Daniel Schoeman

Q1 2025 market outlook: Cautiously optimistic

‍As we enter 2025, we reflect on the challenges of 2024 – a year marked by significant geopolitical events and surprising election outcomes. Despite the uncertainty, most markets delivered positive results, providing investors with some relief.

Looking ahead, the return of Donald Trump as US president and ongoing geopolitical tensions will likely dominate headlines, creating both volatility and opportunities. Key policy developments will be watched closely: proposed tax cuts and deregulation could support global equities while pressuring bonds, whereas tariffs and stricter immigration policies may weigh on both asset classes.

Our primary areas of focus for 2025 remain inflation, interest rates and market valuations.

Inflation and interest rates

We expect inflation in developed markets to remain above the 2% targets, prompting central banks to maintain steady interest rates in 2025. The South African Reserve Bank may lower rates further, but a decision to hold rates steady is possible.

Valuations

While US equity valuations are elevated, opportunities lie in international markets, particularly outside the US. We are monitoring earnings closely for any signs of weakness, which could prompt a more cautious approach. In South Africa, selective opportunities exist within equities and bonds.  

Disciplined asset allocation and active portfolio management will be essential in navigating what promises to be another interesting year.

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