Fidelity International: Expects sustainable momentum in US stocks by 2025, with a focus on corporate earnings trends
Fidelity International Outlook 2025 believes that the momentum of the US stock market is sustainable, with a focus on corporate earnings trends. Despite ongoing global market uncertainties, Fidelity is optimistic about the prospects for stock investments and recommends strategic deployment in fixed income to cope with volatility. US stocks have performed strongly due to fiscal policy and tax cut expectations, with corporate earnings expected to spread from the technology sector to other sectors. The economic growth outlook for Europe is relatively weak, and investors need to pay attention to policy support and geopolitical developments. In the Asian stock market, India benefits from minimal impact from US-China trade, while China's policy has shifted to support growth
According to the Zhitong Finance APP, Fidelity International Investment stated that looking ahead to 2025, global market uncertainties remain. From a multi-asset allocation perspective, Fidelity continues to be optimistic about the prospects for investing in stocks but focuses on corporate earnings trends, as they are an important driver of returns. As for fixed income, U.S. Treasury yields are rising due to the impending governance of the Republican Party and expectations of higher inflation. This reflects that fixed income can provide considerable returns and serve as a risk diversification tool. However, it is recommended to strategically deploy duration, as bond yields will continue to fluctuate due to various factors such as growth, inflation, and policy expectations.
In terms of regional allocation, U.S. stocks have recorded strong gains this year, and with expectations of more expansionary fiscal policies, potential corporate tax cuts, and regulatory easing, the momentum for U.S. stocks is expected to continue. Strong corporate earnings are anticipated to spread from the technology sector to other sectors, narrowing the gap between the two. Considering that the momentum of the U.S. economy is nearing saturation, additional stimulus measures are likely to increase inflation more than economic growth. Economic growth expectations in Europe are weaker than in the U.S., with ongoing political instability in France and Germany, coupled with market concerns about the sustainability of fiscal policies, leading to underperformance in the region. However, considering that most negative factors have been reflected, investors should pay attention to whether local central banks and governments will increase supportive policies, as well as developments in the Russia-Ukraine geopolitical situation, to explore local investment opportunities.
Regarding Asian stock markets, the Indian stock market is expected to face fewer impacts from U.S.-China trade. The stock markets in Taiwan and South Korea benefit from their close relationship with the global technology cycle, but investors need to be aware of recent political instability and the technology cycle reaching a peak, which may affect market performance. The shift in mainland China's policies towards stabilizing the real estate market and stock market indicates support for growth and a focus on local demand, which will benefit market sentiment.
In Japan, real wage growth is expected to continue driving consumption, but the ongoing tariff risks from the U.S. remain an unknown factor affecting external demand. Japanese Prime Minister Kishida Fumio supports companies in raising wages and increasing the minimum wage in the spring. The Bank of Japan will be more conditioned to raise interest rates again, and a stronger yen combined with higher interest rates will pose headwinds for corporate earnings in 2025, necessitating attention to related risks