Citi Wealth releases 1Q 2026 macro and market view: Staying grounded in a noisy world

Citi Wealth has released The Short and Long: Q1 Macro Investment View, a new, quarterly report designed to offer global, data-driven guidance to help investors navigate increasingly complex markets with confidence and clarity.

Following an unpredictable and sometimes volatile macro picture in 2025, Citi Wealth’s focus in 2026 is constructing dynamic portfolios with core positions – rather than shifting point-in-time forecasts – as a winning strategy to navigate volatile market cycles.

"We are constructive on the macroeconomic environment for 2026, with corporate profitability anchoring continued global growth, bolstered by favourable monetary and fiscal policy. Despite last year’s significant macro headwinds, global growth slowed only modestly, showcasing the resilience that companies in advanced economies have built into their balance sheets,” said Kate Moore, chief investment officer, Citi Wealth.

The report also emphasises the need for investors to stay grounded and objective in their market views, avoiding the pervasive risk of “narrative fitting.” In the first quarter of 2026 (1Q26), Citi Wealth cites five core convictions representing its highest-confidence views on the opportunities and risk in the current macro environment:

Monetary and fiscal policy should provide tailwinds to the global economy in early 2026, with the macroeconomic backdrop supporting corporate profits.

Current “elevated” valuations (particularly in the US) reflect index composition and healthy fundamentals, and do not give Citi Wealth pause in its equity allocations.

Capital expenditures (CapEx) and investments in AI infrastructure have opened potential opportunities both upstream in natural resources and downstream across specialised industrials.

Europe’s cyclical bias and stagnant productivity backdrop constrain its upside, while the US continues to offer more durable and predictable earnings growth.

A hawkish monetary policy tilt, disruptions in AI investments, and a ruling against tariffs could all be risks to bullish investor sentiment in 1Q26.

In detailing these views, Citi Wealth questions commonly held views about economic growth in 2025, such as the hype around fading leadership of mega-cap tech equities and attributing “all US growth” to AI.

“Despite growing fatigue in AI and Tech market discourse, fundamentals continue to favour the sector, and superior earnings growth and strong cash flow generation support tech as a long-term core holding,” said JP Coviello, head of portfolio strategy at Citi Wealth. “The sector comprises the majority of growth in US equity indices, and it is extremely difficult to be bullish on stocks without also being bullish on tech. We continue to believe that technology investment will power the global economy across global industries.”

For investors looking at medium-term opportunities, Citi Wealth’s report highlights several key investment tenets they need to keep in mind:

We do not believe in using valuations as an investment thesis. Many investors get intimidated by valuations appearing elevated, fearing a repeat of the Dot Com Bubble, but there are stark differences to previous periods of similar valuation levels.

Upstream and downstream opportunities in CapEx and AI infrastructure. An aggressive global CapEx pipeline and evolving AI needs support sustained demand for natural resources, specialized labor and niche industrial suppliers, and potential investment opportunities with it.

Structural drags and cyclical exposure leave Europe trailing US in earnings power. Earnings should drive the bulk of equity returns over the coming quarters, which leaves non‑US markets in a “show me” phase: margin and earnings delivery must now validate the higher multiples of 2025.

Re-disseminated by Wealth and Society