Citi Group has set its mid-2026 target for the MSCI All Country World Index (ACWI) at 1150 points, indicating a potential 5% increase from its recent close of 1100.213 points. The bank predicts global stock markets will trade within a range by year-end, with a "significant" rise expected in the first half of next year.
Citi highlights that Japan and Europe have the greatest potential for gains in the medium term. While it remains bullish on European stocks, Citi has downgraded its rating for Japanese stocks to "neutral" due to concerns over short-term tariff risks and a strengthening yen.
Despite the global markets recovering to historical highs after volatility in early 2025, the overall economic outlook remains uncertain, influenced by Trump's tariff policies and geopolitical tensions. Citi projects the index's earnings per share (EPS) growth rate to exceed 11% by the end of 2026, which is below the market consensus of over 13%.
Citi maintains a "neutral" stance on U.S. stocks and an "underweight" rating for emerging markets and Australian stocks. In terms of global sectors, Citi favors technology stocks while holding a "low" rating for consumer stocks.
