DWS has expressed a positive outlook for European equities in 2025, forecasting five interest rate cuts by the European Central Bank (ECB) by the end of that year. Vincenzo Vedda, Global Chief Investment Officer at DWS, describes the upcoming year as 'very interesting' for investors, despite anticipated volatility stemming from the potential re-election of Donald Trump [de6545f0].
Johannes Müller, Chief Economist at DWS, highlights signs of economic normalization in Europe, noting that while inflation has decreased, core inflation remains elevated. This situation is expected to prompt the ECB to implement rate cuts, which could further support market stability [de6545f0]. The firm also anticipates a stabilization in European production, suggesting that Europe could be the 'place to be' for Purchasing Managers' Index (PMI) indicators [de6545f0].
In addition to European markets, DWS's analysis extends to US equities, with David Bianco, Chief Investment Officer for the Americas, pointing out the potential for growth following the Trump election. Meanwhile, Marcus Poppe, Co-Head of European Equities, remains optimistic about sectors such as artificial intelligence and cyclical industries, which are expected to perform well in the evolving market landscape [de6545f0].
Adding to this optimism, JPMorgan has forecasted a continuation of the US equities rally into 2025, predicting that market gains will broaden beyond Big Tech. This sentiment reflects a growing confidence among market leaders regarding growth and global opportunities, even as they analyze the risks associated with Trump's potential return to the political arena [7968bd4b].
In a recent analysis, Marc Decker, Head of Equities at Quintet, emphasized that artificial intelligence (AI) will be a key market driver, particularly in the wake of Trump's decisive election victory on December 2, 2024. Markets are expected to favor clarity and stability in the aftermath of the election, which could lead to benefits for financial stocks due to anticipated deregulation [3ffa21c7].
Moreover, Thomas Höfer, Head of European Credit, predicts positive returns in fixed-income securities, indicating a broader trend of recovery across various asset classes. Ulrich von Creytz also foresees a turnaround in the real estate market by 2025, adding to the overall optimistic sentiment surrounding European equities [de6545f0].
In the context of real estate, foreign funds are reportedly returning to the Irish market, signaling renewed interest and investment opportunities [7968bd4b]. Additionally, fintech company Revolut aims to double its customer base to 100 million within three years, showcasing the potential for growth in the tech sector as well [7968bd4b].
Despite some mixed earnings reports, demand for Big Tech remains strong, with companies like ASML and Nvidia justifying their high valuations. The healthcare sector also shows promise due to demographic trends, although firms like Eli Lilly and Novo Nordisk are facing increased competition [3ffa21c7].
As the economic landscape continues to shift, DWS's insights, along with JPMorgan's forecasts and Quintet's analysis, provide a comprehensive view of the potential opportunities and challenges that investors may face in the coming years, underscoring the importance of strategic planning and adaptability in investment approaches. Market volatility is expected amid political uncertainty in Germany, and tariffs could negatively impact European industries, particularly in the auto sector, which faces competitive pressure from China [3ffa21c7].