Morgan Stanley Warns of Market Disruption in 2026: A Striking Scenario for Risky Assets
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Amidst expectations of moderate global growth and declining inflation, but acknowledging increasing economic uncertainty, morgan Stanley has released its forecasts for the dollar, euro, and gold through 2026. The firm’s analysis points to a possibly important shift in market dynamics,especially for riskier investments.
Artificial Intelligence: The catalyst for Change
A key driver of Morgan Stanley’s bullish outlook is the accelerating investment in artificial intelligence. The bank’s report suggests this surge will fuel increased risk appetite among investors. “A strong 2026 is coming for risky assets,” analysts stated, citing supportive policy environments and a generally positive economic outlook as contributing factors.
Specifically, Morgan Stanley projects the S&P 500 index to reach 7,800 points by the close of 2026, representing a projected increase of 16 percent from current levels. This optimistic forecast is predicated on a belief that smaller-cap US companies will outperform their larger counterparts, and that cyclical sectors will lead the way, surpassing the performance of more defensively positioned industries.
The bank also attributes anticipated gains to the Federal Reserve’s increasingly dovish monetary policies, which are expected to further bolster stock market performance.
Currency and commodity Outlook: Dollar Dip, Gold Surge
Morgan Stanley’s currency predictions indicate a fluctuating dollar index. The forecast suggests an initial decline to 94 in the first half of 2026, followed by a rebound to 99 by year-end.
Gold Poised for Continued Record-Breaking Performance
Perhaps the most striking prediction concerns gold. Morgan Stanley anticipates the price of an ounce of gold to climb to $4,500 next year, continuing its recent streak of record highs. In contrast, the firm expects Brent oil prices to stabilize around $60 per barrel, influenced by a balance between global supply and demand.
European Markets to Benefit from US Recovery
The positive momentum observed in European stock markets this year – a gain of approximately 12.5 percent – is expected to continue,driven by the broader economic recovery in the United States. As an inevitable result, Morgan Stanley has increased its target for the MSCI Europe index from 2,250 to 2,430.
