The return of Donald Trump to the presidency will be an incentive for the US economy and the US market during 2025. This is how Rosa Duce, CIO of Deutsche Bank and Alejandro Vidal, Head Investment Manager of Deutsche Bank for Spain see it in their outlook for 2025. After a year in which it has been the great protagonist of the world market, in the Republican heat, The S&P 500 will continue its upward trend next year to 6,500 points.
One of the assets that will benefit most from this new mandate will be the greenback and the euro could close the next year at $1.02. Currently, the exchange rate of the two main world currencies moves at 1.05 dollars. Deutsche Bank’s forecasts assume seeing the European currency 3% below current levels and placing it at November 2022 levels.
With the arrival of the Republicans to the presidency of the United States, the market discounts that the growth of the North American economy will continue its course, driven by a more lax fiscal policy, with greater deregulation, an increase in the public deficit and tariffs on imports. In this context, from Deutsche Bank They place US GDP growth at 2% in 2025.
With the economy still strong, they also expect the Federal Reserve (Fed) to lower interest rates during the next fiscal year less than originally expected. In this way, from the German entity, they estimate that The agency will cut rates by 50 basis points additional (they assume that at the December meeting, Powell will lower them by 25 basis points), leaving them at 3.75-4% by the end of 2025.
Trump’s arrival, however, has affected their growth forecasts for the European economy, for which they now estimate an improvement of below 1% in 2025. With a more weakened situation, especially in the main economies of the Old Continent , Germany and France, the European Central Bank (ECB) would cut the deposit facility rate on up to four separate occasions over the next year to reach its level at 2% at the end of that year.
They continue to maintain that Spain will continue with a trail of growth superior to that of the European economy itself, benefited by its service economy. Thus, they set an increase for the Spanish GDP of 1.7% for 2025.
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From the German bank they point out that 2025 will be the year in which yield curves will return to their usual course and they will stop being inverted and will have a positive slope. With this scenario and, although the Fed has begun the path of lowering rates, bonds continue to be an attractive option because, despite the decrease in yields, they will continue to beat inflation. However, Deutsche Bank points out that they have reduced their position to lower quality debt.
In equities, they state that the presidential elections have not been the main driver of change in the markets in the months following their celebration. In this way, they explain that, although Donald Trump’s presidency will ensure that investment appetite remains on Wall Street, the growth in corporate profits will be the true catalyst. “AI is the key factor. It is something disruptive that will permeate reality, although in US companies it is already having its impact. The improvement in productivity has been evident and goes beyond cyclical measures,” Duce explained. .
In this way, Deutsche Bank continues to be overweight the North American market, for which they estimate increases of 8% in the case of the S&P 500, which would close 2025 at around 6,500 points (new historical highs). They show their preference for US mid- and small-cap companies who will benefit from a more relaxed financing environment and more lax fiscal policies, while their profits grow and offer interesting discounts at the investment level.
By theme, they point to technology, which will continue to dominate; to consumption, health and medical technology and financial values. However, they emphasize that 2025 is going to be a year of volatility for the stock markets, marked by the Republican mandate that will condition and generate doubts in each Fed rate decision.
In raw materials, they see gold at $2,800 per ounce and Brent (the reference oil price in the Old Continent) at $69 per barrel at the end of 2025.
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