Positioning for the Next Phase of Global Markets
As we enter the second half of 2026, we’re sharing a concise overview of the key macroeconomic themes shaping global markets—and how investors can position portfolios thoughtfully for the opportunities and risks ahead. Artificial intelligence continues to reshape industries, central banks remain cautious, geopolitical tensions persist, and market leadership is becoming more concentrated.
Pacific Private’s latest Investment Strategy & Playbook outlines the key macroeconomic themes expected to influence portfolios throughout 2026—and how investors can position to manage risk while capturing long-term opportunities.
Global Economy
The global economy is expected to slow but avoid a severe recession. Cooling labour markets, moderating inflation and gradual monetary easing should support markets, although growth is likely to become more uneven across regions.
Our Positioning
- Maintain global diversification
- Increase exposure to defensive, high-quality businesses
- Reduce reliance on China-sensitive sectors
Artificial Intelligence
AI remains one of the most powerful long-term investment themes, but much of the enthusiasm is already reflected in valuations. Rather than chasing speculative AI companies, we favour businesses enabling AI adoption through infrastructure, semiconductors, utilities and digital networks.
Our Positioning
- Focus on AI infrastructure
- Selective semiconductor exposure
- Energy and digital infrastructure beneficiaries
Consumers & Economic Growth
Consumer spending is beginning to soften, particularly in the United States, while Australian households continue to face cost-of-living pressures. Companies with resilient earnings and strong pricing power are expected to outperform.
Our Positioning
- Defensive sectors
- Quality domestic businesses
- Income-oriented investments
Equities
US mega-cap technology continues to dominate global markets, but concentration risk is increasing as valuations become more demanding. We see stronger opportunities developing outside the largest US technology companies.
Our Positioning
- Reduce concentration in mega-cap tech
- Increase exposure to Europe and Japan
- Prefer quality and value factors
- Overweight international small caps
- Maintain selective Australian exposure
Fixed Income
Improving inflation trends and gradually easing interest rates create a more favourable environment for government bonds. High-quality fixed income once again offers attractive diversification and income.
Our Positioning
- Overweight long-duration government bonds
- Prefer Australian Government Bonds
- Currency-hedged US Treasuries
- Maintain investment-grade credit
- Avoid excessive lower-quality credit exposure
Commodities
While enthusiasm remains high around copper and oil, we believe current pricing already reflects much of the positive outlook. Gold continues to stand out as an attractive portfolio diversifier.
Our Positioning
- Underweight copper
- Underweight oil
- Overweight gold for inflation protection and geopolitical risk
Currency Outlook
We expect the US dollar to gradually weaken over the medium term as monetary policy normalises and global growth broadens. A stronger Australian dollar should provide opportunities for Australian investors.
Our Positioning
- Positive on AUD
- Prefer AUD relative to EUR, GBP and NZD
- Tactical exposure to AUD/JPY
- Limited directional exposure to China
Alternative Investments
Alternative assets remain an increasingly important source of diversification as public market valuations become more demanding. Infrastructure, private credit and specialist hedge funds continue to provide attractive long-term opportunities.
Our Positioning
- Increase infrastructure exposure
- Selective private equity
- High-quality private credit
- Skill-based hedge fund strategies
- Focus on resilient real assets
Bottom Line for 2026
Pacific Private Asset Management believes 2026 will reward disciplined investors who remain globally diversified and focused on quality. While artificial intelligence continues to create compelling opportunities, portfolios should avoid excessive concentration risk by balancing growth assets with defensive exposures including government bonds, infrastructure, alternatives and gold. Maintaining flexibility, preserving diversification and focusing on long-term fundamentals will remain central to navigating what is likely to be another dynamic investment environment.
Pacific Playbook – 2H 2026
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General Disclosure
This material contains general advice only and does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your own circumstances and obtain independent financial, legal and taxation advice.
The information is based on sources believed to be reliable; however, Pacific Private does not represent or warrant that it is accurate, complete or up to date. Opinions expressed are subject to change without notice. Pacific Private accepts no liability for any loss arising from reliance on this material.