Citi Predicts Global Stock Market Rally to Continue Through 2025

Citi's Expectation for Global Stocks and EPS Growth

Citigroup (NYSE: C) has expressed an optimistic outlook for global equities, anticipating a rally that extends into 2025. The firm cites the potential advantages of declining interest rates and easing inflation as contributing factors that could bolster corporate earnings in the near future.

Forecast for MSCI All Country World Index

According to Citi's predictions, the MSCI All Country World Index Local, which serves as a key performance measure for global stocks, is expected to reach 1,140 points by year-end. This projection suggests a significant upside of 10% from its most recent close at 1,035.46, illustrating a robust bullish sentiment in the markets.

Global EPS Growth Projections

In terms of earnings-per-share (EPS), Citi forecasts a 10% growth for global equities, which is slightly below the consensus estimate of 13% among analysts. Notably, they emphasize that both U.S. markets and emerging economies are likely to experience stronger EPS growth, reportedly around 15% in these regions.

Implications of U.S. Policies on Market Performance

In maintaining an "overweight" position on U.S. equities, Citi acknowledges the complexities introduced by President-elect Donald Trump's potential economic policies. The firm highlights that factors such as tariffs, tax reforms, and deregulation may create a mixed array of favorable and adverse outcomes for the economy.

Impact of Artificial Intelligence on Growth

The broader market dynamics are further influenced by the U.S. S&P 500 index, which surged by 24% in 2024. This growth momentum has been largely attributed to heightened expectations tied to artificial intelligence advancements and anticipated interest rate reductions from the Federal Reserve. Recently, the prospect of deregulation policies aligned with the incoming administration has also played a role in this rally.

Market Performance Analysis by Sector

Citi's sector analysis indicates a positive shift, as the firm upgrades its stance on health care stocks to "overweight," while adjusting its views on consumer staples and materials to "neutral." Conversely, it has moved consumer discretionary, utilities, and industrial sectors to an "underweight" position, reflecting a more cautious approach toward these sectors in the current market climate.

Citi's Global Equity Market Positioning

Looking at the broader regional picture, Citi maintains a "neutral" stance on emerging markets and has positioned itself as "underweight" on both Australia and Japan. This reflects a strategic approach, indicating a preference for investing in regions where they see more potential for growth.

Frequently Asked Questions

1. What is Citigroup’s current outlook for global stocks?

Citigroup predicts a continuation of the rally in global stocks into 2025, supported by falling interest rates and easing inflation.

2. What EPS growth does Citi anticipate for global equities?

Citi estimates a 10% EPS growth for global equities, which is below the consensus of 13% among analysts.

3. How is the MSCI All Country World Index expected to perform?

The index is projected to rise to 1,140 points by the end of the year, indicating a possible 10% upside from its previous close.

4. What sectors is Citi optimistic about?

Citi has upgraded its rating for health care stocks to "overweight" and adjusted consumer staples and materials to "neutral."

5. How does U.S. policy uncertainty affect market predictions?

Citi mentions that President-elect Trump's policies introduce significant uncertainty, which could lead to a mixed economic impact on the stock market.

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