Market Outlook 2025: Key Predictions and Trends
In 2025, it looks like moderation will be the name of the game for the markets. Here are three key things we’re keeping our eyes on for the upcoming year.
Expect to see slower growth, positive but lower equity market returns, stable inflation, and decreasing interest rates as the markets look for balance. Despite this shift towards moderation, the markets will still be far from dull, influenced by global trade tensions, mixed economic signals, differing fiscal and monetary policies, and active money movements.
The start of 2025 may see a defensive market stance due to the potential return of trade conflicts led by Trump’s tariffs. China and the EU may retaliate, creating some turbulence in risk assets. Tariffs might seem like a negotiation tool and could help fund tax cuts, but their impact on consumers raises concerns about long-term effectiveness. The AUD might face pressure early in the year.
Keep an eye on geopolitical tensions in the Middle East, particularly Iran, as they could impact oil prices due to possible disruptions in shipping routes. OPEC’s strategy will play a crucial role, affecting global oil supply. While market positioning is leaning negative in certain sectors, undervalued equity might offer opportunities.
Even though China sentiment may be shaky at the start of 2025, there could be a chance to build positions in resource stocks ahead of significant stimulus announcements post-tariff issues. Look out for opportunities in consumer-facing and resource companies benefiting from China’s demand for specific goods.
The ASX Big Four banks are seeing high valuations and might not offer significant value. Consider companies with strong asset backing to capitalize on potential market shifts. It’s shaping up to be a volatile 2025, but with volatility comes opportunity. Stay updated as we delve deeper into the market’s key driving factors.
