Citi Sends Bullish Message on Global Stocks For 2027

Global stocks could continue to see earnings-driven gains through mid-2027 despite a shift toward tighter monetary policy, according to a Wednesday report from Citi strategists.

Citi expects the Federal Reserve to raise rates this week, while its economists also see additional increases from the Bank of Japan, European Central Bank and Bank of England. The number of major central banks raising rates has recently moved above those cutting them.

The bank’s review of previous Fed tightening cycles found that equities often experienced turbulence around the initial rate increase, while performance improved over longer periods. Citi said developed markets outside the U.S. have historically outperformed U.S. stocks over the year following the first hike in several past cycles.

Citi also pointed to economic growth and inflation as key factors for markets as bond yields remain elevated. The strategists said resilient growth may help equities absorb higher borrowing costs, while lower inflation could provide additional support.

The outlook comes as the Fed raised its benchmark rate by 25 basis points on Wednesday to a 3.75% to 4% range, its first increase since 2023. Policymakers indicated another hike could come this year.