In a nutshell, this is his take on the year ahead:

1. 2025 is likely to see positive returns but after the strong gains of the last two years, it’s likely to be more volatile and constrained, particularly as Trump returns with populist policies. A 15% plus correction is likely along the way.
2. We expect the RBA to cut the cash rate to 3.6%, with the first cut looking like it could be in February, the ASX to return around 7% and balanced super funds to return around 6%. Australian residential property prices are likely to soften further ahead of support from rate cuts.
3. The key things to watch are: interest rates; recession risk; a likely trade war; China; and the Australian consumer.

And here are the big market-moving events for the week ahead:

What to watch over the week ahead?

1. The return of Trump will be the main focus for markets over the week ahead.
2. The release of business conditions from the Purchasing Managers Index readings worldwide for January on Friday. Shane says: “These are likely to remain at okay levels on average but with strength in the US and softness in Europe, Japan and Australia, and with services strong but manufacturing weak. Key to watch will be whether the broad-based weakness in manufacturing conditions flows through to services.
3. In the US, the December quarter earnings reporting season will start to ramp up. Shane says: “The consensus is expecting a 9.4% rise in earnings compared to December quarter 2023, from 8.9% year on year in the September quarter. This is revised up from 8.4% just a week ago but still looks too pessimistic given the ongoing strength of US economic data. A final outcome closer to 12.5% is more likely. Tech is likely to be the strongest sector.”
4. In Japan, the Bank of Japan on Friday will likely raise its policy interest rate again from 0.25% to 0.5% with Governor Ueda and Deputy Governor Himino indicating a hike will be under consideration on the back of the economy being strong, positive news on wages growth and increasing confidence inflation will be around the 2% target.”

And Good News for Oz from China

China grew at target last year, helped by additional policy

stimulus. GDP rose a stronger than expected 5.4% over the year to the December quarter and rose 5% in 2024 compared to 2023, in line with the “around 5%” growth objective. Additional policy stimulus appears to have helped boost quarterly growth from1.3% quarter on quarter in the September quarter to 1.6% quarter on quarter in the December quarter. December data also showed a stronger than expected

acceleration in growth in industrial production to 6.2% year on year and retail sales to 3.7%, while growth in investment was little changed at 3.2%. Export and import growth picked up in December with front loading ahead of Trump tariffs likely helping exports to the US.

Money supply and credit growth also picked up. Property sales and property investment continued to slide but the pace of decline in sales and home prices slowed which is good news. All up there are signs that policy stimulus is helping, and this is good news for Australian exports to China. But more likely needs to be done to help the Chinese consumer and particularly if Trump is aggressive with tariffs. GDP growth is likely to be “around 5%” this year as well – maybe a bit below.

China and Donald J. Trump will be really important for stocks this year and we will be monitoring both big market-drivers like a labrador watches a sausage at a barbecue!