Global investment trends to watch in a roiling ocean of uncertainty

Investors have been rattled by global shocks in recent months but markets remain near record highs, so where should they focus?

Investors face more uncertainty than ever in 2025-26 after being shaken by a series of global shocks in the past six months.

Trade wars, real wars, interest rate uncertainty, energy spikes and the unstoppable rise of artificial intelligence are among the biggest trends playing out globally, and investment specialists say riding out the bumpy road ahead requires diversification.

IG market analyst Tony Sycamore said investors had been climbing “a wall of worry”.

“The last six months have coincided with President Trump in the White House, and President Trump is volatility personified,” he said.

“He guarantees it going ahead because of the way he manages his policies.”

Trump turmoil aside, these seven trends are likely to shape markets and investment decisions.

1 AI

Australian Shareholders’ Association director Lel Smits said the world was reshaping itself through AI and automation.

“AI is no longer hype – it’s a utility revolutionising every workplace and the entire investing landscape,” she said.

Markets have recovered from their April crash, but more volatility looms. Picture: iStock

AvaTrade chief market analyst Kate Leaman said AI was changing businesses and industries “at lightning speed”.

“AI is already disrupting industries like finance, healthcare, retail and education,” she said.

“If you’re thinking about investing, now’s a great time to watch companies leading the charge in AI, machine learning and automation.”

2 Defence

In a research note, Blackrock Investment Institute says AI should revolutionise militaries everywhere, already witnessed through the use of drones.

It says last week’s agreement by NATO members to lift defence spending to 5 per cent of GDP shows a big structural shift for defence.

“We think investors can benefit from exposure to defence,” Blackrock says. “Among sectors, we see opportunities in defence tech. We think many private companies in defence tech could launch initial public offerings in coming years.”

3 Trade

Donald Trump’s trade wars are still to fire up, but already have shaken markets.

Blackrock says economic competition and geopolitical fragmentation into blocs aligned with the US and China is a “mega force” that is evolving rapidly.

Ms Smits said geopolitical shifts were creating a realignment of international power dynamics.

“With supply chains being rewritten, the importance of diversification has never been more important,” she said.

Mr Sycamore said global economic growth was likely to slow because of US tariffs, which averaged 3 per cent at the start of 2025 and now averaged 15 per cent.

4 Interest rate cuts

Investors should plan for falling interest rates in Australia and elsewhere.

“I think central banks, including the RBA, will look through the one-off tariff-induced inflation spike,” Mr Sycamore said.

Experts say falling interest rates could help cushion economic downturns and boost recoveries.

5 US exceptionalism

Webull Securities Australia CEO Rob Talevski said falling interest rates and a lack of low-risk returns elsewhere were sending investors back into equities, potentially taking on more risk than they would like to.

“In terms of where to look, it seems that US exceptionalism is back on the rise,” he said.

“We view the US markets as an exciting place to be in right now, even if valuations continue to push all-time highs. There’s a chance that the best is yet to come.”

Kate Leaman, chief market analyst at AvaTrade

6 Energy spikes

Fears of oil surging above $US100 a barrel after the US bombed Iran did not eventuate, but AvaTrade’s Ms Leaman said energy prices could swing wildly.

She said Middle East and trade uncertainty meant “it’s hard to know what’s coming next”.

“For Australian investors, the energy sector offers both risk and reward … if you’re looking to tap into these changes, global energy ETFs could be a smart move.”

7 Health and ageing

Baby boomers are ageing rapidly all over the world and their health needs are growing, boosting innovations including telemedicine and wearables, Ms Leaman said.

“Australian investors might find great opportunities in biotech stocks or healthcare-focused ETFs,” she said.

Stay focused

American Century chief investment officer Victor Zhang said reacting emotionally to short-term volatility could be more damaging than the volatility itself.

“The challenge in this environment is remembering that uncertainty isn’t the same as a negative outcome,” he said.

“Diversification, not market timing, may be the best defence against heightened uncertainty.”

Originally published as Global investment trends to watch in a roiling ocean of uncertainty