- Global economic growth and central bank interest rate cuts
expected to continue in 2025
- The higher yields offered by fixed income create attractive
investment opportunities. Within equities, the earnings outlook is
attractive, but valuation requires a selective approach
- As a result of the new U.S. administration, expect policy
shifts in trade, taxation and regulations to add to
volatility
WINNIPEG, MB, Dec. 3, 2024
/CNW/ - According to IG Wealth Management's ("IG") 2025 Market
Outlook ("the Outlook"), Canadians can expect a market environment
with stabilized inflation and interest rates, lower recession risk
and a general easing of monetary policy in the year ahead. This, in
turn, is expected to contribute to a favorable backdrop for
investment opportunities after a year of economic normalization in
2024.
"The markets have rebounded strongly over the past two years,
returning to a pre-2008 'old normal' economy with stable
inflation and interest rates moving forward," said Philip Petursson, Chief Investment Strategist,
IG Wealth Management. "We're seeing more evidence of inflation
stabilizing closer to the 100-year average of three per cent and
with this view we expect the Bank of Canada and U.S. Federal Reserve benchmark
policy rates to average 50-100 basis points above inflation."
In its Outlook, IG's Investment Strategy Team expects the
following investment themes to emerge in 2025:
Differing Growth Rates Among Global Economies and Central
Bank Balancing Acts
Looking ahead to 2025, IG believes the global economy is moving
in the right direction. However, the pace of growth will vary by
country and region. While the fundamentals of the U.S. economy
remain stable, Canada and
Europe may face challenges
maintaining economic stability throughout 2025. Further, and not
surprisingly, if China's economy,
which has generally been sluggish the last few years, sees success,
it will positively impact global markets. The Outlook also notes
that growth rates will largely depend on central bank policies,
with continued interest rate cuts expected in 2025 as banks balance
growth, unemployment and price stability.
Attractive Fixed Income Opportunities and Earnings Growth
Potential
The tilting of interest rates is expected to create an
attractive fixed income environment for investors in 2025. IG
forecasts that short-term interest rates will likely continue to
fall, but that long-term interest rates are projected to remain
steady, creating mid-single digit expectations for fixed income
returns, along with down-side protection against economic risks in
the coming years. Throughout 2023 and 2024, markets saw two
strong years of equity returns. IG anticipates that this growth
will continue into next year, with earnings-focused investors
likely to see improved performance in individual stocks, compared
to investments in broad-based indicators like the S&P 500
Index.
Post-Election Policy Shifts
The Outlook expects that the results of the 2024 U.S.
presidential election will bring new policy changes that may impact
markets as the country takes a more "protectionist" approach. These
policy shifts in areas such as trade, taxation and regulation can
bring opportunities - but also uncertainty and risk. For example,
continued federal deficit spending and additional tariffs are
likely to add inflationary pressure. As the landscape evolves,
staying focused and strategically invested will be key to
navigating what's ahead.
"As highlighted throughout our Outlook, investors can head into
2025 with a certain degree of optimism. Given the economic, fixed
income and equity backdrop for the year ahead, our focus remains on
quality and tactical asset selection, particularly as equity
valuations realign and fixed income once again offers competitive
yields. Maintaining balance across asset classes, geographies,
styles and size will remain crucial," concluded Mr. Petursson.
Read the full IG Wealth Management 2025 Market Outlook on the IG
website:
https://www.ig.ca/en/insights/2025-market-outlook
About IG Wealth Management
Founded in 1926, IG Wealth
Management ("IG") is a Canadian leader in delivering financial
planning with approximately $136.6
billion in assets under management as of October 31, 2024. For more than 95 years,
IG has been focused on improving the financial well-being of
Canadians so they can confidently embrace all of life's
possibilities. Through a network of advisors located across
the country, IG provides approximately one million clients with
personalized advice, comprehensive financial planning, insurance
and mortgage services and professionally managed investment
solutions. IG is a member of IGM Financial Inc. (TSX: IGM),
part of the Power Corporation group of companies and one of
Canada's leading diversified
wealth and asset management organizations with approximately
$264 billion in total assets under
management and advisement as of October 31,
2024. For more information, visit ig.ca
This commentary may contain forward-looking information which
reflect our or third-party current expectations or forecasts of
future events. Forward-looking information is inherently subject
to, among other things, risks, uncertainties and assumptions that
could cause actual results to differ materially from those
expressed herein. These risks, uncertainties and assumptions
include, without limitation, general economic, political and market
factors, interest and foreign exchange rates, the volatility of
equity and capital markets, business competition, technological
change, changes in government regulations, changes in tax laws,
unexpected judicial or regulatory proceedings and catastrophic
events. Please consider these and other factors carefully and not
place undue reliance on forward-looking information. The
forward-looking information contained herein is current only as of
11/28/2024. There should be no expectation that such information
will in all circumstances be updated, supplemented or revised
whether as a result of new information, changing circumstances,
future events or otherwise.
SOURCE IG Wealth Management
