Deutsche Bank forecasts S&P 500 to hit 7000 by end of 2025
Jim Reid, Head of Global Economics and Thematic Research at Deutsche Bank, commented that this forecast hinges on a solid demand-supply backdrop for U.S. equities, with the bank expecting continued robust inflows into both equity and bond markets, albeit at a slightly slower pace.
The bank's analysis suggests that the equity positioning is currently near the top of its historical range, indicating limited room for further upside from that angle. However, Deutsche Bank sees the demand-supply dynamics for U.S. stocks as remaining strong, even with conservative assumptions. Consumer Cyclicals and Materials are also overweight, banking on the broader economic cycle's momentum. Industrials are held at neutral, with mega-trends seemingly factored into current valuations.
The bank notes that the economic backdrop has been robust, with a combination of low unemployment and strong GDP growth that is historically rare. This has been complemented by cross-asset inflows as excess cash from the pandemic has led to larger allocations to bonds and equities. The bank also anticipates rises in consumer and corporate confidence, a recovery in capital markets and M&A activity, increased loan growth, and stronger global economic growth.The US president-elect Donald Trump said today that plans to sign an executive order on 20 January 2025 setting a 25% tariff on all goods coming from Mexico and Canada, as well as"an additional 10% tariff, above any additional tariffs" on China.
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