Many investors would be surprised to learn that despite increasing 16%, the S&P 500 was one of the worst-performing major global indices in 2025. So when one of the most reliable indices slows its pace, and conflicting headlines push different market strategies, where should investors direct their money in 2026?  

Following the seismic shifts of the past few years, 2026 will see structural growth drivers, the reordering of global trade, and the lingering threat of market volatility. While the foundation of economic growth remains encouraging, we've identified seven key themes that demand close investor attention this year. As always, the importance of ensuring your portfolio is diversified in assets, geography and sectors to appropriately allocate risk remains crucial.

1. Continued focus on AI growth (but don’t forget about capital spending)

While artificial intelligence (AI) remains one of the most discussed topics in the investment world, we witnessed something interesting in late 2025 that will undoubtedly draw the attention of investors. Many technology and AI-related companies raised a significant amount of debt in the final months of 2025. This immense capital expenditure by leading tech companies is cascading across the entire technology ecosystem—from software and semiconductors to data centres, automation, and industrial applications. But what about the cost to get us to these benefits? Some of this debt will be used to fund the next leg of growth for companies like Nvidia, AMD, Microsoft, Alphabet, Amazon and Meta. Not only will these companies require funding to advance chip technology or cloud computing, other capital spending considerations are being considered to build out the infrastructure and plan for the energy required to fuel this growth. 

AI will continue to be a hot topic in 2026 and investors are increasingly looking for greater clarity on the inevitability of accelerated capital spending and when this spending will translate to revenue, profitability and cash flow growth.

2. The equity rally - can strong corporate earnings growth support the market rally?

With S&P 500 and the TSX Composite indices earnings expected to grow at 14% and 17%¹ respectively, it's not surprising there is continued investor optimism. Given the forward-looking nature of equity markets, a big question that investors are wrestling with at the moment is will these strong growth expectations be met or will earnings fall short and contribute to market weakness? While many investors recognize that valuations are relatively high, this means that maintaining strong earnings growth is even more important to support the market rally. Generally speaking, when market valuations are high, shareholders have less tolerance for those companies that fall short of growth or earnings expectations. 

The US economy is expected to receive the benefit of supportive monetary and fiscal policy in 2026 with easing interest rates and tax relief. This will undoubtedly support both consumers and businesses. We’ll also be keeping an eye on how businesses are showing growth. For example, it could be a function of increased demand or alternatively, companies can become more productive—perhaps due to AI efficiencies—and improve their profit margins. Companies that can maintain or expand margins through efficiency gains, pricing power, and technological adoption are positioned to drive growth and potentially justify elevated valuations.

3. Fixed income: Policy divergence and challenges in Japan

The fixed-income market is poised to offer compelling opportunities as major central banks around the world navigate different stages of the economic cycle. Sovereign debt levels will continue to be a concern for investors in 2026. While Canada is in great shape with the lowest 2025 net debt-to-gross domestic product (GDP) of its G7 peers, others such as Japan, Italy, France and the US each have net debt-to-GDP ratios near or significantly above 100%. Since GDP measures the total goods and services produced by a country, those countries with a total debt exceeding GDP are receiving more attention. This relatively high level of debt creates concern over a country’s ability to service its debt and the attention right now is focused on Japan. Not only does Japan have the highest debt-to-GDP of its G7 peers, Japan is also the largest holder of US Treasury securities. If Japan’s economy needs financial support, the country may be faced with a difficult decision to sell a portion of its US Treasury holdings to assist its own economy. 

Closer to home, the Bank of Canada recently held rates steady at 2.25% at its most recent announcement on Jan. 29, 2026. Relative to its G7 peers, Canadian rates will likely be more stable than others providing investors with more certainty in their fixed-income investments. Our ATB Economics team expects the Bank of Canada to hold rates steady in 2026.

4. Canadian mining industry 

With the US focused on diversifying its reliance on rare earth minerals and other natural resources from China, the US is re-positioning its supply chains. This should benefit mining-focused countries such as Canada. The TSX Composite materials sector represented 18% of the total index at year end 2025. This is second to only the financial sector in Canada. Canada ranks in the top 10 in a variety of critical minerals such as nickel, cobalt and lithium. Additionally, Canada is a global leader in potash and uranium production. Investors with positions in a broad-based TSX index fund should be aware of the relatively high exposure to the materials sector, which includes a significant number of mining companies.  

Precious metals have been receiving notable attention from investors given the rise in gold and silver prices. While silver has demand from industrial use, gold prices have been pushed higher as global central banks have been purchasing physical gold to diversify their reserves and hedge against inflationary pressure.

5. Tariffs and global supply chains 

The traditional model of seamless globalization is being rapidly redefined. Spurred by factors such as US protectionism and the strategic desire for resiliency, the movement is shifting from unfettered globalization toward localization and regional trade blocs. 

This macro trend is resulting in significant market fragmentation and strategic diversification. This fragmentation, driven by geopolitics, rising trade barriers, and the necessity of regional supply chains, is compelling investors to rethink the traditional "one global market" assumption. Strategically diversifying assets across different regions and sectors can serve as a hedge against emerging geopolitical risks. This means regions and companies will need to be agile in their supply chain management should they face trade barriers. 

6. Global oil markets are well supplied

The importance of the oil market to the western Canadian economy is undisputed. The outlook for global oil markets suggests a scenario where supply outstrips demand, keeping pressure on prices. While OPEC+ continues to manage production quotas, continued global supplies suggest a surplus environment is likely to persist through 2026. This is reinforced by potential production influences, such as the gradual re-entry and increase of barrels from regions like Venezuela into the global markets. 

While it will likely be a number of years before Venezuela gets back to producing over three million barrels per day, its current product of 800,000 barrels per day is a fraction of the country's potential production. While the heavy, sour crude oil of northern Alberta is comparable to crude oil in Venezuela, investors should recognize that the primary end points for Canadian crude oil are the US Rocky Mountain and Midwest district refineries and that the oil produced in Western Canada does not meaningfully supply Gulf Coast refineries. This means crude oil produced in Venezuela is not expected to compete with Canadian crude in the US Rocky Mountain and Midwest supply districts.

7. Geopolitical risk and volatility concerns

Markets and investors crave an element of certainty, therefore both policy uncertainty and global security threats have a significant impact. We witnessed one of the most volatile markets in 2025 since the global financial crisis. One of the most viewed measures of market volatility is the Chicago Options Exchange Volatility Index (VIX). The factor that drove volatility in 2025 was largely trade-policy-related rhetoric. This in turn forced market analysts to revisit a number of assumptions that were built into economic and company forecast models. In many cases, shifting supply chains and changes in costs, pushed both equity and bond markets higher and lower.