewhat, mainly due to concerns about the sustainability of government debt. As a result, our yield expectations for bonds remain below the effective yield. Despite the tight spreads, we currently have a slight preference for corporate bonds.
Our main concern with equities is valuations. These have already risen considerably and we see little upside potential. If earnings growth expectations are revised downwards, this could even lead to slightly lower valuations. In that scenario, the expected return on global equities would be limited to the dividend yield. Within equities, we currently prefer emerging markets and companies that are benefiting from structural growth in artificial intelligence.'
Our main concern with equities is valuations.