TORONTO, Nov. 27,
2024 /CNW/ - Today, Mackenzie Investments
("Mackenzie") released its 2025 Market Outlook. It
includes insights and commentary for financial advisors and
investors about the key trends impacting Canadian and global
markets, and investable themes for the year ahead.
Mackenzie anticipates that 2025 will be marked by both
opportunities and challenges, with stabilized economic growth
driven by steady inflation for most major developed economies and
lower interest rates from the majority of central banks. While
the stage is seemingly set for a favourable investment landscape,
the outcome of the 2024 U.S. presidential election could still
bring significant ramifications for various economies worldwide
with changes to U.S. tariffs, tax rates, deregulation and
immigration policies.
"The incoming U.S. administration is expected to have
potentially significant implications for geopolitical risks and
trade flows, and for the outlook for various asset classes and
sectors. Policy decisions could also lead to a relative growth
advantage for the U.S.," said Steve
Locke, CIO of Fixed Income and Multi-Asset Strategies,
Mackenzie Investments. "In response, Canada may need bigger rate cuts than other G7
countries to boost our economy, leading to lower Canadian bond
yields and a weaker Canadian dollar compared to the U.S."
In its 2025 Market Outlook, Mackenzie has identified three major
factors for investors to keep in mind that will drive global
economies and markets in the year ahead:
The Battle with Inflation Has Stabilized – For
Now
Inflation has finally been stabilized after continued efforts by
central banks. This sets the stage for a favourable investment
landscape for equities and some nuanced opportunities for bond
investors in 2025.
"The stable economic backdrop and a positive outlook for
corporate profits paints a favourable picture for equities in the
coming year, especially with central banks turning their attention
towards economic growth," said Lesley
Marks, CIO of Equities, Mackenzie Investments. "However,
investors should still be wary of risks and potential volatility.
Inflation may have steadied for now, but the introduction of any
new economic policies related to tariffs and onshoring from the
incoming U.S. administration could result in another fight against
inflation in our future."
Expect Policy Divergence from Central
Banks
Throughout 2024, most of the world's central banks
began lowering interest rates after embracing the idea that
inflation had been contained. From their 2024 peak in April,
Canadian and U.S. 10-year government bond yields dropped by more
than 100 basis points by late summer before experiencing a rebound
in October.
Mackenzie believes this will continue in 2025, albeit at
differing paces. Slowing economies, including in Canada and the EU, are expected to lower
policy rates much further than the U.S.
"In the aftermath of the rate-cutting cycle in 2024, Canadian
bond yields are likely to decline relative to U.S. yields, which we
expect will put continued downward pressure on the Canadian
dollar," said Mr. Locke. "The Bank of Canada may need to cut more aggressively than
the U.S. Federal Reserve to stimulate a rebound in domestic demand
and close the output gap."
Pockets of Value Remain in the U.S.
Market
The U.S. economy continued to stand out with earnings growth
maintained in the low double-digit range, bringing the U.S. markets
to "Goldilocks" status, with all economic factors lining up to be
just right. Despite the concentration of the U.S. stock market in
mega caps and the large exposure to the technology sector,
Mackenzie's report notes that there is still attractive value to be
found in the remaining S&P 493 stocks and U.S. small and
mid-cap companies.
"While aggregate valuation may lead you to shy away from U.S.
equities, we believe that opportunity still exists for capital
appreciation with careful stock selection. As we expect interest
rates to fall faster in the rest of the world, this should help
support multiple expansion and, in turn, generate higher share
prices across regions, including Canada and Europe. With the support of lower interest
rates, cyclicality will be a crucial factor in sector allocation
across portfolios, as will adopting a balanced and diversified
approach," Ms. Marks concluded.
To learn more about Mackenzie Investments' 2025 Market Outlook
and additional investible themes including Electrification,
Resources, Quantitative Investing and Private Markets to help
inform investment decisions in the year ahead, visit:
https://www.mackenzieinvestments.com/en/institute/insights/market-outlook
About Mackenzie Investments
Mackenzie Investments
("Mackenzie") is a Canadian investment management firm with
approximately $211.3 billion in
assets under management as of October 31,
2024. Mackenzie seeks to create a more invested world by
delivering strong investment performance and offering innovative
portfolio solutions and related services to more than one million
retail and institutional clients through multiple distribution
channels. Founded in 1967, it is a global asset manager with
offices across Canada as well as
in Beijing, Boston, Dublin, Hong
Kong and London. Mackenzie
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 mackenzieinvestments.com
SOURCE Mackenzie Investments
