Investing.com -- As 2025 approaches, UBS analysts identified critical factors that will shape the global economy and markets for the rest of the 2020s.
The "Year Ahead 2025" report from UBS examines the impact of political shifts, transformative innovations, and monetary easing on investors’ strategies.
Despite significant challenges over the past five years—including global lockdowns, geopolitical conflicts, and surging inflation—global equity markets are up 50%, and US corporate profits have nearly doubled.
UBS predicts further market gains, with the S&P 500 potentially reaching 6,600 by year-end 2025, driven by robust US growth, lower interest rates, and advancements in artificial intelligence.
While the US economy could benefit from tax cuts and deregulation under a Trump administration, UBS said new tariffs might pose stagflationary risks.
In Asia, the bank anticipates slower growth in China, partially offset by fiscal stimulus and robust expansion in India. Europe’s growth should improve with falling interest rates, led by outperformers such as Spain, the UK, and Switzerland.
UBS also highlights several actionable opportunities:
Lower Rates: With further central bank cuts, cash returns will decline, making investment-grade bonds attractive for mid-single-digit returns.
Stocks: The US remains a preferred equity market, while Asia ex-Japan offers diversification. Swiss dividend stocks and Eurozone small- and mid-caps also present opportunities.
Transformational Innovation: AI and renewable energy could drive sustained profit growth.
Gold and Commodities: Geopolitical risks and decarbonization efforts bolster demand for gold and transition metals.
Real Estate: Constrained supply and rising demand support opportunities in logistics, data centers, and housing.