The year 2024 has been a rollercoaster for the global economy and financial markets, marked by macroeconomic fluctuations alongside shifts in trade and monetary policies amidst an atmosphere of geopolitical tensionsAs we approach the end of the year, investors worldwide find themselves navigating a complex web of factors influencing the investment landscape.

Looking ahead to 2025, the economic situation remains unpredictable and filled with uncertaintiesGlobal investors are reassessing their asset allocation strategies in search of fresh opportunities for economic growth and market returnsInvestment giant Schroders is optimistic, forecasting that the economy will achieve a "soft landing" in 2025, with expectations for positive returns in global stock markets.

Johanna Kyrklund, the Chief Investment Officer of Schroders, expressed her belief in the positive outlook for global equities

She highlights that corporate earnings in various regions are expected to improve, coupled with anticipated economic stimulus measures in markets outside the U.Sto counteract the negative impacts stemming from tariff policiesHer perspective emphasizes the importance of vigilance in portfolio resilience against potential market risks.

As Kyrklund suggests, in 2025, investors may need to broaden their horizons beyond recently favored assets and explore other promising investment opportunitiesThe conversation pivots to the potential ramifications of ongoing tariff threats, which she asserts serve as "negotiation leverage," casting shadows over the economic landscape.

In contrast to the previous decade, Kyrklund notes that the world is shifting towards a more polarized environment characterized by increased trade protectionism, which, along with aggressive fiscal policies and elevated interest rates, complicates the economic outlook

• Quantum Computing Poses Risk to Cryptocurrencies' Stability
• Climate Rules Hit Traditional Energy Firms
• Gold Soars: $3000 in Sight for Next Year?
• East vs. West: China's Golden Dragon Soars as US Stocks Dip
• PE Firms Push for Balanced Portfolios

While uncertainties exist, she insists volatility will mainly arise from unforeseen risks rather than ongoing tariff policies to which the market has already adjusted.

Discussions surrounding tariffs highlight their role in influencing negotiations while creating pressure not only on the U.Sbut also on global economicsKyrklund anticipates that the impact of tariffs may become less detrimental over time and that countries will increasingly adopt monetary stimulus measures to alleviate some of the negative effects.

Shifting perspective from tariffs, Kyrklund observes significant disparities between stock and bond markets in 2024. Traditionally, rising nominal GDP would bolster stock performance due to the inverse relationship between bonds and stocks, but this trend is changingCurrent market dynamics reflect a positive correlation, implying investors should pay closer attention to the yield variations in the bond market, as these can significantly impact stock valuations.

In that light, she evaluates the performance of U.S

Treasury bonds, suggesting that if yields on ten-year bonds remain below 4.5%, the market remains reasonably valuedConversely, yields above this threshold could lead to detrimental effects on equity valuations.

As we steer into 2025, Kyrklund remains optimistic about the potential for global stock markets to yield positive returnsHowever, she emphasizes the need for investors to look beyond the traditional strong performers and explore undervalued regions and sectors, such as small-cap stocks and non-U.SmarketsIn the past, stock market gains were predominantly driven by a handful of large corporations, but this trend is shifting, and there is ample room for expansion in various sectors.

Additionally, the overall investment climate in the U.Scontinues to encourage growth, despite the enforcement of high tariffs, which may push non-U.Smarkets towards additional monetary easing actions that could buffer the impact of such policies

While macroeconomic conditions appear favorable for returns, Kyrklund cautions about lurking risks, particularly surrounding the sustainability of fiscal stimuli and the rising valuation metrics in the stock market.

She poses a significant concern over the potential for an overheated U.Seconomy, which could bear inflationary pressures stemming from government policies like immigration restrictions and corporate growth regulations, consequently limiting the Federal Reserve's capacity to cut interest rates.

Adopting a diversified strategy across regions and asset classes becomes essential in this shifting landscape to enhance portfolio resilience and brace against future uncertaintiesAs the discussion pivots toward the hot topic of AI investment, Kyrklund advises against a narrow focus solely on the major players in AI, suggesting that now could be a prime time to widen the investment lens beyond MAG-7 companies to unearth potential opportunities across various sectors.

The profundity of AI's impact on the global economy cannot be understated, and while Kyrklund remains optimistic about its prospects, she asserts a balanced approach, diversifying investments into sectors such as infrastructure, energy transition, and defense could yield significant benefits.

Delving deeper into asset allocation preferences, Kyrklund shows a penchant for global stocks, U.S