The war in the Middle East is driving a fundamental shift from efficiency toward certainty. The result: higher interest rates, slower earnings growth, elevated geopolitical uncertainty, and a changed central bank response to economic downturns. The consequences for financial markets and tactical asset allocation are substantial.
The bull market continues to be supported by strong growth and accommodative policy, but cracks are appearing beneath the surface. Is it time to reposition the tactical asset allocation?
Investors continue to shrug off escalating geopolitical risks and the alarming rise in government debt burdens. Market sentiment remains exuberant, with valuations stretched to extremes, especially in the US. In our latest asset allocation update, we ask: Is this the moment to pivot to a deliberate contrarian stance?
Outlook for 2026 looks strong, but fundamentals are shaky
Monday, 22 December 2025
The consensus expectation is that shares will have another good year and monetary policy will be further loosened. This underestimates several risks that could undermine many of the pillars supporting economic growth and the stock markets. In this final asset allocation report of the year, we answer the question of what this means for the outlook for asset prices and tactical asset allocation.
