BlackRock - 2025 Global Investment Outlook

We are not in a typical business cycle. Mega forces like AI are transforming economies, breaking historical trends. We stay risk-on as we look for transformation beneficiaries – and go further overweight U.S. stocks as the AI theme broadens out. We have more conviction inflation and interest rates will stay above pre-pandemic levels.

Read the 2025 outlook (PDF)

Investment themes

01

Financing the future

Mega forces including AI are transforming economies. We see capital markets – especially private markets – playing a vital role in building this transformation.

02

Rethinking investing

This transformation raises questions about how to build portfolios for an ever-changing outlook. We think investors should focus on themes and put more weight on tactical views.

03

Staying pro-risk

We remain pro-risk and further upgrade U.S. stocks thanks to U.S. corporate strength. But we stay nimble. Key signposts for changing our views include any surge in long-term bond yields or an escalation in trade protectionism.
 

Topics of 2025 outlook:

Global Investment Outlook -  Transformation underway
Historical trends are being permanently broken in real time as mega forces, like the rise of artificial intelligence (AI), transform economies. The ongoing outsized response of long-term assets to short-term news shows how unusual this environment is. We stay risk-on as we look for transformation beneficiaries – and go further overweight U.S. stocks as the AI theme broadens out. We have more conviction inflation and interest rates will stay above pre-pandemic levels. 2024 has reinforced our view that we are not in a business cycle: AI has been a major market driver, inflation fell without a growth slowdown and typical recession signals failed. Volatility surged and narratives flipflopped as markets viewed developments through a business cycle lens. As we head into 2025, some countries have new leaders with a mandate for political and economic change. That could see policymakers pursuing measures that add to volatility rather than stability. Financial markets may work to rein in any policy extremes, such as with fiscal policy. Yet we think there will be fewer checks when stocks are running up, creating the potential for risk appetite to turn frothy.

View the outlook in charts (PDF)
 

A thematic approach  -  Financing the future 

Historical trends are being permanently broken in real time as mega forces, like the rise of artificial intelligence (AI), transform economies. The ongoing outsized response of long-term assets to short-term news shows how unusual this environment is. We stay risk-on as we look for transformation beneficiaries – and go further overweight U.S. stocks as the AI theme broadens out. We have more conviction inflation and interest rates will stay above pre-pandemic levels. 2024 has reinforced our view that we are not in a business cycle: AI has been a major market driver, inflation fell without a growth slowdown and typical recession signals failed. Volatility surged and narratives flipflopped as markets viewed developments through a business cycle lens. As we head into 2025, some countries have new leaders with a mandate for political and economic change. That could see policymakers pursuing measures that add to volatility rather than stability. Financial markets may work to rein in any policy extremes, such as with fiscal policy. Yet we think there will be fewer checks when stocks are running up, creating the potential for risk appetite to turn frothy.

Weighing near-term scenarios - Evolving our scenarios

We worked with portfolio managers across BlackRock to evolve our scenarios for 2025 given what we have learned. The new scenarios are U.S. corporate strength and easing supply constraints. See our scenario map in the outlook (pdf). This recognizes that U.S. corporate strength goes beyond the AI theme. We think that U.S. corporate strength is the most likely scenario to play out over the next six-to-12 months as earnings growth broadens, even if the economy slows slightly. This highlights the resilience of corporate earnings even if interest rates stay higher.

Asset class views - Staying dynamics

Our scenarios framework helps ground our views on a tactical horizon. We have done so in 2024 as our concentrated AI scenario evolved to our U.S. corporate strength scenario. Yet we could change our stance quickly if a different scenario were to look more likely.

Important Information:

Capital at Risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Past performance is not a reliable indicator of current or future results. It is not possible to invest directly in an index. Sources: Blackrock Investment Institute, November 2022. Notes: The boxes in this stylized matrix  show how our tactical views on broad assets classes would switch if we were to change our assessment of market risk sentiment or assessment of how much economic damage is priced in. The potential view changes are from a U.S. dollar perspective. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. This information should not be relied upon as investment advice regarding any particular fund, strategy or security.

December 2024
Please note that these are the views of Sarasin and Partners and should not be interpreted as the views of RL360.