Citigroup said Friday it expects the rise in global equities to continue through 2025, as lower interest rates and easing inflation could help prop up corporate earnings.
Wall Street brokers expect the MSCI All Country World Index Local (.dMIWD00000P), which is a benchmark for global stock performance, to reach 1,140 points by the end of this year, implying a 10% gain from its last close of 1,035.46.
Citi estimates earnings per share (EPS) growth of 10% for global equities, slightly below the analyst consensus of 13%, and added that the US and emerging market regions will see the strongest EPS growth, at around 15%.
Maintaining an “overweight” stance on US equities, Citi said President-elect Donald Trump’s policies are “a major source of uncertainty, as tariffs, tax cuts and deregulation will have both favorable and adverse economic impacts.”
The US benchmark S&P 500 index, SPX, rallied 24% in 2024, driven by growth expectations around artificial intelligence, expected interest rate cuts from the US Federal Reserve, and more recently the possibility of deregulatory policies from the incoming Trump administration.
“While AI is no longer expected to provide much of an EPS growth advantage relative to other indices, continued USD strength and policy uncertainty regarding rates could prolong AI’s outperformance,” Citi analysts added.
Among other regional equity markets, Citi maintains a “neutral” view on emerging markets, “underweight” on Australia and Japan, and “overweight” on continental Europe.
In the global sector, the broker upgraded health services to “overweight”, consumer staples and materials to “neutral”, and downgraded consumer discretionary, utilities and industrials to “underweight”.
Source: Reuters
