European Investment House Enhances Positive Stance On US Equities In 2025

The Amundi Investment Institute, part of European asset manager Amundi, has just released its latest investment outlook for 2025.

Amundi
Investment Institute believes that economic growth in the US
and Europe is reasonable, and inflation is slowing, painting a
supportive backdrop for risky assets. Consequently, the firm has
strengthened its positive stance on US equities and turned
constructive on Europe in 2025, while also maintaining a small
positive view on the UK and Japan.

“The US should be supported by economic strength and new
government’s policies while being less vulnerable to weak global
demand. Europe is appealing as a value play, and challenges from
a worsening trade environment are heavily discounted,” Amundi
said in a note.

“In equities, diversification is the name of the game, as
concentration risk remains the top concern,” Amundi
continued. In the US, it remains cautious on the mega caps
and explores opportunities down in the capitalization spectrum in
companies that could benefit from a resumption in industrial
demand and economic growth but where the valuations do not yet
reflect this. It thinks the rally broadening toward more US
value, cyclical stocks will benefit from an uptick in economic
activity. Amundi favors value, quality, and defensive stocks
beyond the traditional names. Sector-wise, it prefers materials
and US large banks that are structural winners and could benefit
from favorable regulatory changes and lower taxes.

Other wealth managers, such as Northern Trust Asset Management,
UBS Global Wealth Management, Pictet Asset Management and Goldman
Sachs Asset Management also favor US equities in 2025. See more
commentary
here.

In Europe, Amundi prefers staples and healthcare stocks with
pricing power. It also favors banks that are less sensitive to
rate changes and have strong capital buffers versus those more
sensitive to rate reductions. While Amundi is cautious on tech
and industrials, it sees opportunities in industrial names linked
with the long-term electrification theme.

“Any dollar strength and rise in geopolitical risks will likely
create volatility for emerging markets, but their growth
potential is strong and central banks are prudent. We aim to
explore resilient bottom-up stories that are driven by domestic
consumption themes in debt and equities,” Amundi continued.

It is constructive on emerging market equities, but does see
divergences. For instance, in China, the recent announcements
clarified that the country has fiscal space, but whether it is
willing to use this is still a question. Some segments are
attractively priced, but Amundi stays neutral. Outside China,
Amundi is positive on Indonesia, Mexico, and Brazil, whereas it
exercises caution on Taiwan and Saudi Arabia.

Amundi is also searching for opportunities in emerging market
(EM) bonds, in particular in the Czech Republic, South Africa,
and Indonesia. To counterbalance this overall pro-risk
allocation, it maintains a positive duration bias as a hedge
against potential deterioration in the growth outlook. It has
also added some equity hedges and keeps gold as a diversifier.

Amundi believes that fixed income as an asset class will be
increasingly affected by uncertainty around fiscal and monetary
policies. As a result, it maintains a tactical approach to
duration in the US and Europe, where it looks for opportunities
on the expected steepening of the yield curves. In the UK, Amundi
is positive but is monitoring the recent strong inflation and
wage growth data, while in Japan bonds, it remains cautious. In
the credit market, the firm continues to favor investment grade,
in particular in Europe, where valuations look more attractive.
In contrast, it is cautious on US high yield.

US tariff risk

Amundi highlighted how higher US tariffs are likely to hit
various countries in different ways, if implemented. The eurozone
has a high reliance on exports, which accounts for some 50 per
cent of GDP on average, but it varies across countries. China
should be hit hard; to offset the likely impact of US tariffs,
the recently-held economic conference set a pro-growth and
pro-stimulus tone for 2025, with likely additional fiscal
spending, mostly to help domestic consumption. Details should be
unveiled during the National People’s Congress in March. Amundi
is close to neutral on Chinese equities but, given the fluid
situation, this could change. On credit, it favors investment
grade over high yield.

Amundi is a European asset manager, managing more than €2
trillion ($2.2 trillion) of assets. The Amundi Investment
Institute, launched in 2022, brings together Amundi”s research,
market strategy, investment themes and asset allocation advisory
activities to help meet the needs of investors on economic,
financial, geopolitical and environmental topics.