Rob Lovelace on the year ahead | 16 February 2026 | Capital Group

The market enters 2026 having navigated a "wall of worry" including trade wars, geopolitical conflicts, and AI bubble fears. Despite these pressures, the fundamental outlook remains supported by corporate earnings.

• Market Context: The market follows three consecutive years of double-digit returns. Lovelace approaches 2026 with a "blank piece of paper" but notes that earnings growth shows no signs of slowing down.
• The Global Reordering: A dramatic "rewiring" of global trade and political orders is underway. Europe is increasingly prioritizing onshore manufacturing and defense.
• U.S. vs. International: While the U.S. has maintained a price/earnings multiple nearly twice that of the rest of the world for several years, a balancing act is beginning. International stocks outpaced U.S. stocks over the last year, a trend likely to persist as earnings outside the U.S. catch up and U.S. policy uncertainty (specifically regarding tariffs) reduces domestic investment.

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