LIVE MARKETS-Invesco eyes 2026 market advance, looks outside US

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INVESCO EYES 2026 MARKET ADVANCE, LOOKS OUTSIDE US

In Invesco's 2026 Investment Outlook report, its chief global strategist, Brian Levitt, writes that lower U.S. interest rates and greater European, Japanese, and Chinese government spending should help "lift the global economy out of a mid-cycle slowdown.”

And Levitt notes that today's "macroeconomic environment supports an overweight allocation to non-US assets."

Levitt's logic is that developed markets outside the United States offer more attractive valuations and so more potential for multiple expansion with support from improving global growth and better earnings prospects. And he says that emerging markets represent the most compelling valuations while performance is expected to vary widely.

And of course every outlook piece has to give at least a nod to artificial intelligence.

But while Levitt notes that AI has dominated global equity returns over recent years, he says that he prefers to rebalance as concentration is at multi-decade highs. His rebalance involves looking at opportunities in markets that could potentially benefit from improving global growth.

With many other major central banks on hold, he notes that Federal Reserve cuts should "contribute to a soft dollar environment." And Levitt notes that falling costs for hedging U.S. dollar exposure will likely encourage investors to increase hedge ratios and exert downward pressure on the greenback. This will help support non-US assets.

(Sinéad Carew)

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