With the equator of the decade in crosshairthe time has come to take stock and look back at a five-year period that has brought with it some record-breaking equity markets, solid economic growth (+30% since the beginning of the decade) and historical technological advances. However, this movement has also been accompanied by a global pandemic, various geopolitical conflicts and global social challenges.
The decade is only halfway over, which begs the question: what’s next? UBS has raised this issue in the last round table they held for the media, titled UBS Year Ahead 2025 where they have given their experts’ opinions on the key events that will shape the next stage of the “roaring 20s.”
Mark Haefele Chief Investment Officer of the Swiss firm, explains in this sense that in the first stages of the second part of this decade the trend seen until now will continue and in 2025, therefore, we will be able to witness a “great year for the stock markets.”
“Negotiations with trading partners or internal legal challenges could mitigate its scope and impact, but tax cuts and deregulation could support a more positive market narrative,” explains the executive of the firm who assures that the S&P 500 could reach the 6,600 points by the end of 2025just over 10% from current levels, driven by solid US growth, lower interest rates and advances in AI.
In this sense, Themis Themistocleous Chief Investment Officer EMEA of the firm, has focused on the growth expected for the economies of Europe, which in 2025 will be around 0.7/0.8 for the most powerful countries in the region, such as Germany, France and Italy, and which will be greater in the peripherals such as Spain Portugal or Greece, where the GDP growth rate will exceed the 2% and in some cases it can reach 3% in the best of cases.
Of course, whether or not these objectives are achieved will have a lot to do with the challenges facing the European region in the coming months, such as the hypothetical shock for Germany, which may mean an aggressive implementation of tariffs by the new Trump administration on the German country’s exports, or politically, the elections that the country faces in 2025
In this context, and in the absence of fast-growing companies like those in the US, investors are often willing to diversify and focus on Wall Street companies. However, looking ahead to next year, UBS sees an opportunity in the real state European. “The outlook for residential and commercial real estate investments is bright. With limited supply and growing demand, there are opportunities in sectors such as logistics, data centers and multifamily housing,” they explain.
In commodities, lower interest rates, persistent geopolitical risks and concerns about US government debt should continue supporting gold in 2025. “There are also long-term opportunities in copper and other transition metals such as aluminum or lithium, as demand increases alongside growing investment in electric power generation, storage and transportation,” he explains. Mark Andersen Co-Head Global Asset Allocation.
“US growth will be supported by deregulation and improved business confidence, which will more than offset the impact of selective tariffs on key Chinese and European imports,” they explain from the entity while adding that “trade and geopolitical negotiations will add volatility to European and Chinese markets.”
Among the guidelines proposed by UBS for next year are also less expansive fiscal plans in the US, falling inflation moving closer to targets and bond yields falling slightly in part due to the decisions of central banks that systematically cut interest rates towards a neutral level.
“The dollar is likely to be caught between short-term positive factors, such as the rigidity of the US labor market and tariffs, and long-term negative factors, such as overvaluation,” notes Anderson about the US currency. “Investors should take advantage of periods of strength to reduce their exposure to the dollar,” he says..
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