Allianz Global Investors sees an environment full of contrasts in 2026 – with opportunities outside the US and a weaker dollar a possible catalyst for emerging markets and European bonds.
• Allianz GI sees Europe more favorably positioned than the USA for 2026
• A weaker US dollar should support emerging market bonds
• Gold mining stocks are cited as an attractive alternative to physical gold
Be careful with US stocks, opportunities in Europe
In his annual outlook published on November 25, 2025, Gregor Hirt, Chief Investment Officer Multi Asset at Allianz Global Investors, outlines a differentiated picture of the global markets. Despite tax burdens and protectionist policies, the global economy has shown surprising resilience – technology and artificial intelligence remain strong growth engines. The question, however, is how long this momentum will last.
Hirt urges caution when it comes to US stocks. While valuations are elevated, strong earnings growth in the technology sector continues to justify market strength. In the short term – in the next three to six months – many market participants are likely to use price setbacks as an opportunity to enter. Strategically, however, one is a little more cautious about US stocks due to high market concentration, demanding valuations and underestimated risks of stagflation – especially in the second half of 2026. Once markets realize that the valuations of AI and related technologies already reflect their true return potential, a normalization phase could follow.
Europe, on the other hand, offers a more favorable outlook. Earnings momentum is improving and Germany’s fiscal support should provide a noticeable boost. However, France is likely to remain on hold until the presidential election in 2027 – a source of uncertainty that will need to be monitored in the coming quarters.
Emerging market bonds as a top pick
In the area of fixed-interest securities, Allianz Global Investors favors bonds from the Eurozone – particularly German federal bonds – where inflation is under control and fiscal stimulus is likely to expand market breadth. However, the top pick remains emerging market debt: This asset class benefits from a weaker US dollar, growing domestic demand and relatively disciplined fiscal and monetary policy compared to developed markets.
As can be seen from the outlook, Allianz GI expects the US dollar to weaken again in 2026 – albeit more moderately than in 2025. This development will be driven by inflation differentials in favor of Europe and political pressure on the US Federal Reserve. This environment requires a reassessment of high US dollar exposures in portfolios. In stocks, investors rarely hedged their dollar positions, even though U.S.-listed stocks typically accounted for more than 70 percent of major indexes. Allocations for bonds also often leaned heavily towards US issuers.
When it comes to emerging market stocks, we remain constructive. The asset class is underweight, attractively valued and is supported by a weaker dollar. China continues to stimulate its economy and favors the AI and technology segment.
Gold and alternative hedges
According to Allianz GI, gold remains an important diversification tool, even if it could trade close to highs in the short term. You continue to hold positions, but also explore alternatives such as silver and gold mining stocks. The latter are attractively valued compared to the rise in the precious metal and benefit from lower interest rates, which relieves the burden on their capital-intensive operations.
Volatility is a central theme in the investment strategy. The past two years have shown below-average index volatility with sharp spikes in market corrections. Under the surface, however, individual stock volatility was elevated and low correlations between securities masked broader risks. This fragile dynamic could act as a catalyst for a more sustained correction if market breadth narrows or macroeconomic shocks occur. Hirt therefore emphasizes the importance of an agile approach: a well-diversified investment mix with an increased focus on active portfolio management.
D. Maier / editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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