Global markets are expected to face another volatile year in 2026, as artificial intelligence, geopolitical tensions, and persistent inflation continue to influence investor sentiment, according to GSFM. GSFM is a wealth management firm that offers investment solutions to financial advisers, institutions, and sophisticated investors. The company partners with specialist investment managers to deliver a range of investment strategies.
Stephen Miller, an investment strategist at GSFM, suggests that lingering “stagflation-lite” conditions and heightened geopolitical risks are likely to limit equity gains, even with inflation showing signs of moderation. He noted that while ongoing strength in the macroeconomy and a gradual decline in inflation could broaden stock performance, investors must remain vigilant due to rich equity market valuations and the persistent macro and geopolitical risks.
Geopolitical factors are a significant uncertainty for markets in the coming year. Miller highlighted US President Donald Trump’s “Donroe doctrine” – a move towards spheres of influence among major global powers – and increasing tensions within NATO. He cautioned that this approach could divide the world into competing power blocs, potentially emboldening China over Taiwan and strengthening Russia’s position in the Baltics, especially as Europe becomes more politically fragmented.
Miller warned that if these spheres of influence also develop an economic dimension, it could further harm the global trading system through protectionist tariffs and retaliatory measures. This, in turn, would present a significant headwind for global economic growth, adding to the already complex challenges facing investors in 2026.
