Deutsche Bank is gearing clients up for an eventful 2026 and warns that it certainly will not be boring. In his note, Jim Reid highlights that rapid investments in artificial intelligence and its implementation will continue to shape market sentiment. Given the pace of technological change, the analyst finds it unlikely that this will not lead to a notable increase in productivity — it is just a matter of time.
However, the bank warns that markets will oscillate between optimistic and pessimistic narratives, and investors should not expect a decrease in volatility. Despite the overall positive tone of the forecast, Deutsche Bank singles out one particularly bright target: an S&P 500 target level of 8,000 points by the end of 2026, proposed by the chief strategist for US equities. Reid notes that this forecast deserves attention due to the expert's strong track record.
Global growth in real terms is expected to match the dynamics of 2024-2025 closely, but key drivers will change. Deutsche Bank predicts that the US economy will gain momentum against a backdrop of lower trade uncertainty, rising incomes from tax incentives, and broader economic growth beyond the AI investment wave. Germany, after several years of weakness, is expected to show one of the most impressive recoveries among major economies, thanks to new fiscal measures.
Inflation, while continuing its path toward a steady decline, remains above pre-pandemic levels. The bank expects just two further rate cuts from the Federal Reserve before a pause. AI remains the main focus for investors: analysts forecast S&P 500 earnings per share around $320 and a target index level of 8,000 points. In the currency market, Deutsche Bank anticipates further weakness of the US dollar, complementing the picture of next year as volatile but potentially highly profitable for those prepared for turbulence.
