As the US and European stock markets hit historic highs in 2024, Forbes is hailing the past year as a "harvest year for the super rich" - with as many as 141 billionaires newly added to its super rich list.
At the same time, in such an election year, people in many parts of the world have also experienced an extremely turbulent year of political games. Voters have punished incumbents from India to South Africa, Europe, and the United States, and have turned more attention to economic reality: the continuous rise in prices after the pandemic is bringing about a ruthless cost of living crisis.
This actually lays an unknown foreshadowing for the market next year: what kind of sparks will continue to be ignited between the extreme fanaticism of risk appetite and the changing geopolitical situation?
Currently, most Wall Street strategists predict that global stock and bond markets may continue to rise in 2025, but the biggest uncertainty facing investors is the policy direction of incoming US President Trump.
The following is a summary of industry media's survey estimates on the global stock market, bond market, foreign exchange market, gold and crude oil market trends in 2025 from ten major global investment banks.
Note: Horizontally representing various assets, namely S&P 500, FTSE 100, European Stoxx 600, 10-year US Treasury bonds, crude oil, and gold
Overall, most of these investment banks are generally optimistic about the performance of various assets other than crude oil next year, and expect many market themes in 2024 to continue. But they also acknowledge that Trump's arrival in the White House next month and how he implements plans such as trade tariffs and tax cuts will be key to shaping the direction of financial markets.
At the same time, these investment banks are also working to avoid repeating last year's mistakes - many institutions predicted an imminent economic recession last year, but it did not materialize in the end.
Global stock markets
In terms of the stock market, most of the aforementioned investment banks predict that the S&P 500 index will continue to reach a historic high next year, but most of them believe that its increase will be lower than the historical average annual increase level of 11%.
Among these 10 investment banks, 9 are clearly bullish on the US stock market next year, with an average expectation that the S&P 500 index will further rise by about 10% to around 6550 points next year. Only Societe Generale is relatively neutral, and it is expected that the stock index will drop slightly to 5800 points next year. The S&P 500 index has surged 23% this year, closing at 5930.85 points last Friday.
Deutsche Bank predicts that the S&P 500 index will climb to 7000 points, driven by the sustained strength of the US economy. But the bank also reminds that the timing of policy changes during President Trump's tenure will be crucial to market performance.
The bank also believes that the huge interest of investors in artificial intelligence stocks will drive the stock market up. Bankim Chadha, Chief US Equity Strategist at Deutsche Bank, said, "The valuation is undoubtedly already high, but it may continue to be maintained or even higher
Of course, there are also other analysts who are candid that they are waiting for the latest signs of AI boosting business revenue growth. Citigroup analyst Drew Pettit said that there have been no cases of investment overheating in history, which could mean that the results in 2025 will be even more negative, and the uncertainty of Trump's policies may further drag down the S&P 500 index. We expect greater volatility. This won't be an easy journey
In the European market, the above investment banks also generally expect that European shares will further rise - if the European Central Bank accelerates interest rate cuts, the Russia-Ukraine conflict ends or the political situation in France and Germany begins to stabilize, it is expected to bring benefits.
Among the 10 banks surveyed, 5 expect European stock markets to continue to rise next year, with only one (UBS) relatively bearish, while the rest are neutral.
Bond market
As for the bond market, the above investment bank strategists predicted that with the decline of inflation in the first half of next year, the yield of US treasury bond bonds is also expected to decline. But the uncertainty of what actions Trump will take immediately after taking office has led to different views on the subsequent trend.
On average, these investment bank strategists predict that the yield of the 10-year US treasury bond bond will fall from the current 4.49% to about 4.1%. However, there is still a significant difference in forecasts among investment banks - Morgan Stanley predicts that the 10-year US Treasury yield will fall to 3.6%, while Deutsche Bank expects it to climb to 4.7%.
Vishwanath Tirupattur, Global Head of Fixed Income Research at Morgan Stanley, stated that the Federal Reserve will "walk the tightrope" next year before the Trump administration takes action. The bank expects that the Federal Reserve will continue to reduce borrowing costs until the middle of next year, after which the inflationary pressure caused by widespread tariffs will force a pause in interest rate cuts.
On the other hand, Deutsche Bank believes that the market is currently too optimistic, and its reason for bearish views on US bonds depends on the "current political reality", namely fiscal easing, deregulation, strengthened immigration controls, and comprehensive tariffs. The bank believes that all these measures indicate that inflation will face upward pressure.
Last week, the Federal Reserve made it clear at its January meeting that it intends to slow down the pace of interest rate cuts next year. In addition to the surprising halving of the Federal Reserve's forecast for next year's interest rate cuts to two in the dot matrix, there is also a worrying phenomenon - as many as 15 out of 19 Federal Reserve officials believe that inflation is facing upward risks, while only 3 made the same prediction at the September meeting.
Hui Market
More than half of the surveyed institutions expect that Trump's 2.0 era policies will further boost the US dollar next year, although the incoming president may also be concerned that the appreciation of the US dollar will have an impact on the competitiveness of US commodity exports.
The euro's decline at the end of the US presidential election in November this year was the largest among all G10 currencies. Since the end of September, the euro against the US dollar has fallen from around the 1.11 mark to less than 1.04. Deutsche Bank currently expects the US dollar to reach parity with the euro next year.
Kamakshya Trivedi, Global Head of Foreign Exchange, Interest Rates, and Emerging Markets Strategy at Goldman Sachs, stated that Trump tends to use tariffs as a policy measure, which will help boost the US dollar. President Trump will not hesitate to significantly increase tariffs. We expect the policy combination of tariff hikes and tax cuts to provide important support for the US dollar in the coming year
Bank of America, on the other hand, is relatively pessimistic about the long-term prospects of the US dollar. Kamal Sharma, senior foreign exchange strategist at the bank, predicts that as Trump's remarks translate into tough policies, the market will actually respond more to expectations of a "perfect tariff storm" rather than policy implementation - the US dollar will strengthen in early 2025, but will fall back to $1.10 per euro by the end of next year.
Gold
After a shocking year due to the conflict in Ukraine and the Middle East, the top ten institutions generally expect safe haven asset gold to continue to rise. They believe that the central bank's demand for gold and concerns about inflation and reckless fiscal spending will be the driving force behind the rise in gold prices next year.
Goldman Sachs and Bank of America both predict that gold will rise nearly 13% next year, reaching $3000 per ounce, although this is less than half of this year's increase. The average expectation of the top ten investment banks is that gold prices will rise by 8% next year, reaching $2860.
Only Morgan Stanley is betting that gold prices will remain around current levels, and the bank's strategists expect economic weakness in major economies to become a resistance to gold demand.
Crude oil
Despite OPEC+'s plan this month to delay production increases to support oil prices, the aforementioned investment banks still expect Brent oil prices to fall further from around $72.80 per barrel at Friday's close to around $70 per barrel by the end of next year.
Kim Fustier, Head of European Oil and Gas Research at HSBC, stated that the OPEC+initiative is unlikely to change the direction of oil prices. She said, "In 2025-26, the production growth rate of non OPEC countries will exceed the demand growth rate, so OPEC will have no room to cancel the production cuts
Relatively speaking, Goldman Sachs still maintains its long-term bullish image in commodities. Goldman Sachs' forecast for oil distribution next year is $76 per barrel. The bank stated that commercial crude oil inventories have significantly decreased in recent months, and filling strategic inventories in the United States and China next year will drive up oil prices.