2025 Global Market Outlook

Change is constant, but in some periods it occurs more dramatically than in others. We believe the world is currently undergoing transition at a pace and scale rarely seen before. Technological developments are driving extraordinary innovations in artificial intelligence (AI) and health care. Continuing geopolitical tensions and the probability of higher tariffs globally following the U.S. election will likely lead to the reconfiguration of supply chains, disrupted labor supplies and a strong focus on secure energy transition. At the same time, the global economy is adjusting to a world of higher trend inflation, higher rates, and greater volatility.

Transition at this degree may seem daunting. However, we believe it will bring with it an opportunity set of a breadth and richness not experienced since the aftermath of the global financial crisis (GFC). The nature of this opportunity set will inevitably evolve as markets change, but, in our view, the overall trend will be for earnings growth to broaden beyond a handful of dominant tech stocks, across both sectors and regions.

As we navigate this new equilibrium, our portfolio construction themes argue for greater diversification across asset classes.¹ Bond yields have been on a roller‑coaster ride as markets have been overly enthusiastic about pricing in bank rate cuts. High yield bonds, bank loans, and emerging markets bonds present income opportunities.

We are likely past the first innings of the AI infrastructure buildout. However, the AI wave is not over—as companies employ AI, we will see an acceleration in speed, productivity, and innovation. At the same time, we believe conditions are in place for a golden age for the health care sector amid a flurry of radical innovations.

We also think it is prudent for investors to consider diversifying into areas that have valuation support and robust fundamentals, such as value and small‑cap stocks. Additionally, there are select opportunities in underappreciated sectors such as energy, financials, and industrials. Countries such as Japan and South Korea could also benefit from structural changes.

The year 2025 is shaping up to be one of transition marked by a clear broadening of investment opportunities. In this evolving world, curiosity is vital. Asking smart questions about new opportunities—within asset classes or major themes such as health care innovation, energy transition, or artificial intelligence—is the best way to source the insights on which smart investment decisions can be made.