Allocate to optimism – Positioning for growth and innovation in 2025

AS WE enter 2025, we believe US equity markets are poised for continued growth, supported by three factors:

• The US economy appears to be entering a new, innovation-led business cycle fuelled by the rapid application of artificial intelligence (AI) across multiple sectors, healthcare innovation, energy infrastructure investment, and reindustrialisation as manufacturers move onshore to avoid tariffs.
• We anticipate a supportive interest rate environment as the Federal Reserve maintains a neutral-to-dovish stance, especially if inflation remains subdued and real gross domestic product growth is supportive.
• The incoming Trump administration’s deregulatory efforts, combined with Silicon Valley’s rising political influence, particularly in support of “little tech”, are likely to foster a more dynamic business landscape. We see significant opportunities with a lighter regulatory touch for the financial services, crypto, technology, industrial and energy industries.

While risks exist, we view them as manageable. To some, valuations may appear elevated, but we believe earnings estimates may be too low, given the potential acceleration in growth and innovation in coming quarters. In aggregate, our outlook is positive, and we encourage investors to allocate to optimism in 2025.

Dawn of a new business cycle

We believe the US is on the cusp of an AI-driven productivity boom that could profoundly impact all sectors of the economy, and that many investors continue to underestimate the scale of this opportunity.