Global Economic Scenario in 2024
The year 2024 was marked by significant geopolitical events, including wars, crises, and international tensions. Despite these challenges, the financial markets displayed remarkable resilience, with oil prices showing limited fluctuations.
In the United States, equities led global markets, supported by surprisingly strong economic growth. High consumer spending and a robust labor market were key drivers, while the Federal Reserve adopted a more accommodative monetary policy as inflation eased. Investments in artificial intelligence further fueled earnings growth, though valuations remain high.
In contrast, Europe faced deepening economic stagnation, exacerbated by political crises in major countries such as Germany and France. Bond markets experienced elevated volatility due to shifting interest rate expectations, while eurozone deposit rates are projected to decrease to 2% by the end of 2025.
Gold delivered strong performance despite its sensitivity to a stronger dollar and high real rates, offering diversification benefits.
Outlook for 2025
US Equities: Valuations and Opportunities
The outlook for US equities remains positive, supported by upward earnings revisions and continued buyback activity. However, investors should remain cautious about valuations, which are still elevated.
Small caps emerge as a potential opportunity, as they remain relatively cheaper compared to mega-cap stocks.
Europe: Potential and Challenges
European equities are attractively valued but require a positive catalyst to regain investor interest. Sectors like tourism, media, and defense show promise, particularly due to their exposure to the US market.
China: A Potential Positive Surprise
China may become a key opportunity, thanks to its increasingly accommodative monetary policy and additional fiscal stimulus. However, uncertainties linger over its real estate sector and the escalation of US tariffs. Strategic management of these challenges could restore investor confidence.
Key Asset Classes and Investment Strategies
- Gold: Remains a critical portfolio hedge, effectively mitigating risks tied to adverse macroeconomic scenarios and geopolitical crises.
- US Money Markets: Record levels in money market funds could pivot toward equities in case of a market correction, limiting potential drawdowns.
