Download the PDF

Global Asset Allocation Viewpoints

February 2025

Outlook

We have a more cautious view as broadly resilient global growth and receding inflation trends could be at risk to increased policy uncertainty, particularly around trade threats.
U.S. growth exceptionalism leaves it better positioned should trade disputes escalate, with other major economies, particularly Europe and China, more exposed with growth already tepid.
Central bank divergence could widen on impacts of trade, with the Fed in a position to wait on impacts, while other central banks, including Europe Central Bank (ECB) and Bank of Canada (BoC), advance easing as risk tilts toward slower growth.
Key risks to global markets include elevated threat of trade wars impacting growth and reaccelerating inflation, central bank missteps, and geopolitical tensions.

Themes Driving Positioning

Big Bet!

What do digital advertising, online retail, electric vehicles, and software have in common? Seemingly not a lot, other than a combined $20 trillion. The “Mag 7,” as they are known, are a heterogenous group of companies that have dominated global equity markets. Their combined market cap is now multiple times larger than other parts of the market and any other country outside the U.S. While eye catching, their profitability has also been unprecedented in helping justify valuations. However, the recent news around Deepseek, the Chinese AI startup, highlighted a common thread across this otherwise disparate group, billions in capex spending. Their enormous bet on AI technology to sustain their dominance will be increasingly scrutinized by investors looking for assurance these big bets pay off. Against this backdrop, we favor better priced value stocks that should benefit from a broadening market and improving earnings.

Performance data quoted represents past performance which is not a guarantee or a reliable indicator of future results.
Data as of 31 January 2025 unless otherwise noted.
Sources: T. Rowe Price calculations using data from FactSet Research Systems Inc. All rights reserved. Standard & Poor’s and MacroBond. Please see Additional Disclosures for more information about this sourcing information.

Deal or No Deal?

As promised, President Trump acted swiftly on using tariffs as a negotiating tool to draw counterparties to the table. The tariffs have been introduced largely on the premise of creating fairer trade policies and gaining border security protections. For the most part, the more aggressive stance has worked with trade partners acting quickly to make a deal,or at least delay tariffs. The stakes are high for those targeted whose economies rely more heavily on trade. And while the U.S. comes at these on a stronger economic footing and less trade vulnerability, it will not be immune to potential consequence if this turns into a prolonged trade war, particularly with inflation at higher levels this time around. With the increased uncertainty, we moderated our equity exposure as risk is increasingly tilted to the downside at current valuations.

Performance data quoted represents past performance which is not a guarantee or a reliable indicator of future results.
Data as of 31 January 2025 unless otherwise noted.
Sources: T. Rowe Price calculations using data from FactSet Research Systems Inc. All rights reserved. Standard & Poor’s and MacroBond. Please see Additional Disclosures for more information about this sourcing information.

See the full report

ADDITIONAL DISCLOSURES

Any specific securities identified and described are for informational purposes only and do not represent recommendations.

* The Magnificent 7 (”Mag 7”) is Apple, Alphabet, Amazon, Meta, Microsoft, NVIDIA, and Tesla.

The S&P Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and has been licensed for use by T. Rowe Price. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). This product is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Index.

IMPORTANT INFORMATION

This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is no guarantee or a reliable indicator of future results.

The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.

It is not intended for distribution to retail investors in any jurisdiction.

USA - Issued in the USA by T. Rowe Price Associates Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.

202502-4225054

Download

Latest Date Range

Audience for the document: Share Class: Language of the document:

Download Cancel

Open

Share Class: Language of the document:

Open Cancel

Change Details

If you need to change your email address please contact us.

Subscriptions

You are ready to start subscribing.

Get started by going to our products or insights section to follow what you're interested in.

Products Insights

GIPS^® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the 27-year period ended June 30, 2023, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request.

Other Literature

You have successfully subscribed.

Notify me by email when

regular data and commentary is available
exceptional commentary is available

new articles become available