Wall Street’s big players have just shared their 2025 predictions, and Goldman Sachs is optimistic. They’re forecasting 2.4% GDP growth, which is higher than the 2.0% most experts expected, looking forward to strong consumer spending and a surge in AI investments. Speaking of consumers, spending is projected to grow at 2.3% and unemployment to hold steady at 4%. On the inflation front, core PCE is predicted to drop to 2.1% by the end of the year, which could give the Federal Reserve the green light to cut rates three times—likely in March, June, and September. Tech enthusiasts will want to keep an eye on AI advancements, with xAI’s Grok 3 and Meta’s Llama 4 set to make waves using even bigger GPU clusters while being wary of competition from China's DeepSeek. And in a big move for the crypto world, Coinbase is expected to join the S&P 500 in early 2025 after crypto-centred MicroStrategy joined Nasdaq late last year. On the trade side, Wells Fargo is wary of potential tariff hikes on Chinese imports, but Wolfe Research thinks President-elect Trump might take a softer approach than many fear. On the bright side, large-cap portfolio managers might find some relief as regulatory changes could lead to more balanced market conditions.
EQUITY
Global stocks enjoyed a solid year of growth in 2024, with the MSCI All-Country World Index climbing nearly 16%, though they finished with a slight downturn after U.S. Treasury yields climbed. The S&P 500 and Nasdaq still posted impressive gains of 23.31% and 24.88%, respectively, high on AI and Fed rate cuts. Investors are now cash-heavy, as higher yields and policy changes from the incoming administration are expected. Additionally, the dollar saw a strong annual gain, affecting currency markets. As we move into 2025, investors remain optimistic about continued growth but are staying vigilant against these emerging challenges.
GOLD
Gold is starting the year strong after closing 27% higher last year, and analysts are optimistic about its potential this year. Gold remains a top choice for investors seeking stability in risky geopolitics and market conditions during rate cut phase. Central banks continue to be major buyers, driving demand and supporting prices, especially China's PBoC. Goldman Sachs even predicts a price target of $3,000 per ounce by year-end, making gold a compelling option not only to hedge against potential risks but also as a speculative asset.
OIL
Oil prices started 2025 with small gains, with Chinese President Xi Jinping's New Year's promise to boost economic growth, though recent data shows the country's manufacturing sector is growing slower than expected. Experts think oil prices might stay around $70 per barrel this year, marking a third straight year of declines. U.S. oil production is running at record levels, hitting 13.46 million barrels per day in October, while American oil demand jumped to its highest point since COVID-19.
CURRENCY
The dollar is starting the year swinging without any clear direction, hoping to build on last year's gains. The yen, which took a big hit in 2024 with a 10% drop, is hovering near five-month lows, and while it saw a small rebound on Thursday, it's still under pressure. Investors are bracing for the U.S. Federal Reserve to keep interest rates high for longer, which should support the dollar. The incoming Trump administration is another key focus, as his policies are likely to boost growth but could also add to inflation. Meanwhile, the euro remains steady but is still struggling, trading just above $1.03.
