Ten scenarios for the most uncertain year: the American stock market will face fate and it looks bad for Europe

Political changes, including tariffs, tax policy and the regulatory environment, should have almost as much impact on the rest of the world as they do on the US. As the year progresses, international opportunities should present themselves: European stock markets are expected to slow but recover to current levels by the end of 2025, and in China, domestic stimulus measures should offset any slowdown caused by changes in trade policies.

• He S&P will continue to rise, and could do so quickly: Savita Subramanian, Head of US Equity Strategy, foresees an upside potential of more than 10% for the S&P and an acceleration of earnings growth to 13% in 2025.





• The improving productivity in the US should help economic growth, but political changes should play a fundamental role for the US and the rest of the world: Aditya Bhave, Senior US economist, estimates that US GDP growth will be 2.4% year-on-year in 2025 and 2.4% year-on-year in 2025 and 2.4% year-on-year in 2025. 1% year-on-year in 2026, above consensus, due in part to improved productivity. A new combination of fiscal policies could favor US economic growth more than that of the rest of the world.





• Fed expected to make one more cut before pausing; US bond yields should remain in a narrow range: In 2025, Bhave and his team expect the Federal Reserve to cut interest rates by 25 basis points at its March and June meetings, and then pause. Mark Cabana, head of US Rates Strategy, foresees a relatively narrow trading range for the 10-year US Treasury yield, around 4-4.5%.





• Commodity prices, including oil, are expected to fall: Francisco Blanch, head of Commodities and Derivatives Research, expects demand growth for commodities to weaken. Macroeconomic fundamentals suggest that in 2025 markets will be oversupplied in oil and grains, but more balanced in the case of metals. After facing headwinds earlier in the year, gold should reach a high of $3,000 per ounce.





• Dollar strength until the first half of 2005but concerns about growth will lead to depreciation: Alex Cohen, senior FX strategist, expects the US dollar to remain strong through the first half of 2025, at which point bullish factors should subside amid a political outlook and less secure growth.





• Emerging market assets face near-term riskand then a likely upgrade: David Hauner, Head of Global Emerging Markets Fixed Income Strategy, says uncertainty over US policy is likely to push emerging markets lower, but investors could find a buying opportunity once there is more clarity on trade policy, especially if the US dollar hits highs.





• The American cyclicals Should Outperform: Subramanian expects strength from cyclicals in 2025 for a variety of reasons, including the Republican sweep, the productivity cycle, decades of underspending in the manufacturing sector, and slight positioning in cyclicals.





• The credit demand remains exceptionally strong: Our Credit Research team expects strong positive total returns for credit in developed markets next year, the third consecutive year of strong performance.





• We hope that the Chinese growth weakensbut easing will offset the impact of tariffs: Helen Qiao, greater chief China economist and head of Asia Economics, expects China’s real GDP growth to slow to 4.5% year-on-year in 2025 and that stimulus from domestic demand will belatedly offset any impact of tariffs.





• The euro zone equity market will record declines until mid-year, and then recover. Sebastian Raedler, head of European Equity Strategy, forecasts a 7% drop in the Stoxx 600, followed by a recovery close to current levels.

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