Important security note: Warning of attempted fraud in the name of DWS
We have detected that fraudulent individuals are misusing the "DWS" trademark and the names of DWS employees on the internet and social media. These fraudsters are operating fake websites, Facebook pages, WhatsApp groups and Mobile Apps. Please be aware that DWS does not have any Facebook Ambassador profiles or WhatsApp chats. If you receive any unexpected calls, messages, or emails claiming to be from DWS, exercise caution and do not make any payments or disclose personal information. We encourage you to report any suspicious activity to info@dws.com, including any relevant documents and the original fraudulent email. Additionally, if you believe you have been a victim of fraud, please notify your local authorities and take steps to protect yourself.
Markets between Energy shock and AI boom
22/05/2026
Rising energy prices weigh on growth and inflation, while AI-driven investment continues to support selected segments and drive increasing divergence across markets.
Global capital markets are currently caught in a tension between geopolitical risks and resilient underlying fundamentals. Developments around Iran and their impact on energy prices are creating short-term uncertainty. Overall, however, we continue to view the global economy as broadly resilient.
At the core of the current market environment is a clear trade-off: the oil price shock is feeding directly into inflation while simultaneously weighing on growth, shaping both monetary policy and market dynamics. For the U.S., we expect inflation to reach 3.2% in 2026 before gradually declining toward 2.3% in 2027. At the same time, we expect growth to remain around 2.0%.
A similar picture is emerging in Europe: inflation could rise to 3.1% in 2026, while growth could temporarily slow to 0.9%. Overall, this suggests moderate growth alongside elevated price pressures.
These opposing forces are leading to an increasingly fragmented market environment, with individual segments becoming more clearly decoupled. While some investors remain focused on inflation and interest-rate risks, others are placing more emphasis on the medium- to long-term growth outlook.
At the same time, we see a key structural driver in the ongoing investment cycle in AI, which is increasingly shaping equity-market performance. Strong investment in infrastructure and data centers is supporting selected market segments and partly offsetting the dampening effects of higher energy prices. In our view, this dynamic is reinforcing market bifurcation, as AI-related segments benefit significantly more than cyclical or rate-sensitive areas.
Central banks are also likely to respond differently to this environment, reflecting regional differences in inflation dynamics and growth resilience. Against this backdrop, we continue to expect two rate cuts from the U.S. Federal Reserve, while the European Central Bank may initially be more restrictive.
Overall, we view the market environment as fundamentally stable yet increasingly differentiated. Structural investment continues to support growth, but underlying drivers no longer translate evenly across markets.
For capital markets, this implies that corporate earnings are becoming more important, with micro factors gaining prominence while macro headwinds gradually lose relative influence. Against this backdrop, we see the potential for the S&P 500 to reach 8,200 points over a 12-month horizon, the Stoxx Europe 600 650 points and the DAX 26,300 points.
In fixed income markets, we expect yields to trend moderately lower. We forecast that 10-year U.S. Treasuries could stand at 4.20% and 10-year Bunds at 2.90% by June 2027, reflecting a gradual shift in monetary policy toward supporting growth.
Similar dynamics are visible in currencies and commodities: we see the euro appreciating to 1.22 against the U.S. dollar. Gold remains, in our view, a key beneficiary of geopolitical uncertainty, with a target of USD 5,400 per ounce, while we think oil prices should stabilize at USD 82 per barrel.
Conclusion: Despite elevated uncertainty, we continue to see a constructive environment for risk assets. At the same time, diversification is becoming increasingly important, as opportunities are developing more unevenly along structural growth drivers.
Key DWS forecasts for the next 12 months
Sources: DWS Investment GmbH as of 5/20/26
* Gross domestic product (GDP) growth expectations for 2027 (year-on-year in %)
** Consumer price inflation expectations for 2027 (year-on-year in %)
This information is subject to change at any time, based upon economic, market and other considerations and should not be construed as a recommendation. Past performance is not indicative of future returns. Forecasts are based on assumptions, estimates, opinions and hypothetical models that may prove to be incorrect. Alternative investments may be speculative and involve significant risks including illiquidity, heightened potential for loss and lack of transparency. Alternatives are not suitable for all clients.