As 2024 draws to a close, we’ve asked the experts what 2025 has in store for markets, and the best investment opportunities

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By Dan McEvoy
In the run-up to Christmas and the New Year, many investors will be deciding on the best stocks, commodities and funds to invest in for 2025, to help navigate the complex but potentially rewarding global market environment.
While inflation and global instability remain areas of concern, investors who think carefully about where to invest for the year ahead can potentially benefit from potential upsides, including the expected impact of Donald Trump’s re-election on the stock market.
The UK stock market has struggled over recent years, but some experts believe that this now makes FTSE 250 stocks an attractive source of value. With UK interest rates now entering a cutting cycle, this could be one key source of diversification away from US megacaps.
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Bonds and commodities (especially gold), though, remain important components of a balanced portfolio.
The macro environment – risk and reward
“From an economic perspective, the environment is still quite benign,” Johanna Kyrklund, group chief investment officer (CIO) at Schroders, told a 2025 crystal ball webinar this month (November). “With inflation rolling over, we’ve seen a number of central banks start to cut rates, which is very helpful.”
Schroders expects the US economy to return to expansion in 2025. “We’re not expecting a hard landing,” says Kyrklund. This is based largely on labour market resilience, as well as positive indications from savings data, and expectations that fiscal spending is unlikely to cut back significantly.
“This combination of rates coming down and growth holding up – what we often refer to as a ‘soft landing’ – is very benign for markets.”
However, there are risk factors that need to be considered.
Trump’s tariffs, which herecently announced would be newly levied on imports from Canada and Mexico from the outset of his presidency, could fan global inflation. While Schroders’ baseline model paints a positive picture for markets, elevated global tariffs could, they believe, negatively impact global trade and weigh on US consumer spending.
“Generally, an environment where global trade is contracting is one where the pie is shrinking,” says Kyrklund.
However, Scott Klimo, CIO at Saturna Capital, feels that tariffs are unlikely to spread significantly beyond these countries. Mexico and Canada are in the firing line by virtue of the large trade deficits that the US runs with them, but as Klimo says in HANetf’s Partner Outlook 2025, “a global 10-20% tariff [is] unlikely, as the US runs trade surpluses with many countries, including Brazil, the United Kingdom, Spain, Australia, and the Netherlands”.
There is also the potential for the bond vigilantes to further fiscal spending in the US.
“Investors face a complex landscape” heading into 2025, Tom Stevenson, investment director at Fidelity International, tells MoneyWeek. US policy shifts, moderating inflation, and regional divergence all look set to influence the markets.
The global picture is in many respects harder to predict. “Outside the US, economies have struggled with stagnation and weak productivity,” Shaan Raithatha, senior economist at Vanguard, tells MoneyWeek. “Europe faces risks from global trade slowdowns, while China needs more aggressive policies to overcome structural issues.”
On the other hand, Kate Morrisey, head of asset allocation at Evelyn Partners, predicts a return to global growth next year.
“With Western and Eastern policymakers easing monetary policy, we could see global growth accelerate over the next 12 months,” she says.
The UK economy in particular will be heavily impacted by the question of how persistent inflation remains, and the knock-on effect this has on interest rates. On 5 December, the Bank of England (BoE)published data suggesting that 54% of British employers expect to raise prices in light of the increase to employer national insurance announced in the Autumn Budget.
This could lead to greater inflation. Seath, director of market insight at the Investment Association, predicts a “slightly more inflationary environment through 2025”.
As a result, markets expect the BoE to “reduce the pace and the scale of interest rate cuts”, Seath tells MoneyWeek.
In the short term, this complicates the picture as it relates to the government’s plan to return the UK to GDP growth; in Seath’s view, it could take longer than previously hoped, and this has a negative impact on the short term outlook for the UK’s equity market.
All the experts we’ve spoken to agree on one thing: the importance of diversification. In essence, while there are reasons to be optimistic about 2025, this optimism is laced with uncertainty for a variety of reasons, and the only way to hedge against this uncertainty is through a diversified portfolio.
“Diversifying investments that improve your portfolio resilience is very important,” says Kyrklund.
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