Patrick Brechbühl, Head Equities & Alternative Investments, Swiss Life Asset Managers:

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The global equity rally is likely to continue into 2026. Monetary conditions remain supportive: Historically, equities tend to perform well during rate-cutting cycles, provided no recession emerges – which we do not expect at present.

Looser financial conditions and fiscal stimulus should outweigh the impact of U.S. trade policy. Earnings momentum also supports a continuation of the rally: Double-digit earnings growth is expected in the U.S. next year, with Europe and Switzerland only slightly behind.

«Our conclusion: the rally continues, but the air is getting thinner.»

While U.S. valuations are very high and the market remains concentrated in a few names, this structural risk should not be underestimated. Outside the U.S. – in Europe or emerging markets – valuations are generally fair. Valuations alone are not reliable timing tools and do not necessarily signal imminent corrections.

However, high valuations imply lower long-term return expectations. Several developments warrant close monitoring: a potential break in the AI narrative if returns on massive tech investments fall short of expectations – reminiscent of the late dot-com era – or signs of speculative behavior such as leveraged ETF flows.

Our conclusion: the rally continues, but the air is getting thinner.

Read next: Michael Bolliger, Chief Investment Officer Switzerland and Global Emerging Markets, UBS Global Wealth Management.