DWS: The likelihood of a continued strong upward trend in the US stock market in 2025 is relatively low, and gold is expected to fluctuate within a narrow range

According to the Zhitong Finance APP, German asset management company DWS has released its market outlook for January 2025. DWS's Global Chief Investment Officer Vincenzo Vedda stated that the S&P 500 index recorded an impressive 24% increase in 2024, but the market rally was mainly driven by a few technology stocks, with the "Magnificent Seven" contributing two-thirds of the gains. He noted that after a significant rise, U.S. stock valuations are currently being digested, and the likelihood of continuing this upward trend in the stock market in 2025 is relatively low. Following an astonishing increase in gold prices (up 26% in U.S. dollars) in 2024, the firm expects gold prices to fluctuate within a relatively narrow range.

He mentioned that several market indicators are worth noting: since October 2022, the MSCI Global Index has risen by 60%, and the S&P 500 Index has increased by 70%, with stock prices surging; cash holdings have reached a ten-year low, while the proportion of U.S. stock holdings is significantly high. The geopolitical situation remains unstable, and with U.S. technology stocks facing numerous challenges, the market is at risk of adjustment pressure at any time.

Despite the many uncertainties in the market, Vedda remains cautiously optimistic about the stock market outlook for 2025, mentioning that the U.S. economy and job market are performing robustly, corporate earnings are continuing to recover, and the upward trend in long-term Treasury yields has largely peaked.

Vedda believes that the momentum of the U.S. economy remains strong. The new President Trump has proposed easing regulations, adjusting trade policies, and implementing expansionary fiscal measures, which are expected to boost U.S. economic growth. In terms of inflation, U.S. inflation continues to cool, but if large-scale tariffs and tightened immigration measures are implemented, it may slow the pace of inflation decline.

Easing regulations is expected to promote the growth of U.S. corporate profits. Due to the favorable conditions surrounding the U.S. elections, the firm has upgraded the rating of the U.S. stock market relative to the MSCI Global Index to short-term neutral. The firm currently favors the healthcare sector, believing that it can achieve robust defensive growth at reasonable prices.

By 2030, India is expected to surpass Germany and Japan, joining the U.S. and China as a major global economy. Compared to other Asian countries, India has significantly lower labor costs, coupled with increased infrastructure investment, policies that promote economic growth, and the inclusion of Indian stocks in major stock market indices, all of which create a favorable capital market environment for India