Global Stocks Could Gain 10% by 2025, Citi Predicts

Global equities are poised to rally 10% by the end of 2025, driven by robust corporate earnings growth and expanding equity gains beyond the U.S., according to strategists at Citigroup.

Earnings Growth Fuels Optimism
Strategist Beata Manthey anticipates global earnings will rise in tandem with stock prices, projecting a 10% increase in profits as global economic growth remains resilient. However, she cautioned that incoming U.S. President Donald Trump's trade policies could present a significant risk to global markets.

Manthey highlighted U.S. stocks as a continued favorite but identified Europe as the top pick for investors seeking exposure to sectors linked to the economic cycle. “The macro picture remains supportive of additional corporate earnings growth and equity market gains,” she wrote in a note, predicting U.S. outperformance until Trump's policies, particularly on tariffs, become clearer.

Challenges to the Rally
The MSCI All-Country World Index, which has surged 50% since the lows of 2022, has stalled in early 2025. Investor sentiment has been dampened by concerns over:

- U.S. tariffs: Sweeping trade measures could disrupt global commerce.
- Political uncertainty in Europe: Elections and reforms continue to weigh on markets.
- A struggling Chinese economy: Slower growth in China remains a significant headwind.

Manthey expects that as the year progresses, the gap between the profits of U.S. tech giants—dubbed the Magnificent Seven—and the rest of the S&P 500 will narrow, signaling a potential broadening of the rally beyond AI-driven stocks.

What’s Next?
While Citigroup remains optimistic about a global equity rally, much depends on the unfolding of Trump’s trade policies, improvements in international markets, and continued earnings strength. Investors should brace for potential volatility while keeping an eye on emerging opportunities outside the tech-heavy U.S. market.