Devin Shutte

The outlook for global markets in the first quarter of 2025 looks set to be primarily driven by the incoming US president as he gets his feet under the White House desk again. There will be a complex and evolving reaction to the potential impact of his administration’s increased protectionism, lower taxes, deregulation, and tighter immigration, and the effect that these will have on monetary policy and economic growth. Recession odds remain low but will depend on global trade stability and consumer confidence. The result could be a wait-and-see approach from markets for the conviction with which the Trump administration implements these policies.

Chair Powell has emphasised that policy will dynamically respond to any Trump-led fiscal boost. The Fed may slow down or even halt cuts if inflation surges.

Trump’s aggressive trade policies and potential tariff hikes could exacerbate China’s export challenges. Nevertheless, the PBOC’s accommodative stance and potential for further fiscal intervention serve as a buffer against trade risks. Chinese valuations remain compelling, especially if the PBOC maintains pro-growth policies.

South Africa’s assets look set to continue enjoying the benefits of increasing sentiment, falling rates, and benign inflation. However, accelerating progress on structural reforms will be required to ensure this is sustained.

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