(Reuters) - Citigroup (NYSE:C) said on Friday it was expecting a rally in global equities to extend into 2025, as falling interest rates and easing inflation could help prop up corporate earnings.
The Wall Street brokerage forecast the MSCI All Country World Index Local, a benchmark performance gauge of world stocks, to hit 1,140 points by the end of this year, implying a 10% upside to its last close of 1,035.46.
Citi estimated a 10% earnings-per-share(EPS) growth for global equities, slightly below analyst consensus of 13%, adding that U.S. and emerging market regions could see the strongest EPS growth of about 15%.
Maintaining its "overweight" stance on U.S. equities, Citi said President-elect Donald Trump's policies are "a key source of uncertainty, as tariffs, tax cuts and deregulation will bring a complicated mix of favorable and adverse economic effects."
The U.S. benchmark S&P 500 index rallied 24% in 2024, fueled by growth expectations surrounding artificial intelligence, expected rate cuts from the U.S. Federal Reserve, and more recently the likelihood of deregulation policies from the incoming Trump administration.
"While AI is no longer expected to provide as much EPS growth advantage vs. the rest of the index, any continuation of USD strength and policy uncertainty on tariffs could extend its outperformance," Citi analysts added.
Among other regional equity markets, Citi maintained its "neutral" view on emerging markets, "underweight" on Australia and Japan, and "overweight" on Continental Europe.
On the global sector front, the brokerage raised its rating on health care to "overweight," consumer staples and materials to "neutral," and downgraded consumer discretionary, utilities and industrials to "underweight."