Sturdy stocks, stubborn interest rates

The stock market's ongoing strength in the face of geopolitical instability "is really driven by the fact that the economy is still quite resilient", says Deepak Puri, the Private Bank’s Chief Investment Officer for the Americas, pointing to solid labour markets and strong economic growth. "It seems we're in a good spot.”

Earnings reports from the fourth quarter have also provided plenty of reasons for optimism. "Banks are doing well, which is important to providing liquidity to markets”, Deepak says, adding that technology megacaps showed impressive earnings growth. Still, Deepak notes that the 2025 outlook for earnings and revenue growth are somewhat subdued. And U.S. interest rates may not come down much this year, if at all: “Almost every Fed speaker has said that the bar is too high for them to cut rates, primarily driven by inflation concerns.”

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