Stock market outlook 01/2025: What the stock market year 2025 will look like

January 14, 2025

What has been the focus in recent weeks

The US economy performed impressively well in 2024, once again demonstrating its strong adaptability. As a result, the US equity markets have also had a very pleasing year. The recently published data on the state of the US economy was so strong that expectations of further interest rate cuts by the Fed fell. This caused bond yields to rise and the US dollar to strengthen further, all of which had a negative impact on the US equity markets.

Added to this were concerns about rising inflation, partly in connection with rising oil prices due to the renewed US sanctions against Russia. And although Trump is not even in office yet, he is already keeping the world – and therefore the financial markets – on tenterhooks. “Greenland”, “Panama”, “Elon Musk”, “punitive tariffs”, etc. to name just a few keywords.

Our investment solutions and positioning

Our multi-asset solutions performed very positively across the board last year. The higher the selected risk profile, the higher the returns over the year. In addition to global equities, our strong allocation to gold was also a clear driver of the positive result. While European industrial stocks were also among the winners, Swiss equities were disappointing, coming under pressure in the second half of the year in particular. Last but not least, foreign currencies also made a positive contribution, with the US dollar clearly leading the way against the euro.

Also in the equity strategy Global Equity Trends we can look back on a successful 2024. Although the allocation in December was somewhat sporty, such phases are in the nature of a trend strategy. Over the last 12 months, the winners were clearly to be found in large-cap growth stocks, which were also represented in the portfolio for most of the time. On the other hand, the temporary allocation to energy stocks and healthcare companies was not crowned with success. Should there be a shift in trends in the new year, we are very confident that we will recognize this promptly and will adjust our focus accordingly.

The relative weakness of the Swiss equity market was also reflected in our equity strategy Swiss Equity Selection was not left unscathed. Although we had seen very pleasing developments in Holcim, Galderma and ABB, we were disappointed by the stocks of Sika and Nestlé. However, as the Swiss equity market is more defensive by nature, this development in a global bull market is neither surprising nor a cause for concern for long-term investors.

In our equity strategy Global Equity Selection Nvidia has succeeded in defending its title. Having already performed best in 2023, the chip manufacturer was also able to maintain its top position last year. Arista Networks was in second place in both years. However, there was a change in third place. Amazon slipped to fourth place and Fortinet secured bronze in 2024. This shows that 2024 was more or less a continuation of 2023. It remains to be seen whether this will be the case again this year. However, we currently see no signs that the trend towards artificial intelligence (AI) and cloud computing is on the wane.

What next? And what needs to be considered?

For 2025, we expect a mix of continued robust US economic growth, stubborn inflation and rising government deficits – particularly in the US. Healthy corporate earnings growth should continue to support equities. AI is likely to remain an important topic this year. Technological developments in this area are continuing to make rapid progress. Against this backdrop, we are generally positive for the equity markets.

The Swiss market also has a good chance of performing better after a rather disappointing 2024. Its defensive nature should benefit it in the wake of generally increased uncertainty.

On the equity side, however, we expect lower returns internationally than in 2024 and, above all, increased volatility. The high volatility in politics will also be reflected on the financial markets. This creates opportunities for investors who know how to deal with increased volatility and react prudently. In this context, Trump is definitely one of the great unknowns in the new year. It is striking that the bond market has already issued a warning and yields have risen. This needs to be closely monitored.

But the good news is that Trump is known to have defined his successes in the past by the performance of the stock markets and is said to check share prices several times a day.
An exciting year lies ahead of us in many respects!

Point Capital Group
January 14, 2025

Our experts: Jules Kappeler (CEO) & Christian Sutter (Portfolio Manager)