BYD has officially dethroned Tesla Inc (NASDAQ: TSLA) as the world’s top electric vehicle (EV) seller, after the latter’s Q4 deliveries came in down 16% year-on-year at 418,227 units on Friday.

In 2025, the Chinese automaker sold 2.26 million EVs worldwide – strengthening its lead in global sales – while TSLA delivered a total of 1.64 million only.

Still, BYD shares are up just 20% versus their 52-week low, while Tesla stock has roughly doubled over the past 10 months.  

Is BYD stock a better EV name than TSLA for 2026?

Shenzhen-headquartered BYD’s strength lies primarily in its diverse product portfolio.

Offering affordable compact EVs, premium sedans, SUVs, MPVs, buses, and trucks, this Chinese automaker effectively covers nearly every segment of the automotive market.

This allows BYD to capture demand across income levels and geographies, from budget-conscious customers in China to fleet operators in Europe.

Tesla – by contrast – remains confined to just four core models: the Model S, Model 3, Model X, and Model Y – and even those haven’t seen a major upgrade in terms of aesthetics since inception.

Among its other offerings are Cybertruck and Semi, but neither of them has yet achieved notable sales volume or proven mass-market appeal.

While Tesla’s vehicles are aspirational – or at least that’s how it markets its vehicles – the narrow lineup significantly limits its market penetration.

BYD stock may now be a better pick than Tesla because its ability to scale across categories makes it a more resilient and adaptable EV brand heading into 2026.

BYD is a much cheaper EV stock than Tesla

According to Barchart, Tesla shares are currently trading at a forward price-to-earnings (P/E) ratio of more than 400 – a level that reflects extraordinary expectations for growth and profitability.

In comparison, BYD shares are going for 23x forward earnings only – offering investors exposure to the expected reacceleration in EV sales this year without making them pay a hefty premium.

This valuation gap reinforces that BYD is a more attractive EV stock for 2026; it combines strong fundamentals with reasonable pricing.

Tesla’s multiple leaves little margin for error, while BYD’s valuation provides room for meaningful upside as it expands globally.

For investors seeking growth at a reasonable price, BYD has a clear edge. For those worried about a bubble burst in 2026, TSLA shares are an absolute no-go.

BYD’s global expansion means better strategic positioning

Beyond product and valuation, BYD’s global expansion strategy sets it apart.

The company has aggressively entered overseas markets – from Europe to Southeast Asia – with localized production and partnerships that reduce costs and build brand recognition.

Its push into affordable EVs resonates rather strongly in emerging markets, where Tesla’s premium positioning struggles to gain traction.

BYD also benefits from China’s supportive industrial policies, giving it scale advantages in battery technology and supply chains.

On the other hand, Tesla – while dominant in the US – faces rising competition and political headwinds that could constrain growth.

All in all, BYD stock looks much more appealing due to the company’s ability to balance domestic dominance with international expansion, which makes it strategically better positioned for long-term success.

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European markets enter 2026 at a crossroads, marked by symbolic highs, regulatory assertiveness, and uneven economic momentum.

Britain’s benchmark index has broken new ground, underscoring renewed confidence in large-cap equities, while regulators strengthen transparency powers with potential market implications.

On the continent, manufacturing conditions continue to deteriorate, contrasting with sharply divergent trends in the electric vehicle sector.

Together, these developments highlight a region balancing optimism, structural pressures, and sector-specific volatility.

UK’s FTSE 100 breaks through 10,000 barrier

The FTSE 100 has crossed the 10,000 mark for the first time, marking a significant symbolic victory for Britain’s blue-chip index.

The milestone reflects growing investor optimism around UK equities and broader market sentiment heading into 2026.

Banking stocks and energy firms, traditional heavyweight constituents, have driven much of the gains.

The climb underscores recovery momentum in the London exchange despite persistent macro headwinds globally.

Analysts note this breakthrough signals renewed confidence in large-cap UK corporates.

The index’s trajectory will hinge on interest rate expectations, corporate earnings strength, and geopolitical stability in the coming quarters.

UK regulator wins right to name company in investigation

A UK regulator has secured a court victory granting it permission to publicly identify a company at the center of an ongoing investigation.

The ruling pushes back against corporate secrecy arguments and reinforces regulators’ ability to maintain transparency during enforcement proceedings.

This decision carries weight for future investigations, signaling courts are willing to uphold disclosure rights when public interest outweighs confidentiality claims.

The case reflects broader tension between corporate privacy protections and regulatory accountability.

For watchdogs, the precedent strengthens enforcement tools. Market participants will likely scrutinise which firms face naming, a development that could trigger share price volatility and reputational consequences.

Europe’s manufacturing deepens contraction

Europe’s factory sector ended 2025 in sharper decline, with the Eurozone Manufacturing PMI sliding to 49.2 in December, its lowest in eight months.

Germany and France bore the brunt, both posting nine-month lows as demand weakened and export orders fell for the fifth consecutive month.

New orders contracted again, while job losses accelerated to their fastest pace since April.

Production volumes, which had expanded nine months straight, finally contracted.

Despite manufacturers’ improved long-term optimism, the immediate reality was sobering: input costs spiked to eight-month highs while companies absorbed pressures, unable to raise selling prices.

Tesla’s European sales show a stark regional divide

Tesla’s vehicle registrations painted a mixed picture across Europe in December, with sharp contrasts between markets.

Registrations tanked in France and Sweden, signaling weakness in two traditionally strong EV markets, while Norway, Europe’s EV powerhouse, posted robust demand.

The divergence reflects shifting subsidy policies, local competition intensifying, and consumer preference shifts across regions.

France’s slump particularly stings given its EV adoption leadership.

Tesla faces headwinds from aggressive Chinese competitors and legacy automakers ramping up EV lineups.

Norway’s strength underscores the brand’s continued appeal in premium EV segments but masks broader European challenges.

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Valuations and bubble concerns are top of mind for investors as they start the new year after what can only be described as a blockbuster 2025.

Still, Andrew Slimmon – a senior expert at Morgan Stanley – believes US megacap tech stocks are actually more attractive to own “now” than they were a year ago.

His bullish remarks arrive at a time when the “Nasdaq-100” sits more than 50% above its 52-week low in early April.

Valuation reset makes US tech stocks much more attractive

Speaking this morning with CNBC, Slimmon emphasised that “Magnificent 7” tech stocks, despite AI tailwinds and no signs of earnings weakness, underperformed the broader market in the final quarter of 2025.

Since fundamentals remain intact, or even accelerating for some of these mega-cap names, their valuation multiples, naturally, are much more compelling now than at the start of 2025.

What it means is: investors can buy into earnings strength at a relative discount compared to about 12 months ago.

According to the Morgan Stanley analyst, the market’s recent rotation away from tech stocks has been driven primarily by sentiment, not deteriorating profits.

Now that multiples have contracted, the case for re-entering these fast-growing large-cap US tech stocks is stronger than ever, he concluded.

Rate cuts could renew confidence in tech stocks

Andrew Slimmon recommended long-term investors to regain exposure to the big-cap tech names also because the US Federal Reserve is broadly expected to lower interest rates further in 2026.

That’s a policy shift that has historically benefited growth-oriented sectors like technology.

Investors followed the “playbook” last year by rotating into cyclicals ahead of anticipated rate cuts, but industrial names – for the most part – have already priced in that optimism, leaving less room for upside.

By contrast, the US tech stocks combine strong earnings with valuations that have moderated, he told CNBC.

According to the Morgan Stanley expert, lower borrowing costs will further support investment in innovation, cloud infrastructure, and artificial intelligence (AI).

In short, he expects a rotation back into tech in early 2026 as rate cuts provide a tailwind for capital-intensive growth.

Deregulation stands to benefit US mega-cap tech stocks

Finally, Slimmon pointed to deregulation as a structural driver that may trigger a rally across sectors, including technology,

“Deregulation is causing capital to be released. As that capital’s released, it’s going to be deployed and companies are going to come in through with earnings,” he explained.

For tech firms, this means greater flexibility to raise funds, pursue acquisitions, and expand into new markets without the same regulatory constraints that weighed on financials post-2008.

With AI-related IPOs and equity offerings expected to dominate syndicate calendars, the ability to access capital efficiently is critical.

The portfolio manager believes deregulation will support multiple expansion alongside earnings growth – reinforcing tech’s attractiveness in 2026.

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SanDisk (NASDAQ: SNDK) was the “top-performing” S&P 500 stock last year, as index inclusion drove institutional capital to the flash memory firm – but Citi sees it pushing higher still in 2026.

In her latest research note, senior analyst Asiya Merchant maintained a “buy” rating on SNDK shares, with a $280 price target, indicating potential upside of another 18% on their previous close.

Her bullish call on SanDisk stock is particularly significant given it’s already trading at nearly 9x its price in early April.

AI tailwinds to push SanDisk stock higher in 2026

SanDisk specializes in enterprise solid state drives (eSSDs) that are widely used in data centers for high-performance storage, faster data access, and improved energy efficiency.

And since artificial intelligence (AI) spending is broadly expected to remain strong in 2026, Asiya Merchant believes SNDK shares will claw their way back to record levels over the next 12 months.

“The industry should remain in tight production supply, with eSSDs benefitting from super strong hyperscale demand on generative AI training/inferencing services,” she told clients.

Note that SanDisk’s longer-term relative strength index (100-day) sits at 60 currently – reinforcing that its upward momentum is unlikely to lose steam anytime soon.

SNDK shares are trading at attractive valuation

According to the Citi analyst, SanDisk is strongly positioned to more than 8x its adjusted earnings over the next two years and hit a whopping $25.74 a share by its fiscal 2027.

In her research note, she dubbed the firm’s new Bics8 technology a potential barrier to competitive threats – cementing her confidence in its long-term growth trajectory.

From a valuation perspective, SNDK is currently trading at a forward price-to-earnings (P/E) ratio of about 20, which is relatively attractive for a company riding AI tailwinds.

Moreover, derivatives data stepping into 2026 is skewed to the upside as well.

Options traders are currently pricing in a more than 40% rally in the first half of 2026, which means SanDisk shares could be trading at north of $375 within the next six months.

What’s the consensus rating on SanDisk Corp

Investors could also take heart in the fact that Asiya Merchant isn’t the only analyst recommending sticking with SNDK stock at current levels.

In fact, the consensus rating on SanDisk shares also currently sits at “overweight” with price targets going as high as $322, indicating potential upside of another 22% from here.

Note that SanDisk is scheduled to report its fiscal Q2 earnings on January 29th. Consensus is for it to post $2.6 billion in revenue on a staggering 160% year-on-year earnings growth to $3.2 a share.

The upcoming earnings release could, therefore, prove a near-term catalyst that pushes this AI stock higher this year (2026).  

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Global markets and geopolitics set a volatile tone for the start of 2026.

US equities are flashing renewed bullish momentum as investors rotate back into risk assets ahead of key economic data and earnings season.

Corporate developments underscore shifting sector dynamics, from mounting pressure in the electric vehicle space to consolidation in India’s fast-growing consumer market.

Meanwhile, geopolitical tensions re-escalate, with sharp rhetoric from Washington raising concerns over broader regional stability.

US stocks signal bullish momentum

US stocks opened 2026 on a positive footing, signaling renewed investor confidence after recent volatility.

Nasdaq and S&P 500 climbed as risk appetite returned to equity markets, suggesting traders are ditching defensive positioning.

The shift reflects improving sentiment ahead of earnings season and expectations for moderate Fed policy.

Tech megacaps, which faced profit-taking pressure late December, appear poised for fresh demand.

Market breadth is broadening beyond mega-cap darlings, a healthier signal for rally durability. Investors are watching Friday’s jobs report as a potential catalyst.

Tesla’s delivery miss signals tougher EV market headwinds

Tesla posted quarterly deliveries that fell sharply short of expectations, exposing mounting pressure in the EV market.

The miss marks a pivotal moment for Musk’s firm, which faces intensifying competition from both Chinese automakers and legacy players ramping up production.

Demand softness across key regions, particularly Europe and China, has become undeniable.

The numbers arrive as Tesla navigates pricing pressure, inventory challenges, and slowing consumer appetite for EVs amid broader economic caution.

Wall Street will scrutinise management’s commentary on demand visibility and capacity utilisation.

Devyani stock soars on $934 million merger

Devyani International’s shares climbed sharply after the company announced a transformational $934 million merger with a peer quick-service restaurant operator.

The deal consolidates India’s fragmented QSR landscape, creating a heavyweight in the fried chicken and pizza segments.

Devyani, which operates KFC and Pizza Hut franchises, will expand its footprint and operational scale through the combination.

Synergy potential centers on supply chain optimization, real estate efficiency, and technology integration.

The merger reflects investor appetite for consolidated plays in India’s growing casual dining market.

Devyani investors see upside from cost reductions and accelerated expansion.

Trump issues stark warning to Iran

President Donald Trump warned Iran Friday that the US stands “locked and loaded” to rescue protesters if security forces kill more demonstrators amid escalating unrest.

The threat follows at least seven deaths in clashes sparked by economic woes, including the rial’s collapse and soaring inflation.

Protests, now in their fifth day, have spread from Tehran to multiple provinces, with chants targeting Supreme Leader Khamenei.

Iranian officials fired back, accusing the US and Israel of stoking violence and warning any interference would destabilise the region.

Trump’s post on Truth Social marks a sharp escalation, echoing past tensions after US strikes on Iranian nuclear sites.

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The S&P 500 opened 2026 treading water, with semiconductor stocks, particularly Nvidia and Micron, muscling higher to counterbalance weakness across tech names.

The blue-chip Dow inched into positive territory while the Nasdaq slipped roughly 0.2% to 0.3%, painting a classic picture of sector rotation rather than broad confidence.

For traders timing the year’s opening moves, the headline takeaway is straightforward: chip demand remains the story.

Why this matters for the quarter ahead

The semiconductor strength carries outsized significance because AI-related chip demand was the primary engine behind much of 2025’s equity gains.

Nvidia alone climbed nearly 39% last year, and Micron, a bellwether for memory chip production, surged an eye-popping 239% over the same period.

Today’s intraday action matters because it signals whether money managers are chasing incremental gains in hardware suppliers or rotating into other pockets of tech.

If the former, chip stocks could anchor the market through early Q1. If rotation is underway, expect volatility as funds reallocate toward software, services, and other lagging sectors.

Nvidia, Micron keep market’s head above water

Nvidia ticked up more than 1.5% midday, extending its winning streak into a new calendar year.

But the real fireworks came courtesy of Micron, which surged roughly 8% on the session, a jolt that underscores Wall Street’s ongoing appetite for DRAM and memory suppliers riding the artificial intelligence buildout.

The Philadelphia Semiconductor Index, which tracks the broader chip ecosystem, showed notable strength, with gainers outpacing losers by a meaningful margin.

The message: after a year in which semiconductor stocks nearly monopolised equity performance, major players in the space are starting 2026 with momentum intact.

Yet this very strength masks softer undertones elsewhere. Consumer discretionary names, typically a bellwether for economic confidence, declined.

What comes next: Data, earnings, and the Fed

The muted action in the broad S&P 500 belies genuine questions animating trading desks: will the Federal Reserve cut rates further this quarter, or will sticky inflation data force a pause?

How will corporate earnings surprise when companies report in the coming weeks?

And perhaps most pressing, will AI hardware spending continue at the torrid pace set in 2025, or will capex cycle maturity bring moderation?

Upcoming labor data and inflation reports could reshape Fed rate expectations overnight.

Earnings guidance from Nvidia, Micron, and other mega-cap tech names will similarly carry weight.

Market participants are effectively waiting for catalysts to determine whether this year’s opening moves signal sustained chip-led rallies or temporary profit-taking ahead of broader realignment.

January 2’s midday action, though modest, crystallises a central tension: while AI hardware momentum appears durable, the rest of the market is adopting a wait-and-see posture regarding economic growth and monetary policy.

For traders, this means that volatility is likely to persist.

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Micron stock (NASDAQ: MU) jumped almost 10% on Friday, propelled by a perfect storm of supply scarcity, record earnings momentum, and aggressive Wall Street re-ratings.

The stock surge reflects Wall Street’s conviction that Micron has entered a structural era of pricing power and margin expansion tied to AI infrastructure buildout.

In early trading, the memory chipmaker touched its highest levels yet, signaling that the semiconductor cycle has fundamentally shifted.

Guidance and HBM squeeze: Why Micron’s numbers matter

The catalyst for today’s rally traces back to Micron’s December 17 fiscal first-quarter earnings, which obliterated expectations and sent shockwaves through the Street.

The company reported earnings per share of $4.78 against expectations of $3.94, a 21% beat.

Revenue came in at $13.6 billion, crushing the $12.8 billion consensus estimate.

More critically, Micron’s second-quarter guidance signaled even stronger momentum: the company projects revenue of $18.7 billion with earnings per share between $8.22 and $8.62, figures that dwarf analyst estimates.​

The real story, however, lies in supply.

Micron revealed that its entire High-Bandwidth Memory (HBM) capacity for calendar 2026 is already sold out.

CEO Sanjay Mehrotra stated on the earnings call that the company can only meet about 50–67% of customer demand because HBM production is so constrained.

This structural shortage translates directly to pricing power: Bernstein models suggest DRAM average selling prices will sustain 20–25% quarter-over-quarter increases throughout the first half of 2026.

With gross margins surging to 56.8% in Q1 (up 11% points sequentially), Micron stock is capturing exceptional profitability from both HBM and traditional memory.​

Micron stock: Positioning that magnifies rallies

Today’s 10% move amplified beyond fundamentals through a confluence of market mechanics.

Bernstein SocGen Group issued a dramatic upgrade on Friday morning, raising its price target from $270 to $330, a $60 jump that forced a reassessment among portfolio managers.

The firm’s analyst Mark Li cited a “structural reset” in memory pricing and models for Micron’s fiscal 2026 EPS in the $32–$40 range, implying nearly 300% year-over-year growth.

This wasn’t the only voice shifting bullish; the rally prompted multiple analyst reviews across Wall Street.​

The sector momentum added fuel.

Samsung Electronics and SK Hynix, Micron’s chief competitors, also rallied on January 2, with Samsung hitting all-time highs on investor enthusiasm for its HBM4 progress.

These peer moves validated the thesis that the entire memory space benefits from AI capex runaway.​

Short interest also mattered. Micron carried approximately 25.15 million shares short (about 2.24% of the float), with only 1.21 days to cover at the recent trading volume.

While Micron’s short base is modest, any repricing higher squeezes covering, which accelerates rallies in the early morning hours when volume is lighter and liquidity is tighter.​

As capex cycles extend and new fab capacity remains years away, Micron’s sold-out status through 2026 is the ultimate vote of confidence in its pricing power.

Investors are effectively betting that this “higher for longer” memory market persists through mid-2026, underpinning a multi-year re-rating.

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The token XRP starts 2026 with its 2025 achievements, including SEC case resolution and US spot exchange-traded fund introduction, but the token performed poorly and reached its lowest point since reaching its peak.

XRP reached $3.66 in value during 2025, but then its price dropped by 50% to $1.58 in October before finishing the year at $1.85.

The market remains uncertain about which factors will determine the future direction of this currency.

The market achieved major successes throughout 2025, but these accomplishments failed to maintain the upward trend of stock prices.

The United States Digital Asset Reserve’s selection of XRP as a candidate in March 2025 resulted in a 30%+ price increase.

The executive order created a reserve that could hold only seized assets, but it gave Bitcoin a unique status through its official backing without creating any method to buy XRP directly, according to historical news reports.

Ripple Labs then settled its years-long lawsuit with the US Securities and Exchange Commission on May 8, setting up a rally to a seven-year high on July 18 before a drop to $2.73 less than two weeks later.

The Spot XRP ETFs entered the market in November 2025 and received continuous investment for 24 consecutive days, which brought in $1.06 billion of new capital and grew their total assets beyond $1.14 billion, according to SoSoValue.

The total ETF inflow, according to different estimates, has reached more than $1.4 billion since the fund started, which equals 2.3% of the entire supply.

The ETFs showed a powerful beginning, which did not lead to enduring market value growth because XRP performed worse than digital asset indexes during the entire year.

The market shows conflicting information between its on-chain data and its technical indicators.

Daily active addresses on the XRP Ledger stayed below 45,000 for much of the last six months, with 38,500 recorded on Dec. 18, a 94% drawdown from a March peak above 600,000, per Glassnode data.

The exchange supply of XRP reached its lowest point since 2018, while velocity levels remain at the bottom of their historical range, which indicates market participants are holding their positions instead of selling their assets.

The technical analysis shows XRP failed to maintain its position above $2 and its 50-week moving average, which reached $1.87.

The support zone exists between $1.85 and $1.80, which corresponds to the 100-week EMA and the Nov. 21 low, according to analysts who predict long liquidations will drive prices toward $1.61 before the 200-day EMA at $1.38 becomes a potential stabilization point.

Key levels heading into early 2026

XRP reached $1.85 during the last month of 2025, and its current value exceeds $1.80, which experts view as the most reliable indicator for future market trends.

The support level should maintain its position, which would make a $2.00 price test possible while the RSI indicator shows 48, which allows the price to reach $2.20 in the short term.

The market would experience a bearish trend when prices stay below $1.80 because this would destroy the current bullish pattern, which would lead to a potential price drop to $1.60.

The market outlook contains opposing market expectations, which show both negative and positive trends.

Multiple market observers predict XRP has reached its peak value for the current market cycle.

The veteran trader Peter Brandt shows through his chart analysis that the token price might reach below $1 during the following weeks or months because of a possible double top formation.

Others remain constructive.

Chad Steingraber from Analyst predicts that the price will reach $10 from $2 during 2026 because of ongoing ETF purchases and strong market indicators over extended time periods.

Standard Chartered analysts predicted that the price will exceed $8 during 2026 because of improving regulatory conditions and increasing spot ETF market interest.

The Trump administration will maintain its industry-friendly oversight during 2026, which will act as a policy factor for Ripple, while their business alliances could create positive market conditions.

The year 2025 brought XRP both significant legal achievements and market structure advancements, yet the cryptocurrency failed to achieve any substantial price increase.

The success of 2026 will depend on two essential factors, which include maintaining support levels at $1.80 and better network activity and ETF investment inflows that consume available supply at a rapid pace to shift market attitudes.

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Wall Street’s biggest firms view 2026 as a year where selective themes will matter more than broad market rallies.

Rather than betting on another 17% S&P 500 gain, as in 2025, strategists at Goldman Sachs, Morgan Stanley, J.P. Morgan, and Bank of America are pointing toward five specific predictions that could determine which investors win and which stumble.

Here’s what the major research desks are telling clients to watch in 2026.

​5 Wall Street predictions for 2026

1. AI capital spending will hit $527 billion, but…

Goldman Sachs projects that artificial intelligence capital spending will surge to $527 billion in 2026, up from $465 billion at the start of 2025.

That’s extraordinary growth, but here’s the critical caveat: Bank of America’s research team warns of a potential “air pocket” in 2026, where heavy investment continues but expected profits haven’t yet materialised.​

Hyperscalers have issued $121 billion in debt in 2025 alone, and Bank of America projects another $100 billion in borrowing for 2026.

That mounting debt becomes risky if revenue growth doesn’t follow capex growth.

The real winners in 2026 will be companies that can prove AI monetisation, not just capex scale.

Goldman flags semiconductors, cloud providers, and enterprise software firms as the chief beneficiaries if adoption accelerates as expected.​

2. Sector rotation favours financials, industrials, and healthcare over tech

After mega-cap technology stocks dominated 2025, Morgan Stanley and Goldman Sachs expect leadership to broaden significantly in 2026.

Both firms flag financials, industrials, and healthcare as overweight ideas as earnings catch up with valuations and the market reprices tech multiples.​

This rotation matters because it could mean single-digit returns for the Magnificent Seven while other parts of the market deliver double-digit gains.

For income investors, financials offer attractive yields and rising net interest margins if the Fed’s rate-cut cycle stabilises.

For growth investors, industrials benefit from infrastructure spending and AI capex acceleration.

Bank of America cautions that this rotation isn’t guaranteed; if AI monetisation re-accelerates suddenly, tech could reclaim leadership just as quickly.​

3. Gold soars to $4,900; oil stays weak

Goldman Sachs’ commodities team has made one of 2026’s boldest calls: gold to $4,900 per ounce by year-end, while oil averages just $56 per barrel.

The gold thesis rests on structural central bank buying (Goldman expects 70 tonnes per month) and eventual Fed rate cuts driving exchange-traded fund demand.

J.P. Morgan goes even further, seeing gold at roughly $5,055 per ounce by Q4 2026.​

Oil faces the opposite headwind. A massive global liquefied natural gas supply wave, combined with OPEC’s reluctance to cut output aggressively, will leave the market oversupplied unless major geopolitical shocks disrupt supply.

Goldman sees Brent crude at $56, versus consensus views closer to $62.

This divergence: gold up sharply, oil down, reflects the two major macro risks facing 2026: inflation uncertainty and energy transition dynamics.​

4. The Fed’s rate path will determine which assets outperform

Morgan Stanley and J.P. Morgan expect the Fed’s gradual rate-cutting path to drive yields lower in the first half of 2026, then stabilise as inflation data stabilises.

Both firms see yields rangebound in a 3.5% to 4.5% range rather than a dramatic collapse.

This matters because it shapes returns across equities, bonds, and commodities simultaneously.​

Lower real rates (nominal rates minus inflation), combined with geopolitical uncertainty, create classic conditions for gold demand.

Fixed-income teams project higher realised volatility and potential M&A windows opening as deal flow normalises.

For equity investors, the absence of a sharp rate cut or spike creates a Goldilocks scenario: moderate upside, but also moderate downside risk if earnings disappoint.​

5. S&P 500 targets reveal deep disagreement on valuation risk

J.P. Morgan sees the S&P 500 at 7,500 by year-end 2026, assuming 13-15% earnings growth and two Fed rate cuts.

Morgan Stanley’s Michael Wilson targets 7,800, anchored on similar earnings assumptions.

But Bank of America’s Savita Subramanian offers just 4% upside from current levels, citing valuation risk and the need for a market “reset” if earnings disappoint.​

The gap between Morgan Stanley’s bull case and BofA’s bear case reveals genuine disagreement about whether 2026 delivers earnings growth without multiple compression.

That uncertainty alone suggests volatility ahead, exactly what traders and investors should prepare for as 2026 unfolds.

The critical question: will companies earn their way to higher valuations, or will the market demand cheaper multiples before pushing higher?​

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