2025 Market Outlook: Why Markets are Not Binary
As we round out the year and look towards 2025, it’s natural to reflect on the highs and lows of the markets in 2024. With Canadian and US equities showing strong returns, investors may be feeling optimistic. However, the new year brings with it a fresh set of challenges and uncertainties that we need to be prepared for.
Corrado Tiralongo, Chief Investment Officer at Canada Life Investment Management Ltd., recently shared his insights on what to expect in the coming year. He highlighted key themes in Canadian, US, and global markets, as well as major economic trends that could impact performance. Tiralongo emphasizes the importance of adopting a diversified approach in the face of potential volatility and varying market conditions.
One of the major sources of uncertainty for 2025 is political, with looming threats of tariffs on Canadian imports from the incoming Trump administration. Additionally, high valuations in leading US stocks add to the complexity of the economic landscape.
Tiralongo predicts a period of slower economic expansion in the years to come, with global markets expected to grow at around three percent. The US and Canada are likely to experience growth rates below their averages from previous years, reflecting shifting economic dynamics and policy changes.
As the global economy evolves towards regional trading blocs, Tiralongo anticipates a different pattern of GDP growth than what we have seen in the past. This shift could also have inflationary implications, potentially impacting both the US and Canadian economies.
In terms of equity markets, Tiralongo sees the AI theme as an area of potential opportunity for investors, despite concerns of a possible bubble. While AI technology presents significant societal and economic impacts, Tiralongo advises investors to remain vigilant for changes in market trends and explore alternative investment opportunities.
As we move into 2025, it’s crucial for investors to stay informed, adapt to changing market conditions, and maintain a diversified portfolio to navigate the uncertainties that lie ahead.
