4 March, 2025

Global Investment Views - March 2025

Summary

The GIV elaborates on the latest views, convictions and outlook of our Global CIOs, different Investment Platforms and the Amundi Investment Institute.

Markets between love and fear

In February, the markets have shown that love is in the air: despite new tariff announcements, inflation risks, and the DeepSeek shakeup, positive market sentiment continues to prevail. In Europe, equities reached new all-time highs, and in the US, there is evidence of a broadening equity rally, as the dominance of the Magnificent Seven may be starting to fade.

Three hot questions

What is your view on Trump’s reciprocal tariffs?
How do you view the latest developments in US inflation?
What is your take on India’s 2025-26 budget?

Navigating inflation uncertainty

We expect an overall benign economic outlook, although data from Q4 has revealed diverging trends amongst economies. In the US, growth has been solid, driven by strong personal consumption, while in Europe, growth is exhibiting a weaker momentum. Due to uncertainties surrounding trade wars, global growth faces downside risks, and central banks have begun to act asynchronously. The Fed is temporarily on pause, the ECB is determined to follow a clear trajectory toward neutrality, and the BoJ is expected to hike rates in 2025. Overall, while macro, credit, and liquidity conditions remain reasonably supportive, we remain mindful of inflation risks and potential earnings revisions in the second half of the year and therefore favour a mildly pro-risk allocation with hedges and gold.

Fast-paced changes in rate expectations

In 2025, the inflationary and growth impact of Trump’s policies is the primary concern when evaluating the Fed’s trajectory. After initial fears of higher inflation, markets have now started to price risks of growth disappointment. This has resulted in a strong and rapid reassessment of market expectations on the Fed’s trajectory. Such strong market movements call for maintaining an active duration stance and looking for opportunities across the board. Overall, we maintain our positive stance on duration and credit with a preference for high quality and shorter maturities. In emerging markets, we remain overall neutral with a preference for hard currency versus local currency debt.

Market rotation continues

The US’s outperformance has been ongoing for a long time, with a faster rise since 2023 driven by enthusiasm around AI. However, the first months of 2025 have signalled a pause in this trend, with international markets, particularly Europe, outperforming the US, where areas of excessive valuations may see some reassessment. With high uncertainty surrounding tariffs, AI developments, and still high concentration risks, the main market theme remains diversification. Earnings revisions and better risk sentiment continue to support European equities, where valuations remain relatively attractive. EM markets in Asia also offer opportunities, with India more appealing after the recent sell-off.

Read the full article on the Amundi Research Center

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