As the U.S. and European stock markets are expected to hit historic highs in 2024, Forbes is calling this past year a "bumper year for super rich"—with as many as 141 billionaires newly added to their super rich list.

At the same time, in this election year, many people around the world have also experienced a year of political turmoil and power struggles. Voters have punished incumbents from India to South Africa, Europe, and the USA, and have shifted their focus to economic realities: the relentless rise in prices after the pandemic is bringing about a merciless cost of living crisis.

This actually lays an unknown foreshadowing for the market in the coming year: what sparks will continue to ignite between the extreme enthusiasm for risk preference and the swirling changes in geopolitics?

Currently, most Wall Street strategists expect that the global stock and bond markets may continue to rise in 2025, but one of the biggest uncertainties facing investors is the policy direction of the soon-to-be-inaugurated U.S. President Trump.

The following is a summary of the forecasts made by ten global large investment banking Institutions regarding the trends of the global stock, bond, Forex, Gold, and Crude Oil Product markets in 2025.

Overall, these investment banks mostly hold an optimistic attitude towards the performance of various assets next year, excluding Crude Oil Product, and expect many market themes in 2024 to continue. However, they also acknowledge that Trump's arrival in the White House next month and how he implements plans for trade tariffs and tax cuts will be key factors affecting the direction of financial markets.

At the same time, these investment banks are working hard to avoid repeating last year's mistakes—many Institutions predicted a recession was imminent last year, but it ultimately did not materialize.

Global stock market

In terms of the stock market, the aforementioned investment banks generally expect$S&P 500 Index (.SPX.US)$to continue to set historical highs next year, but most investment banks believe that the increase will be lower than the historical average annual growth rate of 11%.

Among these 10 investment banks, 9 have a clear bullish outlook on the U.S. stock market next year, with an average expectation that the S&P 500 Index will further rise by about 10%—to around 6550 points. Only Industrial Bank has a relatively neutral stance, predicting that the index will slightly drop to 5800 points next year. This year, the S&P 500 Index has already surged by 23%, closing at 5930.85 points last Friday.

Deutsche Bank predicts that with the continued strong push from the U.S. economy, the S&P 500 Index will climb to 7000 points. However, the bank also warns that the timing of potential policy changes during President Trump's term will be key to market performance.

The bank also believes that the huge interest from investors in AI Stocks will drive the stock market up. Deutsche Bank's Chief U.S. Equity Strategist Bankim Chadha stated, "Valuations are undoubtedly very high, but they may still continue to maintain or even rise higher."

Of course, there are also other Analysts who honestly admit that they are waiting for the latest signs of AI boosting corporate revenue growth. Citigroup Analyst Drew Pettit noted that there are historically many cases of overheated investments, which could mean that the results in 2025 may be more negative, and the uncertainty surrounding Trump’s policies may further drag down the S&P 500 Index. "We expect greater volatility. This will not be an easy journey."

Regarding the European market, the aforementioned investment banks also generally expect European stocks to rise further—if the European Central Bank accelerates interest rate cuts, the Russia-Ukraine conflict ends, or the political situation in France and Germany begins to stabilize, it is expected to bring Bullish signals.

Among the 10 banks surveyed, 5 expect the European stock market to continue rising next year, with only one (UBS Group) relatively Bearish, and the rest being Neutral.

Bond Market

For the bond market, the aforementioned investment bank strategists expect that as inflation falls in the first half of next year, U.S. Treasury Notes Yield is also expected to decline. However, the uncertainty regarding what actions Trump will take immediately after taking office has led them to have different views on the trend following.

These investment bank strategists expect an average of,$U.S. 10-Year Treasury Notes Yield (US10Y.BD)$It is expected to drop from the current level of around 4.49% to about 4.1%. However, there is still significant discrepancy in forecasts among investment banks—Morgan Stanley indicates that the yield on 10-Year U.S. Treasury Notes will fall to 3.6%, while Deutsche Bank anticipates it will rise to 4.7%.

Vishwanath Tirupattur, the global head of fixed income research at Morgan Stanley, stated that the Federal Reserve will "walk a tightrope" before the Trump administration takes action next year. The bank predicts that the Federal Reserve will continue to lower borrowing costs until mid-next year, after which inflation pressures from widespread tariffs will force a pause in rate cuts.

In contrast, Deutsche Bank believes that the market is currently too optimistic, and its bearish view on U.S. Treasury bonds relies on "current political realities," namely fiscal easing, deregulation, tightening immigration controls, and total tariffs. The bank believes that all these measures indicate that inflation will face upward pressure.

Last week, the Federal Reserve had already "explicitly indicated" its intention to slow down interest rate cuts next year in the January monetary policy meeting. In addition to the surprising halving of expected rate cuts next year in the Fed's dot plot to just two times, there is also a concerning phenomenon—of the 19 Federal Reserve officials, as many as 15 believe that inflation poses an upward risk, whereas only 3 made the same prediction during the September meeting.

Forex Market

More than half of the institutions surveyed expect that policies in the Trump 2.0 era will push the dollar higher next year, although the incoming president may also worry that a stronger dollar will impact the competitiveness of U.S. commodity exports.

The decline of the euro immediately after the U.S. presidential election in November this year was the largest among all G10 currencies. Since the end of September, the euro against the U.S. dollar has dropped from around 1.11 to below 1.04. Currently, Deutsche Bank predicts that the dollar will reach parity with the euro next year.

Kamakshya Trivedi, global head of Forex, Rates, and Emerging Markets strategy at Goldman Sachs, stated that Trump tends to use tariffs as a policy tool, which will help boost the dollar. "President Trump will not hesitate to significantly increase tariffs. We expect the combination of tariff hikes and tax cuts will provide important support for the dollar in the coming year."

Bank of America is relatively pessimistic about the long-term prospects of the dollar. Senior Forex Analyst Kamal Sharma predicts that as Trump's statements translate into tough policies, the market will respond more to expectations of a "perfect tariff storm" rather than the implementation of policies— the dollar is expected to strengthen at the beginning of 2025, but will fall back to 1.10 dollars per euro by the end of next year.

Gold

After a shocking year due to the conflicts in Ukraine and the Middle East, the top ten Institutions generally expectIts price has soared to a historic high, closely related to market expectations of interest rate cuts by the Federal Reserve.Gold to continue rising. They believe that the central banks' demand for Gold and worries about inflation and reckless fiscal spending will be the driving forces for Gold prices to rise next year.

Goldman Sachs and Bank of America both expect that Gold will rise nearly 13% next year, reaching $3,000 per ounce, although this is less than half of this year's increase. The average expectation among the top ten investment banks is that the gold price will rise 8% next year, reaching $2,860.

Only Morgan Stanley is betting that Gold prices will hold around current levels, as the firm's Analysts predict that economic weakness in major economies will become a resistance for Gold demand.

Crude oil trend analysis;

Although OPEC+ has made plans this month to delay production increases to support oil prices, the aforementioned investment banks still expect Brent crude oil prices to fall further from around $72.80 per barrel at Friday's close to about $70 per barrel by the end of next year.

Kim Fustier, head of Oil & Gas research at HSBC in Europe, stated that OPEC+'s actions are unlikely to change the direction of oil prices. She said, "Between 2025 and 2026, non-OPEC countries will see production growth rates surpass demand growth rates, meaning OPEC will have no room to cancel production cuts."

In contrast, Goldman Sachs still maintains a long-term bullish stance on CSI Commodity Equity Index. Goldman Sachs predicts that next year, Brent crude oil will be priced at $76 per barrel. The bank noted that commercial crude oil inventories have significantly decreased in recent months, and next year, the filling of strategic reserves by the USA and China will drive oil prices higher.

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