Outlook for 2025 – next year could be all about competitive devaluation amongst nations, fiscal indebtedness and money printing – as nations pursue high spending policies and struggle to get their respective houses in order.

1. Stock markets around the world do well in 2025. The rest of the world plays catchup with US equities, closing the gap. The problem is not the over-exuberance in the private sector but the government. As the year rolls on, financial markets and bond vigilantes increasingly question this. Emerging markets have a decent run, with China and Hong Kong leading the pack, and this is aided by a weakening dollar throughout the year. The work-from-home ethos is severely eroded as unemployment rises around the world and the imperative to get back to the office gathers substantial momentum, but productivity on a per capita basis for all countries begins to climb again.
2. The US economy continues to expand next year underpinning the bull market. But with the S&P500 already having priced in a lot of good news and expectations around growth, incurs a corrective drawdown which occurs sometime soon after Trump assumes office. The sell-off finds a floor, however, and the stock market resumes an upward path in the second half of the year.
3. Trump tones down his threats to tariff the world, which could start a trade war. While tariffs are implemented, they are not as bad as markets were expecting. Trump quickly initiates negotiations between Ukraine and Russia to bring the war to an end. The peace deal sees a rebuilding effort emerge within Ukraine to repair the nation and its smashed infrastructure.
4. China launches a fiscal stimulus that is finally perceived by the market to be sufficient to get the economy moving again. A light at the end of the tunnel for the economy is finally seen and consumer spending begins to accelerate by year-end, spurring a big rally in China/Hong Kong equities. The CSI300 and Hang Seng are amongst the best-performing indexes in 2025.
5. Copper and iron ore surprise on the upside after a peace deal in Ukraine and China’s determination to use fiscal spending and increase the deficit to turn the economy around. Resources stocks in Australia, the UK and globally do much better and become one of the best-performing sectors, which is a welcome development after a tough 2024.
6. The US dollar finally enters a secular bear market in 2025. The almost unanimous global perception of US exceptionalism begins to fade. The cost of public financing is increasingly questioned as the year unfolds. Growing fiscal indebtedness, an inability to reduce costs, and rising interest payments all take a toll on the dollar as December ’25 approaches. Other major currencies, including the euro, A$, and the yen, do much better. The US dollar index retests the 100 level with risks of a downside break growing by year-end.
7. The Fed continues to ease monetary policy but at a much slower pace as inflation proves sticky. The economy still proves resilient with a technological advantage, and the lead of the US over the rest of the world widens throughout the year. The AI rollout surprises, in terms of speed and also the productivity and efficiency gains filtering through the global economy.
8. Despite some of the smartest billionaires, including Elon Musk, pledging to help President Trump curb US government spending, the US deficit proves stubborn. Government spending in the US – and around the world – is finally recognised as being very entrenched. The US economy grows but not fast enough to offset the tax cuts and to reduce the Federal debt. There is a similar problem in many nations around the world. Australia manages to balance these risks with government indebtedness at circa 35% of GDP, being amongst the lowest of developed economies. The piper has to be paid, and debt finally begins to matter in 2025 at the national level.
9. The global transition path to renewables and nuclear energy accelerates in 2025. More countries embrace nuclear energy as a viable green alternative option. In Australia, the nuclear energy policy versus alternative renewables becomes a defining battleground in the election. Uranium spot prices surge above $120 a pound, with uranium stocks delivering double-digit gains. Silver and copper, which are both materials used in next-generation solar panels, take out their 2024 highs next year.
10. Australia has a closely run election – but PM Anthony Albanese faces a huge battle at the polls to retain power. As in America, the lower socio-economic factions are increasingly frustrated over not being able to keep up with the rising cost of living and express this at the polls. The job market frays and unemployment rises. The high cost of living becomes a central issue for many voters, along with the debate around nuclear energy versus renewables, given rising power costs. The ASX200 powers ahead after a corrective selloff but receives a big boost from China’s stimulus, which drives a big recovery in commodity prices and the resources sector. The index touches 9,000 during the year as the bull market defies an economy on the edge of recession and looks through to higher commodity prices as the year rolls on. The lucky country continues to be lucky.
11. There is a significant recovery in the Eurozone and the UK economies next year after both the ECB and the UK bring down rates. A peace deal between Russia and Ukraine brings an end to the war and stability to Europe. The euro and pound rise strongly against the US dollar while the yen continues to surge as the Bank of Japan raises rates to the highest level in decades. The DAX and FTSE100 make new record highs.
12. Gold rises above US$3000oz. China and other central banks continue to buy and diversify reserves away from the dollar. Silver does well, rising to $40oz, aided by growing industrial demand and a supply shortage. Mergers & Acquisition activity picks up sharply within the sector as major mining companies see it as cheaper to buy existing operations rather than develop new mines. Copper resumes an upward trajectory as demand surges at a global level.
13. Japan also powers ahead in 2025 with the economy benefitting from resurgent demand from China, a robust domestic economy, and sustainable inflation rates. The Bank of Japan raises the base rate to at least 1%, the highest level in 30 years. The Japanese stock market has another solid year of returns, with the TOPIX and Nikkei making new record highs above 44,000 and 3,300, respectively. The yen appreciates against the US dollar as the ECB and Bank of England cut rates. After being the worst performer in recent years, the yen leads the rally amongst the major currencies.