Citi Global Equity Road Ahead: The Bull Market Continues
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Citi forecasts that global equities will continue their upward trajectory in 2026, projecting the MSCI All Country World Index will reach 1,360 by year-end. This target implies roughly 13% upside potential. Consensus estimates show global earnings per share growth accelerating from 11% in 2025 to 14% in 2026, with positive growth contributions anticipated across all major regions and sectors. Notably, European ex-UK EPS growth is expected to surge from 1% to 10%.
Despite these robust earnings expectations, market valuations remain stretched. The global forward price-to-earnings ratio currently sits at 19 times, marking the 90th percentile over a 25-year history. Citi acknowledges that this high valuation leaves little room for error if companies miss profit targets. However, a favorable soft-landing macroeconomic environment, positive earnings revision momentum, and expanding AI-related tailwinds should sufficiently underpin corporate profitability.
Citi expects the trend of diversifying portfolios into international equities to persist throughout 2026. Consequently, the firm maintains an overweight allocation to emerging markets and Europe ex-UK. Within global sectors, Citi prefers technology, financials, and healthcare, while downgrading consumer discretionary from neutral to underweight. Ultimately, the anticipated market rally will be driven primarily by EPS expansion rather than further multiple expansion.