Swiss private bank Bank J Safra Sarasin shares its insights on the macroeconomic outlook and asset allocation, indicating a preference for US and emerging market equities, and gold.

Like a number of wealth managers, Claudio Wewel, FX strategist at Bank J Safra Sarasin continues to favour emerging market equities in 2026, driven by tech, despite higher oil prices amidst the Middle East conflict.

Wewel said that emerging market equities were the top performers, rising by close to 15 per cent in April, followed by US equities. “Both have been largely driven by the stellar performance in the semiconductor space, which continues to benefit from the buildout of AI-related infrastructure,” he said in a note this week. “European and UK equities lagged. Fixed income markets stabilised as policy rate hike expectations moderated, while gold extended its recent consolidation.”

“The US economy continues to demonstrate robustness, with above-trend growth, supported by expansionary fiscal policy and AI-related capital expenditure. Given energy self-sufficiency, the growth impact from higher oil prices should be less severe in the US than in other advanced economies,” Wewel continued. The inflation impact, however, is more visible. He expects US inflation to reach 3.5 per cent in 2026, while GDP growth should moderate to 2 per cent.

Wewel believes that the euro area remains more vulnerable to the energy shock than the US, given its dependence on imported energy and the higher weight of energy-intensive sectors. “Germany’s large fiscal programme will continue to support demand, but higher oil and gas prices are a key risk to the recovery and have begun to weigh on sentiment indicators,” he continued. For the current year, he expects euro area growth to moderate to 0.9 per cent and inflation to increase to 2.4 per cent. He expects the European Central Bank (ECB) to hike rates in June and September to ensure that inflation expectations remain well anchored. The UK economy looks more fragile, with weak growth, high energy sensitivity and limited policy support. As a result, he expects the Bank of England to hike only once in 2026.

Wewel highlighted that Asia is disproportionately exposed to the closure of the Strait of Hormuz, as many economies rely heavily on Middle Eastern energy imports. Japan faces a difficult mix of looser fiscal policy, elevated inflation and higher import costs. Still, he expects the Bank of Japan to hike twice this year, although the war is reducing the case for further tightening in 2027. “China is better positioned than most oil importers. It is the world’s largest crude oil importer, but oil accounts for only around one-fifth of its energy consumption, and retail fuel-price controls limit the pass-through to consumer inflation,” he said. Exports, especially green-tech goods, remain strong, while new investment projects should support domestic demand. He expects China's growth to reach 4.5 per cent in 2026, with inflation rising to 1.5 per cent.

Equities
“Global equities have risen to a new all-time high in April, with the US and emerging markets outpacing Europe and Japan,” Wewel said. He favours emerging market and US equities, as emerging market earnings are supported by Taiwan and Korea’s technology cycle and should benefit from a weaker dollar later this year. Regionally, he is more cautious on the euro area after its strong run and on Japan, where high valuations and the high sensitivity to the yen increasingly suggest downside risks.

In terms of sectors, Wewel prefers technology, communication services, utilities and healthcare. He is less constructive on staples, where valuations look stretched and he is cautious on energy, as oil prices should normalise towards year-end.

“The financial results from the reporting season that has just begun are meeting high expectations and point to a generally positive growth momentum. The high oil price, however, remains the greatest risk to the global economy, although the impact varies across different regions,” Wewel continued. For this reason, he has taken profits and reduced his equity allocation slightly. Nevertheless, he remains slightly overweight in equities and slightly underweight in bonds. He sees the outlook for duration improving, although carry is likely to remain the main driver of returns in 2026. He retains a preference for intermediate maturities of five to seven years. Credit spreads have widened only moderately and remain close to historic lows. Wewel stays neutral on credit, as current spreads do not yet justify a structural underweight.

Within equities, he continues to favour emerging markets. He also maintains slight overweight positions in gold and commodities. His increased cash holdings allow him to seize opportunities in this dynamic market environment.

Wewel is not alone in his views. Mark Haefele, chief investment officer at UBS Global Wealth Management, believes that Asia's resilience should continue amid strong earnings and appealing valuations. “Asia Pacific has led the gains across global equities this year, with the MSCI Asia ex-Japan index rising 16 per cent year to date,” Haefele said in a note this week. Absent of a prolonged energy shock, he believes this resilience can last. Structural forces such as the AI boom continue to be a powerful growth engine for the region, and most Asian economies remain on a solid growth trajectory. He continues to see a strong case for Asia Pacific markets, including China and South Korea, and believes that investors should consider opportunities beyond the US for diversification. In line with a number of wealth managers, Edmund Shing at BNP Paribas Wealth Management also favours gold and emerging market equities in 2026, despite volatility arising from the conflict.

Although US stocks declined on Monday as renewed tensions in the Middle East pushed oil prices higher and heightened concerns about regional instability, Haefele also maintains a positive outlook for US equities. He sees opportunities across financials, healthcare, industrials, utilities, and consumer discretionary. He believes that there is room for US equities to move higher by the end of the year, as corporate earnings continue to show strong profit growth. US equities remain near record levels and big tech results last week confirmed sustained AI demand.