Outlook – First Quarter 2025
Discover ur key messages:
World Economy
Continued U.S. economic strength: Economic growth in the U.S. remains robust, driven by strong consumer spending, resilient labor markets, and favorable fiscal policies, including potential tax cuts and deregulation under Trump’s second term.
Subdued European and Chinese growth: In Europe, economic expansion remains constrained by weak external demand and structural challenges, with some improvement expected due to higher real wages. In China, growth remains under pressure due to falling property prices and ongoing U.S. tariffs.
U.S. trade policy as a pivotal factor: The key uncertainty in 2025 revolves around U.S. tariffs, particularly targeted at China and other high-exporting nations like Vietnam and Mexico. A baseline scenario assumes only selective tariff increases that minimize consumer price impacts in the U.S.
Capital Markets
U.S. equities remain attractive: The U.S. market benefits from strong fundamentals, including corporate earnings growth and supportive policies, despite concerns about high valuations in key tech stocks.
Selective European investments: The European market outlook remains mixed but not negative. We continue to focus on quality growth stocks, high-dividend shares, and companies generating a large portion of their revenues in the U.S., particularly those with local production facilities.
China: Tariff uncertainties cloud the outlook for Chinese equities, though government stimulus measures may provide some relief.
Divergent interest rate trends: In the U.S., rate cuts are expected to be more measured due to resilient growth and moderate inflation. In Europe and China, rates are likely to decline more sharply, driven by economic softness.
Focus on quality bonds: We recommend intermediate-term U.S. Treasury bonds and investment-grade corporate bonds, which offer attractive yields amid stable economic conditions. Conversely, the “high-yield” segment requires caution due to historically low credit spreads.