Gold and stock markets enjoyed a booming year in 2024, setting optimistic expectations for the future in 2025.
Capital Markets Forecast: A Preview for the New Year
As the old year winds down, let's look forward to the exciting prospects ahead in the realm of investment! Although the stock market rallied in 2024, overzealous valuations and risks have left us anticipating more moderate gains for the upcoming year. Expect more volatility this time around, with central bank interest policies and corporate earnings steering the course.
Our tactical asset allocation is keeping a slight edge in stocks, favoring the USA over Europe and developing markets. In bonds, we keep our duration neutral.
A Rollercoaster Ride for Bonds
The bond market outlook is a bit rocky for the near future. US short-term bond yields could see a drop due to further interest rate cuts, while the 10-year US yields might experience increased volatility at higher levels. The Eurozone might attract investors once more, as US yields spike. However, be prepared for a storm Brewing from inflation risks and questionable fiscal policies in the Eurozone.
Stocks with Less Interest Headwinds
The preference for the USA over the struggling European market remains evident, with favorable economic projections, tax cuts, and AI investments. US indices have a sector composition that fits well with this uncertain period, and corporate earnings forecasts could further boost optimism.
Europe, however, presents challenges. Low growth and weak Chinese demand have left many companies in a bind.achive growth of 6-8%, led primarily by increased sales growth and improved margins, compared to 2024. But the low relative valuation compared to US stocks may need a catalyst to bring out the potential.
Gold: Mild Upsurge Possible
Falling real yields may fuel a potential upswing for gold prices, alongside central banks' increasing gold reserves. The constant feeling of unease in the world could continue supporting gold prices in 2025.
An Insightful Perspective by Daniel Winkler
Our special contributor, Daniel Winkler, Multi Asset Strategist at Lampe AM, offers expertise in spotting key drivers in capital markets. By taking advantage of diversification, active management, sustainable investing, and digital and tech investments, investors may steer clear of risks and capitalize on opportunities.
Interested in more of Daniel's insights? Check out his specific writings and statements for a deeper dive into shaping your investment strategies!
- By 2025, anticipate more moderate gains in the stock market, with volatility brought on by central bank interest policies and corporate earnings.
- In the bond market, US short-term bonds may see a drop due to further rate cuts, butUS 10-year yields could experience increased volatility at higher levels.
- Technology and artificial intelligence investments, along with favorable economic projections and tax cuts, make the USA an appealing region for investing over Europe and developing markets.
- In Europe, struggling companies face challenges such as low growth and weak Chinese demand, requiring improved sales growth and margins to achieve growth of 6-8% in 2025.
- Gold prices might experience a potential upswing in 2025 due to falling real yields, central banks' increasing gold reserves, and continued unease in the world.
